UPC_CoA_21/2026 – Suinno v Microsoft

Expert Commentary

Security for costs Facts 1. The Court of Appeal granted a default judgment in the infringement proceedings after Suinno failed to provide security for costs. 2. After the default judgment Suinno was ordered to pay Microsoft costs in the infringement proceedings. Suinno was denied leave to appeal but, until today, did not pay Microsoft’s costs of € 350.000. 3. In the revocation proceedings Suinno’s patent was revoked. Suinno appealed. 4. Microsoft asked for a stay of the appeal and applied for security for costs for the appeal. 5. In the meantime, Suinno was ordered to pay € 300.000 with respect to the costs for the revocation case in first instance. 6. The Court of Appeal ordered Suinno to provide a security for costs for € 600.000 for the appeal and extended the deadline for the statement of response for Microsoft to 19 June 2025. 7. Suinno asked for a revocation of the order or a lower amount (up to € 50.000) for security. The Court 1. The Court noted that you can ask for revocation or variation of a management order. 2. Article 69(4) UPCA does not only apply in the cases of Article 59-62 UPCA and does also not suggest that providing security for costs is an exception. 3. The purpose of the security for costs is protecting the opposing parties from not being able to obtain costs. 4. The Enforcement Directive and the TRIPS Agreement do not contain any provision regarding security for costs. 5. Articles 17 (2) and 47 of the Charter of Fundamental Rights are not absolute and may be restricted to protect the rights and freedom of others. 6. In its reply to the application for security for costs, Suinno did not challenge the amount. Therefore, the arguments for a lower amount are too late. 7. You cannot ask questions to the European Court of Justice about the Charter of Fundamental Rights itself and there is no doubt that there is no violation of EU Law, the Enforcement Directive or the TRIPS Agreement. 8. The application was rejected. Comment 1. You cannot deny that Suinno is not fighting for the right to litigate, even though they are unable to provide security for costs. There are many systems that are different from the UPC, in which this is possible and where if you lose you do not or hardly have to pay anything. I mention the US, but in the EU this is (somewhat) different after the Enforcement Directive, which entitles you to costs. Before the Enforcement Directive, in many countries (the Netherlands, Belgium, France etc.) the winner received only a very limited amount of costs. 2. It is by now clear that in the UPC you cannot start litigation with a shell company without assets or in general without enough funding. So instead of a Don Quichotte fight like Suinno you should secure financing. It looks as if Suinno did not have such a good case, as the patent was invalidated, but hoped to get some money out of Microsoft just by starting a law suit. That backfired! Microsoft will in all likelihood not recover their costs, but they have made clear that if you want to get any money from them you will have to fight for it or have a good case.

Full Decision Text

1 ORDER of the Court of Appeal of the Unified Patent Court issued on 28 April 2026 concerning an application to revoke or vary a case management order (R. 335, 336, 9.3 (a), 353 RoP) on security for costs (R. 158 RoP) K EYWORDS: - Revocation of a security for costs order (R. 335, 336, 158 RoP, Art. 69(4) UPCA) - Referrals under Art. 267 TFEU to the Court of Justice of the European Union - Time extension (R. 9.3 RoP) APPELLANT ( DEFENDANT IN THE COUNTERCLAIM FOR REVOCATION PROCEEDINGS BEFORE THE COURT OF FIRST INSTANCE ) Suinno Mobile & AI Technologies Licensing Oy, Helsinki, Finland (hereinafter ‘Suinno‘) represented by attorney at law Petri Eskola, Backström & Co Attorneys, Helsinki, Finland R ESPONDENT (CLAIMANT IN THE COUNTERCLAIM FOR REVOCATION PROCEEDINGS BEFORE THE COURT OF FIRST INSTANCE ) Microsoft Corporation, Redmond, United States (hereinafter ‘Microsoft‘) represented by Prof. Dr. Tilman Müller-Stoy, attorney at law, Bardehle Pagenberg, Munich, Germany P ATENT AT ISSUE EP 2 671 173 P ANEL AND DECIDING JUDGES Panel 2 Rian Kalden, presiding judge and legally qualified judge Patricia Rombach, legally qualified judge and judge-rapporteur Ingeborg Simonsson, legally qualified judge Steven Kitchen, technically qualified judge Udo Matter, technically qualified judge UPC Court of Appeal UPC CoA 21/2026 2 IMPUGNED D ECISION OF THE COURT OF FIRST INSTANCE Decision of the Paris Central Division of 7 January 2026 in the counterclaim for revocation proceedings UPC CFI 433/2024 (CC 43155/2024) L ANGUAGE OF THE PROCEEDINGS English SUMMARY OF FACTS 1. Suinno is proprietor of the patent at issue. Suinno lodged an infringement action against Microsoft before the Paris Central Division. Microsoft lodged a counterclaim for revocation. 2. The Central Division ordered Suinno to provide security for costs for the infringement proceedings. Due to Suinno’s failure to pay the security for costs with regard to the infringement action, an application for a decision by default was filed by Microsoft and was ultimately granted by the Court of Appeal (12 July 2025, UCP CoA 363/2025). 3. Following the (final) dismissal of the infringement action, on November 6, 2025 (UPC CFI 724/2025) Suinno was ordered by the Central Division Paris to reimburse Microsoft for costs incurred in the infringement proceedings in the amount of EUR 350,000 within three weeks. Suinno lodged an application to grant leave to appeal pursuant to R. 221 RoP against the cost decision, which was denied by the Court of Appeal on 24 December 2025 (UPC CoA 911/2025). To date, Suinno has made no payment to Microsoft. 4. The Central Division Paris denied the request for stay in the counterclaim for revocation proceedings with order of 30 September 2025, and the proceedings relating to the counterclaim for revocation continued. With the impugned decision, the Central Division revoked the patent at issue in its entirety with regard to the territories of the Contracting Member States in which it has effect and ordered Suinno to bear the costs of Microsoft in the counterclaim proceedings. 5. Suinno appealed the impugned decision. 6. On 24 March 2026, Microsoft filed an application for a stay of proceedings pursuant to R. 295 RoP and an application for security for legal costs pursuant to R. 158 RoP. 7. On 31 March 2026 (UPC CFI 544/2026), the CFI determined the costs incurred by Microsoft Corporation in the counterclaim for revocation action proceedings to be EUR 300,000 and ordered Suinno to pay these costs within three weeks. 8. On 7 April 2026 the Court of Appeal ordered Suinno to provide a security for costs to Microsoft in an amount of EUR 600,000 either by deposit or bank guarantee issued by a bank licensed in the European Union, within 3 weeks form the date of service of this order and extended the time period for lodging the Statement of response until 19 June 2026 (hereinafter “security order”). 3 P ARTIES’ REQUESTS 9. Essentially Suinno requests - that the security order is revoked in its entirety, in the alternative that the security order is corrected so that no security is required, in the alternative the amount be lowered to EUR 3,000, in the alternative to EUR 6,000, in the alternative in the low tens of thousands, or EUR 60,000 as a maximum; - the time limit for providing security, if any, be extended pursuant to Art. 9(3) RoP until a reasonable time after the requests in the application have been decided. - Refer the following questions to the CJEU for a preliminary ruling: 1) Is the interpretation of Art. 69(4) UPCA, according to which the applicant must provide security for the defendant’s costs upon the defendant’s request whenever it is uncertain whether the applicant will be able to pay the costs, compatible with EU law, specifically the Charter of Fundamental Rights, the Enforcement Directive, or the TRIPS Agreement? 2) What other criteria should be taken into consideration especially in view of not requiring security despite a lack of financial resources of the applicant, in situations other than those of Art. 56-62 UPCA? 3) Can the patent owner’s right to appeal be denied solely based on lack of security of cost? P ARTIES’ SUBMISSIONS 10. Essentially, Suinno submits the following. - The security order is erroneous and in breach of Art. 69(4) UPCA, the Enforcement Directive and the Charter of Fundamental Rights of the European Union, specifically Art. 17 and 47 thereof. - The purpose and content of Art. 69(4) UPCA is that a security for costs should be provided in the situations according to Art. 59-62 UPCA. - A security for legal representation costs is an exception that should apply only in specific situations. For example, when one party causes the other party costs that are unrelated to resolving the substance of the action. - The case law of the Court ignores that Art. 69(4) UPCA provides that the Court is obligated to consider the case in it’s entirety (“may order”). This involves considering the questions as to whether an infringement claim or validity defence prima facie appear well-frounded, and the requested security commensurate in its amount to the substantive work required to resolve the matter on a bare minimum basis. - The UPC and Court of Appeal (CoA) set the amount of security solely based on the ceiling, and what the world’s richest entities may pay. - Suinno remains the defendant. This action is solely driven by the counterclaimant Microsoft, after Suinno’s infringement action was dismissed by a default decision. This appeal is no longer a consequence of the infringement action of Suinno, which was dismissed, but a sole choice of Microsoft. The reasoning of the security order is incorrect. After August 2025 Microsoft has not been a defendant, neither is Suinno a claimant. Suinno was forced to give up its sole claim. - Art. 69 (4) UPCA refers to the applicant which is the original applicant for the purposes of appeal as well. 4 - In the cases referred to in the security order, Hefei and Aorticlab were alleged infringers and not defending a patent. - In AorticLab v Emboline (para. 21), it is confirmed by the CoA that the Enforcement Directive does not support a security at the request of the claimant. - The security order has multiple errors. Microsoft confirmed that the revocation counterclaim was continued of its sole initiative. - The impugned order cannot be presumed correct. The CFI admits that factually they were misled by Microsoft (see cost decision points 8-10). - Suinno did object to the amount of the security. - The total costs to Microsoft will be less than Euro 6,000. - The defendant has to show the incorrectness of the impugned decision, as Suinno did in the Grounds of appeal. G ROUNDS A. Application to revoke the security order 11. The application to revoke the security order is admissible but has no merit. 12. Pursuant to R. 335 RoP the power of the Court to make a case management order includes the power to vary or revoke such order. According to R. 336 RoP the Court may exercise its case management powers on the application by a party or of its own motion, unless otherwise provided. An order on security for costs pursuant to R. 158 RoP is a case management order (CoA, 14 January 2025, UPC CoA 651/2024, Total Semiconductor v Texas Instruments, para. 14). 13. The reasons given by Suinno do not justify revoking the security order. Requirements for a security order 14. Contrary to Suinno’s opinion, Art. 69(4) UPCA does not only apply to cases referred to in Art. 59-62 UPCA. The reference to these cases in Art. 69(4) UPCA is not exhaustive, as is clear from the wording (“in particular in the cases referred to Articles 59 to 62”). Nor does Art. 69(4) UPCA suggest that the requirement to provide security for costs should be the exception. 15. The purpose of security for costs under Art. 69(4) UPCA is to protect the opposing party from difficulties in enforcing a claim for reimbursement of costs. This justifies to order security for costs if the financial position of the claimant/appellant gives rise to a legitimate and real concern that a possible order for costs may be recoverable and/or the likelihood that a possible order for costs by the UPC may not, or in an unduly burdensome way, be enforceable (see CoA, 17 September 2024, UPC CoA 218/2024, Volkswagen v Network, para. 7). Suinno does not argue that these conditions are not met in this case. 16. There are also no concerns regarding the security order under the Enforcement Directive (Directive 2004/48/EC). It does not contain any provisions regarding security for legal costs. To avoid repetition, reference is made to the order of 20 June 2025 (UPC CoA 393/2025, AorticLab v Emboline, para. 19). 17. Also the TRIPS Agreement does not contain any provisions regarding security for legal costs. 5 18. The Charter of Fundamental Rights also does not give rise to any concerns regarding security for legal costs. According to Art. 17(2) of the Charter intellectual property shall be protected. Pursuant to Art. 47 of the Charter everyone whose rights and freedoms guaranteed by law of the Union are violated has the right to an effective remedy before a tribunal in compliance with the conditions laid down in this Article. It is apparent from Art. 52(1) of the Charter that the right to effective judicial protection is not an absolute right and may be restricted, in particular in order to protect the rights and freedoms of others (CJEU, 19 December 2019, C-752/18, Deutsche Umwelthilfe v Freistaat Bayern, para. 44). The need to protect the opposing party from the risk of costs becoming irrecoverable justifies the requirement for security for costs. The interests of both parties must be weighed up within the scope of the court’s discretionary decision. 19. With regard to the other arguments put forward by Suinno, reference is made to the grounds set out in the security in order to avoid repetition. Amount of the security 20. In its reply to the application for security for costs, Suinno did not raise any specific objections to the amount of the security for costs. The newly put forward arguments are therefore belated and cannot justify a revocation of the security order pursuant to R. 335 RoP. B. Referral to the CJEU 21. The CJEU has no jurisdiction to give a preliminary ruling where a legal situation does not come within the scope of EU law. Therefore, provisions of the Charter that may be relied upon by the Court cannot, of themselves, form the basis for such jurisdiction (see CJEU, Recommendations to national courts and Tribunals in relation to the initiation of preliminary ruling proceedings, para. 10). For there to be jurisdiction, the request for a preliminary ruling must concern a rule of EU law other than the Charter applicable to the case in the main proceedings. 22. It is beyond reasonable doubt that the EU law, the Enforcement Directive and TRIPS agreement, do not prevent the imposition of a security for costs order. For this reason alone, a referral to the CJEU is out of the question. C. Extension of time period 23. There are also no grounds for extending the time period for providing security. Although the Court has the power to revoke or amend an order for security for costs under R. 335 RoP, applicants cannot usually rely on the Court granting an application for revocation or amendment. The application for an extension must be rejected. O RDER The Court of Appeal rejects Suinno’s applications. 6 Issued on 28 April 2026 Rian Kalden, presiding judge and legally qualified judge Patricia Rombach, legally qualified judge and judge-rapporteur Ingeborg Simonsson, legally qualified judge Steven Kitchen, technically qualified judge Udo Matter, technically qualified judge

Key Holdings

• Security for costs serves to protect opposing parties from being unable to recover costs, and Article 69(4) UPCA applies broadly to this principle.
• Fundamental rights (Articles 17(2) and 47 of the Charter of Fundamental Rights) are not absolute and can be restricted to protect the rights and freedoms of others.
• Arguments challenging the amount of security for costs must be made timely; late arguments will be rejected.
• The weak financial status of a claimant is not a valid reason for setting a low security amount.
• Litigation in the UPC requires sufficient funding; shell companies or parties without adequate assets cannot effectively pursue claims, as default judgments or high security orders can result.

Tags

• Security for Costs
• Appeal
• Default Judgment
• Costs
• Fundamental Rights
• Enforcement
• Litigation Funding

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