The success of the Unified Patent Court and Unitary Patent will depend on many factors, a key one of which is the likely cost of litigating before the UPC, including the level of the Court fees, and of legal costs recoverable from the other side. The UPC Preparatory Committee has now issued final (albeit subject to legal checking) details on both of these topics, following its 2015 consultation. It has also issued details of how the Court will assess the value of a dispute, both for the purposes of assessing the ‘value based fee' and costs recovery. Importantly, in news that will be roundly welcomed by patent owners, there will now be no fee to opt a standard European patent out of the UPC.
Court fees in the UPC
The Court fees before the UPC will comprise fixed fees, and value-based fees where the value of the action is more than €500,000. Where an action has more than one claimant and/or defendant, or there is more than one patent, there will be only one fixed fee and, if applicable, only one value based fee.
Fixed fees before the Court of First Instance include the following fees:
|Counterclaim for infringement
|Action for declaration of non-infringement
|Counterclaim for revocation
|Same as infringement action,
subject to a fee limit of €20,000
|Application for provisional measures
|Application to determine damages
As noted above, following much opposition, there is no longer a fee to opt a standard European patent out of the UPC (which had been proposed at €80 per patent) or to withdraw any opt out. The Committee recognised that the administration burden of opt-out rests almost entirely on the applicant, and also that there would be associated costs for the Court in processing such a fee.
Value based fees
In addition to the fixed fee, for certain actions with a value of more than €500,000, there is a rising scale of value based fees. For example, a claim with a value of up to and including €1 million will attract a value based fee of €4,000, whereas a claim with a value of up to and including €10 million will have a value based fee of €65,000. At the top end, a claim with a value of more than €50 million will have a value based fee of €325,000. The Committee notes that it has ironed out some inconsistencies in the fees identified by respondents to the consultation.
The value based fees will apply to actions for infringement (including counterclaims), actions for a declaration of non-infringement, actions for compensation for licence of right and applications to determine damages. Value-based fees will not apply to revocation actions or counterclaims. Claimants will be required to make their own value assessment and pay the relevant fee at the same time as the fixed fee (i.e., when lodging the application); any dispute over the value can be deal with at the interim conference.
Assessing value of a case
The Rules provide that the value of a case should reflect the objective interest pursued by a party at the time that it filed the action. The Court may take into account certain guidelines which have also been issued by the Preparatory Committee. The Guidelines note the following principles:
In most cases, the most practicable method of assessing the value of a case will be a valuation based on an appropriate licence fee. However, a valuation based on the claimant’s loss of profits or the profits gained by the defendant may be appropriate, but will usually be too complex to be determined at the beginning of proceedings, resulting in a mini-trial.
The valuation should relate to the summed up values of the main remedies claimed (injunction for the future, damages for the past), as well as, where appropriate, the value of other remedies claimed.
If the parties agree on a valuation, the Court should in principle base its valuation on their estimate.
The Guidelines go on to explain how the royalty calculation will work for determining the value of an infringement or DNI action (both for applying the Rules on court fees and on recoverable costs). As for a revocation action or counterclaim (where the value of the claim is relevant only in the context of applying the rules on recoverable costs), the determination will have regard to the value of the patent to be revoked. Otherwise, where relevant information is not available, the Guidelines set out how to assess the value of the revocation action / counterclaim.
Fee reductions for SMEs
Small and micro-enterprises will be able to claim a reduction of 60% in the regular Court fees (both fixed and value fees), provided that they comply with certain criteria. This compares to the proposals considered under the consultation, which suggested a potential exemption from value based fees for SMEs.
There may also be fee reimbursements (of both fixed and value based fees) for any type of party, in the following scenarios (only one reimbursement may apply per action and party, with the larger reimbursement being applied for each party):
In exceptional cases, the Court may deny or increase the reimbursement that applies on withdrawal / settlement. Further, the Court may wholly or partially reimburse the fixed and value-based fee where it is persuaded that the amount of Court fees payable will threaten the economic existence of a party (who must not be a natural person).
Fees before the Court of Appeal
There is a separate schedule of fixed and value based fees for appeals. This applies the same structure and levels as before the Court of First Instance (and, so there will be no value based fees in respect of revocation appeals).
The Preparatory Committee has also set out the scales of costs that a successful party may recover from their opponent. It is important to appreciate that these ceilings are a ‘safety net’ i.e., they represent an ‘absolute cap’ on recoverable costs, rather than a default level. Only reasonable and proportionate legal costs and expenses may be recovered. In exceptional circumstances, the Court may order the parties to bear their own costs, or apply a different apportionment of costs.
However, the ceilings are not set in stone: the Court may raise them by up to certain amounts (e.g. due to the complexity of the case or where multiple language are used) or limit them (e.g. where it is persuaded the amount payable may threaten the economic existence of a party). A request to raise or lower the ceilings must be made as soon as possible i.e., in the Statement of Claim or Defence as applicable (and certainly in time so as to allow the Court to make a decision before the end of the interim procedure).
Scale of recoverable costs
The Committee notes that the question of costs recovery has been a difficult one to agree, given the different approaches adopted by Member States, and the final position represents a compromise.
|Value of proceedings
||Ceiling for recoverable costs
|Up to and including €250,000
||Up to €38,000
|Up to and including €500.000
||Up to €56,000
|Up to and including €1,000,000
||Up to €112,000
|Up to and including €2,000,000
||Up to €200,000
|Up to and including €4,000,000
||Up to €400,000
|Up to and including €8,000,000
||Up to €600,000
|Up to and including €16,000,000
||Up to €800,000
|Up to and including €30,000,000
||Up to €1,200,000
|Up to and including €50,000,000
||Up to €1,500,000
|More than €50,000,000
||Up to €2,000,000