Navigating the Unified Patent Court: A Guide to Penalty Payments
Facing a legal battle? The Unified Patent Court (UPC) Court of Appeal has delivered a crucial ruling in the Fujifilm v. Kodak case, offering a clear framework for how penalty orders are enforced. This decision is vital for anyone involved in patent litigation, clarifying the rules around penalties for non-compliance with court orders. But what exactly does this mean for you?
This article, based on insights from J A Kemp LLP, breaks down the key aspects of this decision, providing a user-friendly guide for both those seeking to enforce judgments and those facing compliance obligations.
Background of the Dispute
In April 2025, the Local Division Mannheim (LDM) sided with Fujifilm in a patent infringement case against three Kodak entities. The court issued an injunction, a penalty order, and orders for information, destruction, recall, and removal of infringing products. However, only the injunction had a penalty provision attached. When Fujifilm sought to enforce these orders, alleging Kodak's non-compliance, the LDM imposed a lump sum penalty of €100,000, plus daily penalties ranging from €2,500 to €10,000. Kodak appealed, challenging the legal basis and fairness of these penalties.
The Court of Appeal's Findings: What You Need to Know
The Court of Appeal's decision provides several key takeaways:
- Penalty Orders Post-Judgment: The court confirmed that penalty orders can be issued even after the main judgment, under Rule 354.3, which allows for connection to earlier decisions.
- Prior Penalty Order Required: However, the court ruled that an actual payment of penalties under Rule 354.4 requires a prior penalty order. Since no such order was issued for the €100,000 lump sum, the court set aside this order.
- Validity of Daily Penalties: The court upheld the daily penalties for future non-compliance, viewing them as the necessary "prior penalty orders."
- Single Penalty for Multiple Orders: The court clarified that a single penalty can cover multiple orders relating to different actions, as long as the calculation method is clear. The court confirmed that the relevant amount is forfeited for each day of non-compliance, regardless of the number of orders not complied with that day.
- Penalties on Multiple Defendants: Penalties can be imposed on multiple defendants in general terms ("the defendants") if the underlying orders are similarly directed.
- Burden of Proof: The defendant bears the responsibility of proving full and timely compliance with the orders.
- Evidence of Compliance: The court can specify the type of evidence needed to prove compliance, even if not explicitly stated in the UPCA or Rules of Procedure.
- Confidentiality Requests: The court dismissed Kodak's confidentiality request as a delaying tactic, emphasizing that such requests should be made during the main proceedings.
- Translation Requirements: The court clarified that translation requirements under Rule 118.8 only apply to the parts of the order being enforced and only when enforcement is carried out by national authorities in the relevant Contracting Member States. If orders are being enforced by the UPC (such as in the case of penalty payments), then no translation is required.
Practical Implications for Litigants
This decision provides welcome clarity for UPC practitioners. It confirms that penalty orders can be sought post-judgment without appealing the main decision and that enforcement proceedings must be grounded in a prior penalty order to impose payment.
- For Parties Seeking Enforcement:
- Proactively specify penalty amounts and compliance periods in the original claim.
- Consider what evidence is needed from the defendant to confirm compliance.
- For Defendants:
- Respond promptly to enforcement notices.
- Meticulously document compliance steps.
- Raise objections to enforcement requests and confidentiality concerns early in the process.
But here's where it gets controversial...
The court's ruling on the lump sum penalty raises an interesting point. Does this create a loophole, or does it simply clarify the process? And what about the implications of imposing penalties on multiple defendants? Do you think this approach is fair? Share your thoughts in the comments below!
About J A Kemp LLP
J A Kemp LLP, a leading firm in intellectual property law, provides expert advice on UK and European patent practice and represents clients before the European Patent Office, UKIPO, and the Unified Patent Court. They have extensive expertise in a wide range of technologies, including Biotech and Life Sciences, Pharmaceuticals, Software and IT, Chemistry, and Electronics and Engineering. Visit their website to learn more.
Disclaimer:
The information provided in this article is intended for general guidance only. For specific advice regarding your situation, it is recommended to consult with a legal professional.
