UPC: Winner pays! Clarification on Proportionality in apportioning Litigation Costs and the Role of Pre-Litigation Settlement Efforts

In a decision issued on 26 March 2025, the Court of Appeal of the Unified Patent Court reaffirmed its commitment to proportionality in litigation costs and addressed the role of pre-litigation settlement efforts in patent disputes. The case involved Stäubli Tec-Systems GmbH, which filed a revocation action against EP 3 170 639, only for the action to become moot when the former patent holders acknowledged the patent’s invalidity and surrendered it.

While the UPC did not explicitly require parties to settle before proceedings, the Court highlights, through this decision, that pre-litigation efforts to resolve disputes could help avoid unnecessary costs. Despite prior correspondence suggesting a possible resolution without formal legal action, Stäubli proceeded with the revocation action. The former patent holders surrendered the patent shortly after the discovery of new prior art, rendering the revocation action unnecessary.

Stäubli argued that contacting the former patent holders before filing the revocation action might have led to an opt-out. However, the Court noted that the risk of an opt-out did not outweigh the interest in avoiding unnecessary litigation costs. As such, the Court found that Stäubli could have contacted the patent holders first, which might have led to a quicker and more cost-efficient resolution before formal proceedings were initiated.

According to Art. 69(1) UPCA, the general rule is that the unsuccessful party must bear the costs of the proceedings. However, an exception applies when the claimant files a revocation action without the patent holder having caused it, and the patent holder surrenders the patent immediately at the beginning of the proceedings. The Court held that, although Stäubli was technically the successful party, it should bear the costs from an equity perspective. The Court reasoned that Stäubli initiated the action prematurely, without providing the former patent holders a chance to resolve the matter before filing. Given that the patent holders had surrendered the patent and filed a revocation request with the European Patent Office, the Court found it equitable to place the cost burden on Stäubli, as the action was unnecessary and resulted in additional costs.