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UPC Court of Appeal Clarifies Limits on Security for Costs in Emboline v. AorticLab

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July 23, 2025
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In a significant ruling before the Unified Patent Court (UPC)[1], the Court of Appeal has clarified that a claimant in an infringement action cannot request security for costs from a defendant who files a counterclaim for revocation. The decision, issued on 20 June 2025 in Emboline, Inc. v. AorticLab srl, reinforces the principle of procedural fairness and access to justice within the UPC framework.

Background

The case arose from an infringement action brought by U.S.-based Emboline, Inc. ("Emboline") against Italian medical device company AorticLab srl ("AorticLab"), concerning European Patent EP 2 129 425. In response, AorticLab filed a counterclaim for revocation of the patent. Emboline then sought an order requiring AorticLab to provide security for legal costs under Article 69(4) of the Unified Patent Court Agreement (UPCA).

The Munich local division made a security for costs order against AorticLab on the basis of Article 69 (4), which allows a defendant to request security for legal costs against a claimant. The Munich local division considered that in this case, Emboline is a claimant for the infringement action and a defendant of the revocation action. Therefore, Emboline was allowed to make a request for security against AorticLab in accordance with Article 69(4). However, it granted leave to appeal, and AorticLab appealed the order to the UPC Court of Appeal.

The Court's Reasoning

The Court of Appeal considered the reasoning given by the Munich Local Division and allowed AroticLab's appeal. The Court of Appeal gave explanations for dismissing Emboline's request, offering a detailed interpretation of the UPCA and the Rules of Procedure ("RoP") in its judgment:

  • Purpose of Security for Costs: The Court emphasized that the purpose of Article 69(4) is to protect defendants from the risk of being unable to recover legal costs to which they are entitled from an insolvent claimant—not the other way around. It is not a tool for claimants to shield themselves from the financial consequences of a counterclaim. Therefore, the Court adopted a restrictive reading of Article 69(4), concluding that it does not support a claimant's request for security for costs against a defendant engaged in a defensive counterclaim.
  • Nature of Counterclaims: Although a counterclaim is considered a to be a separate action in Art. 32(1)(e) UPCA, it is practically inseparable from the infringement action, as the UPCA and RoP requires a defendant to lodge a separate counterclaim for revocation in order to raise a validity defence. As such, the defendant does not assume the role of a "claimant" in the sense contemplated by Article 69(4) UPCA.
  • Access to Justice: Imposing a security for costs requirement on defendants could unreasonably limit legitimate defences and result in injunctions granted against them by default. The Court stressed that such a requirement would undermine the principle of fair access to justice, acutely affecting smaller or financially constrained companies. On the other hand, a claimant who is unable to provide a security can choose to not start an action in the first place or withdraw the action if he is ordered to pay security to an amount he cannot pay; therefore, there isn't a situation where he is faced with a decision by default.

Conclusion

The UPC Court of Appeal's decision in Emboline v. AorticLab sets a clear precedent with several important consequences. By firmly rejecting the claimant's attempt to impose security for costs on a defendant asserting a counterclaim for revocation, the Court has drawn a clear line around the protective scope of Article 69(4) UPCA. This decision has already begun to shape UPC case law as seen in Headwater Research LLC v. Motorola & Flextronics[2], where the Munich Local Division explicitly cited Emboline v. AorticLab to reaffirm that the rationale behind Article 69(4) UPCA is to protect defendants from the financial risks of litigation. As such, Emboline v. AorticLab is now firmly established as a foundational authority on the limits of security for costs under the UPCA.

[1] https://www.unifiedpatentcourt.org/en/node/125962

[2] https://www.unifiedpatentcourt.org/en/node/126192


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