UPC_CFI_729/2025 – BFexaQC and ParTec v NVIDIA

Expert Commentary

Security for costs Facts 1. Claimant 2 (ParTec) is a spin-off of the University of Karlsruhe, Claimant 1 (BFexaQC) is entitled to enforce and license the patents of Claimant 2. 2. Another action between the parties was withdrawn after the patent was revoked. The claimants had to pay the costs. 3. A third case is pending before the Local Division of Munich. 4. The claimants also started litigation against Microsoft in the US. 5. In the summer of 2025, press articles surfaced stating that Claimant 2 was experiencing economic difficulties which led to a drastic loss of value on the German stock exchange. 6. The defendants now ask for a security for costs. The JR Orders security after an extensive motivation why there are serious doubts that claimants can pay the costs. Although no counterclaim for revocation had been filed yet, with the time limit to file said claim not yet having expired, the costs of such counterclaim are also taken in consideration. Comment 1. The decision shows that also when the claimant is a UPC company (which means that a cost order can easily be executed), it is still possible to ask for a security of costs if there are legitimate reasons (to be proven by the applicant) to have serious doubts about the capacity of the claimant to pay the costs if it loses the proceedings. 2. To already include the costs of a possible counterclaim for revocation makes practical sense. If no such revocation will be instituted (which seems extremely unlikely) the JR can be asked to review the cost order.

Full Decision Text

Lokalkammer München UPC_CFI_729/2025 Procedural Order of the Court of First Instance of the Unified Patent Court Local Division Munich issued on 28 October 2025 HEADNOTES Even if no counterclaim for revocation has been filed because the time limit under Rule 23, 25 RoP has not yet expired, costs and expenses of representation associated with a (future) counterclaim for revocation must also be taken into account when determining the amount of security for costs of the infringement proceedings (continuation of Munich LD, Order of 3 July 2025, UPC_CFI_127/2024 and UPC_CFI_149/2024 – Headwater vs. Motorola). KEYWORDS Security for costs; Counterclaim for revocation CLAIMANTS 1. BFexaQC AG, represented by its CEO Bernhard Frohwitter, Südliche Münchner Straße 56, 82031 Grünwald, Deutschland, 2. ParTec AG, represented by its CEO Bernhard Frohwitter, Possartstraße 20, 81679 München, Deutschland, represented by: Rajvinder Jagdev and Peter FitzPatrick, Powell Gilbert (Europe) LLP, 28-32 Pembroke Street Upper, Dublin, D02 EK84. DEFENDANTS 1. NVIDIA Corporation, represented by its President and CEO Mr. Jensen Huang, 2788 San Tomas Expressway, Santa Clara, CA 95051, USA, 2. NVIDIA GmbH, represented by its its managing directors Mr. Mark Steven Hoose and Ludwig von Reiche, Adenauer Straße 20/A4, 52146 Würselen, Deutschland, represented by: Johannes Heselberger, Bardehle Pagenberg Partnerschaft mbB, Prinzregentenplatz 7, 81675 Munich. PATENT AT ISSUE European Patent no. EP 3 614 263 PANEL/DIVISION Panel 2 of the Local Division Munich DECIDING JUDGE/S This order has been issued by judge rapporteur Dr. D. Voß LANGUAGE OF THE PROCEEDINGS English SUBJECT-MATTER OF THE PROCEEDINGS Application pursuant to Rule 262A RoP 2  SUMMARY OF FACTS 1 Claimant 2), the sole proprietor of the patent-in-suit, is a leading provider of modular high- performance supercomputers, quantum computers and software for modular computer systems. It was founded in 1999 as a spin-off of the University of Karlsruhe. Claimant 1) was founded inter alia to license and enforce Claimant 2)’s patent portfolio and has allegedly the exclusive rights to license the patent-in-suit to third parties. Both Claimants are asserting claims against the Defendants in court for infringement of the patent-in-suit (infringement action). 2 Another patent infringement proceeding between the parties before the Unified Patent Court (UPC_CFI_627/2024) has already been terminated by withdrawal of the action after the patent-in-suit was revoked with legal effect. The costs of the proceedings were imposed on the Claimants. A third patent infringement proceeding between the parties has been pending before the Munich Local Dividion of the Unified Patent Court since the end of 2024 (UPC_CIF_180/2025). In the United States, the Claimants are conducting an infringement proceeding against Microsoft Corporation. 3 In the summer of 2025, press articles appeared stating that the Claimant 2) was experiencing economic difficulties. Reference is made to the corresponding Exhibits BP-PK 1, 2 and 5. On 26 June 2025, Claimant 2) announced that it would have to postpone its annual and consolidated financial statements for the 2024 financial year for an indefinite period. Due to this breach of the obligation to disclose the annual financial statements report, Deutsche Börse imposed a contractual penalty on Claimant 2), which led to significant price losses on the stock exchange. For details, reference is made to Annexes BP-PK 3 and 4. Another press article reveals that Claimant 2) was involved in the construction of the Jupiter supercomputer, which went into operation in September 2025, and that ‘half the 500 million euros ($580 million) to develop and run the system over the next few years comes from the European Union and the rest from Germany.’ 4 The Defendants now demand that the Claimants provide security for the costs of the proceedings. REQUESTS 5 Defendants request: I. Claimants are ordered to provide, within a time period to be determined by the court, but in any event in good time before the oral hearing, adequate security for the legal costs and other expenses incurred and/or to be incurred by the Defendants (R. 158.1 RoP). 3  II. If Claimants fail to provide adequate security within the time stated, the Court gives a decision by default against Claimants and the infringement action (ACT_34542/2025) is dismissed (R. 158.5, 355 RoP). 6 Claimants request that the Court I. dismisses the Defendants’ Request for security for costs, filed on 7 October 2025, pursuant to Art. 69.4 UPCA and R. 158.1 RoP, as ill-founded; in the alternative II. should order security for costs, substantially lower the amount sought by the Defendants, ordering security for an amount not exceeding EUR 84,000.00; III. gives the Claimants the option of providing security either in the form of a bank deposit, or by way of bank guarantee provided by a bank licensed in the EU (and under the direct supervision of the European Central Bank); and IV. permits the Claimants a period of six weeks, from the date of service of the order, to provide security. SUBMISSIONS OF THE PARTIES 7 The Defendants are of the opinion that there are severe legitimate and real concerns that a possible order for costs may not be enforceable. 8 They point to specific and serious indications that Claimant 2) has massive liquidity problems. Press articles indicate that the value of Claimant 2) has been reduced to less than 1/7 since the beginning of 2024, employees' salaries were not paid on time or at all, contractual partners have terminated their collaboration or refused to provide services for lack of payment, and legal disputes with the Atos-subsidiary Bull, a business partner of Claimant 2), over tens of millions of euros were pending. Stock market analysts assume that the financial downward trend of Claimant 2) will continue. Furthermore, it is not apparent that Claimant 1) could compensate for a payment default by Claimant 2). The share capital of Claimant 1) amounts to only EUR 50,000.00. 9 The amount of security is to be based on the Administrative Committee’s Scale on the ceilings for recoverable costs, resulting from the value of the proceedings. The Defendants can request security for costs for the defense against the infringement action as well as for the counterclaim for revocation. Based on the estimated value of the infringement action and for the counterclaim for revocation - with an assumed value in dispute of EUR 750,000.00 – the ceilings for recoverable costs amount to a total of EUR 168,000.00. 4 10 The Claimants are of the opinion that the Court, when exercising its discretion whether it orders security for legal costs, must have regard to the principles of proportionality, fairness and equity, and ensure a fair balance between the interests and rights of the Defendants and those of the Claimants. This weighing of interests will be in favour of the Claimants. The Claimants argue, that the burden of proof for a real and concrete risk that the Claimants will be unable to recover the costs that they may be liable for lies with the Defendants. The Defendants must also establish that the security sought constitutes a necessary and proportionate measure in the specific circumstances of the case. Indeed, the Defendants have not submitted any evidence that the Claimants may be unwilling or unable to cover any adverse costs award. The press articles submitted contain only speculative and extremely vague assumptions and conjectures that are not relevant to proving Claimant 2)’s financial circumstances. 11 Moreover, the grounds for the Defendants’ request only relate to Claimant 2). The financial conditions of Claimant 1) are not addressed. The Defendants only commented on its share capital, which does not indicate the financial condition of a company. Rather, Claimant 1)’s balance sheet as of 31 December 2023, the balance statement for one of its accounts and the account statement for another account of Claimant 1) show that Claimant 1) alone has more than sufficient assets, including liquid assets, to satisfy any adverse costs award(s) in favour of the Defendants. Since the Claimants were jointly and severally liable for any adverse costs award made against them, the financial position of Claimant 2) is irrelevant. 12 Regardless of this, Claimant 2) is entitled to a substantial share of the EUR 500m cost of the Jupiter project. Claimant 2) is also involved in the development of a new high-performance computing data centre in Hungary. Furthermore, it has contracted to provide a number of supercomputer systems in Europe (in addition to Jupiter), each of which comprises processor hardware of the Defendants. In this respect, the Defendants are aware of the establishing industry practice in relation to payment of invoices, which is often delayed and subject to public procurement processes. Claimant 2) has a healthy and buoyant business in Europe and is not at risk of insolvency. 13 Claimants consider that, since the Claimants are, in fact, financially able to comply with any reasonable cost order, they should not be required to immobilise significant funds merely to satisfy a speculative and unsupported request. Based on reasons of proportionality and equity, an order of security, issued at this stage of the proceedings and under the present circumstances, would have the practical effect of stifling the Claimants’ right to an effective remedy, contrary to Art. 47 of the Charter of Fundamental Rights of the European Union. 14 With regard to the amount of security, the Claimants point out that the Defendants have not yet filed a counterclaim for revocation and so it is inappropriate for them to be seeking security for costs in respect of an as-yet unfiled counterclaim at this stage. Notwithstanding the 5  Defendants’ submissions, until a counterclaim is filed (if at all), the value in dispute attributed to it by the Defendants is not yet crystalised and so it is not possible to assess security for costs in respect of it at this stage. 15 In the event that the Court decides to order security, the amount of security should not be set to the full ceiling of recoverable costs for both the infringement action and the counterclaim for revocation, as requested by the Defendants. This would be highly disproportionate and unreasonable. Instead, any grounds of equity that might become relevant for the subsequent determination of costs must be considered, when determining the amount of the security. GROUNDS FOR THE ORDER 16 The Defendants’ admissible application to order the Defendants to provide adequate security for legal costs is partially justified. I. 17 The Court, when exercising its discretion under Art. 69 (4) UPCA and Rule158 RoP, must determine, in the light of the facts and arguments brought forward by the parties, whether the financial position of the Claimant gives rise to a legitimate and real concern that a possible order for costs may not be recoverable and/or the likelihood that a possible order for costs by the Court may not, or in an unduly burdensome way, be enforceable. (CoA, Order of 26 August 2024, UPC_CoA_328/2024, APL_36389/2024 – Ballinno/Kinexon; Order of 17 September 2024, UPC_CoA_217/2024, APL_25919/2024 – NST/Audi; Order of 29 November 2024, UPC_CoA_548/2024, APL_52969/2024 – Sodastream/Aarke). A (current) risk of insolvency or inability to pay on the Claimant’s part, which jeopardises the Defendant's claim for reimbursement of costs, is irrelevant. It is sufficient that there are doubts as to whether the claim arising from a future order for costs can be realised. It is also irrelevant whether an order for costs in favour of the Defendant is to be expected or whether the Claimant is willing to reimburse the Defendant if a cost order would be issued in favour of the Defendant (CoA Order of 29 November 2024, UPC_CoA_548/2024, APL_52969/2024 – Sodastream/Aarke). 18 The burden of substantiation and proof why an order for security for costs is appropriate in a particular case is on the Defendant making such a request. Once the reasons and facts in the request have been presented in a credible manner, it is up to the Claimant to challenge these reasons and facts in a substantiated manner, especially since that party will normally have knowledge and evidence of its financial situation. It is for the claimant to argue that and why a security order would unduly interfere with its right to an effective remedy (CoA, Order of 17 September 2024, UPC_CoA_217/2024, APL_25919/2024 – NST/Audi). 6  II. 19 In accordance with these principles, the Court exercises its discretionary power to order Claimant 2) to provide an adequate security for any costs and expenses of the proceedings to be reimbursed by the Defendants. 1. 20 With regard to the financial situation of Claimant 2), the judge rapporteur has serious doubts as to whether Claimant 2) would be in a position to satisfy the Defendants’ claims for reimbursement of costs in the event of an order for costs. a) 21 The Defendants have presented sufficient evidence to show that Claimant 2) is experiencing financial difficulties. This suggests that it will not be able to satisfy any claims for reimbursement of costs made by the Defendants. In any case, this raises sufficient doubts about Claimant 2)’s solvency. 22 In August 2025, Handelsblatt reported that there were already initial signs of problems at Claimant 2) in October 2024, which continued to escalate from 2025 onwards. The article ‘Supercomputing-Firma Partec im Abwärtssog’ (‘Supercomputing company Partec in downward spiral’) in the weekend edition of 22, 23 and 24 August 2025 (Exhibit BP-PK 2) stated that plans for a quantum computer factory were put on hold in October 2024 because suppliers could no longer be paid. Employee salaries were no longer being paid on time. According to the company, there were temporary liquidity problems. In 2025, January salaries were not paid until April, and in February only 20% were paid. Service providers had stopped working for the Claimant due to lack of payment. There were cases of new employees who had never received a salary. 23 This situation is confirmed by the report ‘Vom Hoffen und Hebeln’ (‘On Hope and Leverage’) in the 32nd issue of WirtschaftsWoche magazine from 2025 (Exhibit BP-PK 5). This report also provides information about unpaid salaries and the temporary termination of the quantum computer factory project. Furthermore, the article states that Claimant 2) only recorded a turnover of EUR 5,000,000.00 in the first half of 2024 and that its liquid assets amounted to just EUR 288,000.00 at 30 June 2024. 24 The circumstances described by the press are a clear indication that Claimant 2) has been experiencing specific payment difficulties for some time. These difficulties are so severe that, according to the article in WirtschaftsWoche, the CEO of Claimant 2) and its CFO stepped in with private funds to settle outstanding claims. However, if a party does not have sufficient liquid funds to cover its claims, this justifies the ordering of a security for legal costs in any case. 7  b) 25 The Defendants’ argument that the press articles contain only speculative and extremely vague assumptions and conjectures that were not relevant to proving the financial circumstances of Claimant 2), and that the Defendants have not provided any concrete evidence that the Claimants might be unwilling or unable to bear any costs to be reimbursed, is not valid. 26 The Claimants do not dispute that Claimant 2) currently has liquidity problems. They merely refer to the lack of evidence provided by the Defendants. However, such evidence is not required if the corresponding facts are undisputed, as in the present case. 27 Regardless of this, Handelsblatt and WirtschaftsWoche are press publications that cannot be accused of being biased or speculative or of reporting untruthfully. It can generally be assumed that the circumstances described have been thoroughly researched and substantiated. The Claimants do not assert otherwise. In particular, the chief financial officer of Claimant 2) himself stated that there had been delays in salary payments. It is also undisputed that individual board members used their private funds to support Claimant 2). 28 It should also be noted that the Defendants generally have no insight into the current financial situation of the Claimants. By submitting the various press articles, the Defendants have provided sufficient evidence to suggest that there are concerns as to whether Claimant 2) will be able to satisfy any claims for reimbursement of costs asserted by the Defendants. It has not been argued, nor is it otherwise apparent, that the Defendants have any other means of obtaining information. In accordance with the principles set out in the foregoing, it would therefore have been for the Claimants to provide substantiated evidence of the financial situation of Claimant 2), in particular its financial liquidity. However, this is lacking. In particular, the allegedly speculative and vague assumptions and conjectures in the press articles are not refuted in a convincing manner. For example, the explanation that the failure to pay the claims of individual business partners was merely due to temporary internal delays in payment processing, which can occur in any company, is meaningless. No other reasons for non- payment are given. 29 The argument that Claimant 2) is entitled to a substantial share of the costs of the Jupiter project, totalling EUR 500 million, is also without substance. According to the article ‘Europe hopes to join competitive AI race with supercomputer Jupiter’ published on the France24 website on 5 September 2025 and submitted by the Claimants as Exhibit PAR-04, these are costs for the development and operation of the system. Even if Claimant 2) were entitled to a share of this substantial amount, it remains completely unclear over what period of time this amount would be paid out and what services Claimant 2) would still have to provide in return (‘to develop and run the system’, see Exhibit PAR-04). Nor has it been argued whether and to what extent the amount is realisable or disputed. Apart from all this, a single claim amounting to millions without knowledge of Claimant 2)’s other financial situation, in particular its indebtedness, says nothing about whether Claimant 2) is financially sound, as it claims. 8 30 For these reasons, the further submission of the Claimants that Claimant 2) had concluded a contract for the delivery of a number of additional supercomputer systems in Europe and that it was customary practice in the industry for invoices to be paid late because they were subject to public procurement processes is also insufficient. These circumstances do not provide any concrete information about the financial situation of Claimant 2) and its liquidity. Above all, concerns regarding the settlement of any cost reimbursement claims do not require that Claimant 2) be threatened with insolvency. 31 Finally, it is also irrelevant that there is another Claimant, BFexaQC AG, which is said to have sufficient liquidity to settle all conceivable claims for reimbursement of costs by the Defendants against the Claimants. Contrary to the Claimants’ opinion, they are not jointly and severally liable for any claims for reimbursement of costs, but on a pro rata basis. Neither the UPCA nor the Rules of Procedure recognise or standardise joint and several liability in any context. Rather, liability for costs is to be assumed on a pro rata basis, which is why cost decisions of the Unified Patent Court regularly provide for a division of costs between several Defendants or Claimants (see Düsseldorf LD, Decision of 10 October 2024, UPC_CFI_363/2023 – Seoul Viosys gg. expert e-Commerce; Decision of 14 January 2025, UPC_CFI_16/2024 – Ortovox gg. Mammut; Decision of 07 March 2025, UPC_CFI_459/2023 – Tridonic gg. Cupower). 2. 32 With regard to Claimant 1), the Defendants’ application is unfounded. The Defendants have not provided any information whatsoever on the financial circumstances of Claimant 1) so that there are no doubts as to its financial capacity that could challenge the successful enforcement of a claim for reimbursement of costs against Claimant 1). 3. 33 The Court considers security for costs of EUR 85.000,00 EUR to be paid by Claimant 2) in favour of the Defendants appropriate. 34 In determining the amount of security to be paid, the Court was guided by the fact that the representation costs to be reimbursed in the event of an unsuccessful outcome of the infringement action are based on the ceilings for reimbursable costs. Pursuant to Art. 1 (2) and (3) of the Scale of ceilings for recoverable costs, adopted by the Administrative Committee of the UPC on 24 April 2023 (hereinafter: the Scale), the ceilings on recoverable costs apply to the costs of representation at each instance of the proceedings, irrespective of the number of parties. 35 In this specific case, according to the Scale, the ceiling for reimbursable costs is EUR 200,000.00. This is based on the value of the infringement proceedings and of a (future) counterclaim for revocation. 9 36 The values for infringement proceedings and counterclaims are determined in accordance with Section II. 2. b) (4) of the Guidelines for the determination of court fees and the ceiling of recoverable costs of 24 April 2023 (hereinafter: Guidelines) for the purposes of determining the amount of reimbursable costs and thus also for determining their ceiling. In particular, when determining the amount of the security for legal costs, the costs of representation associated with a counterclaim for revocation must also be taken into account (Munich Regional Court, order of 3 July 2025, UPC_CFI_127/2024 and UPC_CFI_149/2024 – Headwater/Motorola). This applies even if no counterclaim has been filed because the time limit under Rule 23, 25 RoP has not yet expired. This is because Rule 158.1 RoP stipulates that security may be ordered for costs and expenses incurred and/or to be incurred by the Defendant which the Claimant may be liable for. This means that the costs do not yet need to have been incurred. Rather, they must be forecast in order to determine the amount of the security. Generally, and in particular in the present case, it is more likely than not that the Defendants will file a counterclaim for revocation because pursuant to Rule 25.1 RoP the assertion of the invalidity of the patent-in-suit can only be raised in this way and is also raised in the vast majority of infringement proceedings. If, contrary to expectations, no counterclaim for revocation is brought, this order may still be amended and the amount of the security reduced. 37 The value for the infringement action is stated by the Claimant as EUR 500,000.00, and even if no counterclaim for revocation has yet been filed, the value of a future counterclaim can also be estimated. According to Section II. 2. b) (2) (ii) of the Guidelines, the value of a counterclaim for revocation is generally one and a half times the value of the infringement action, i.e. EUR 750,000.00. The total value of the proceedings is between EUR 1,000,000.00 and EUR 2,000,000.00, resulting in a ceiling of EUR 200,000.00 for recoverable costs. 38 However, this ceiling cannot be equated with the reimbursable costs without further consideration. According to recital 1 to the Scale, the ceilings for reimbursable representation costs is only one of the safeguards against undue cost recovery, and the last one to apply when the Court makes its decision on costs. The Scale therefore assumes that the recoverable costs of representation are generally below the ceilings. Since the Defendants have not submitted what costs they have incurred for representation to date, the judge rapporteur estimates the recoverable costs of representation at EUR 150,000.00. Although the case is technically challenging, it does not appear to pose any particular problems and is not so extensive as to justify requiring security in the amount of the ceilings. 39 Of this amount, EUR 75,000.00 is attributable to Claimant 2) due to the Claimants’ liability on a pro rata basis. Adding half of the court fees for a future counterclaim for revocation, which are also reimbursable, the judge rapporteur considers a security of EUR 80,500.00 to be appropriate. In doing so, the judge rapporteur also takes into account that, under the circumstances, ordering security for legal costs may restrict the Claimant's right to an effective remedy and a fair trial, which is guaranteed under European law, including Article 47 of the Charter of Fundamental Rights of the EU and the Enforcement Directive. 10  III. 40 The security can be provided in form of a deposit on the UPC account dedicated for security deposits (UPC account for a deposit of security for costs) or by a bank guarantee provided by a bank licensed in the European Union. Claimant 2) may choose which form of security it prefers to provide. 41 The Court considers a time limit of six weeks for providing security for legal costs within the meaning of Rule 158.1 RoP reasonable. The information on the consequences of late provision of security is based on Rule 158.4 RoP. 42 As this is an order issued by the judge rapporteur, no reference to the possibility of appeal is to be made in accordance with Rule 158.3 RoP. An appeal is only admissible after the order has been reviewed by the panel (CoA, Order of 14 January 2025, UPC_CoA_651/2024, APL_59329/2024 – Total Semiconductor/Texas Instruments). ORDER 1. Claimant 2) is ordered to provide security for legal costs and other expenses incurred and/or to be incurred by the Defendants in the total amount of EUR 80,500.00 (eighty thousand five hundred euros). 2. The security may be provided either by way of deposit on the UPC account dedicated for security deposits, or alternatively by way of bank guarantee issued by a bank licensed in the European Union to be chosen by Claimant 2). 3. The security has to be provided within six weeks from the date of service of this order. Claimant 2) is informed that if it fails to provide the aforementioned security within the time stated a decision by default may be given, in accordance with Rule 355 RoP. Digital unterschrieben von Daniel Voß Daniel Voß Datum: 2025.10.28 16:15:51 +01'00' 11

Key Holdings

• Security for costs can be ordered even against a UPC company if there are legitimate, proven doubts about the claimant's ability to pay costs.
• The Judge-Rapporteur can consider the potential costs of a future counterclaim for revocation when determining the amount of security for costs, even if the time limit for filing it has not expired.
• Financial difficulties and previous cost orders against the claimant can serve as valid grounds for requesting security for costs.

Tags

• Costs
• Counterclaim
• Financial Standing
• Security for Costs

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