UPC: NPE’s licencing income renders risk of insolvency low

The Dusseldorf Local Division refused to grant an order for a security for costs against a non-practicing entity (NPE) claimant in UPC_CFI_26/2024. The defendants’ request for security for costs was based, inter alia, on the argument that, because the claimant is an NPE, there is a risk the claimant is likely to become insolvent. 

The Court rejected this argument on the grounds that the claimant derives a revenue from licencing the large portfolio of patents that it owns and has access to investor funds, rendering insolvency unlikely. The Court also found that involvement in legal proceedings to enforce the patents the NPE owns is not per se evidence that the NPE is likely to be at risk of becoming insolvent.