Short Summary
Advanced Standard Communication LLC (ASC) sought discretionary review of an order by the Munich Local Division requiring it to provide security for costs in its patent infringement action against Xiaomi entities. The Court of Appeal, sitting as a standing judge, rejected the request for discretionary review as not demonstrating manifest error, and also rejected the application for suspensive effect as having become devoid of purpose.
Detailed Summary
Advanced Standard Communication LLC (ASC) filed an infringement action before the Munich Local Division of the Unified Patent Court against several Xiaomi entities (XIAOMI Inc., XIAOMI Communications Co., Ltd., XIAOMI Technology Netherlands B.V., and XIAOMI Technology Germany GmbH), alleging infringement of European patent EP 3 016 464. Xiaomi filed a Statement of defence arguing that ASC was required under antitrust law to grant a licence on Fair, Reasonable and Non-Discriminatory (FRAND) terms, and also filed a counterclaim for revocation of the patent. Xiaomi additionally filed a request for security for costs.
By an order of the judge-rapporteur dated 24 March 2026 (served on 27 March 2026), the Munich Local Division ordered ASC to provide security for costs within eight weeks of service. ASC applied for review of that order by the panel, which was rejected without granting leave to appeal by order of 23 April 2026 (the Impugned Order). ASC then filed a request for discretionary review under R. 220.3 RoP before the Court of Appeal, seeking to set aside the Impugned Order and dismiss Xiaomi's request for security for costs, or alternatively to order security only unless ASC provided proof of litigation insurance. ASC simultaneously filed an application for suspensive effect under R. 223 RoP.
The Court of Appeal, presided over by Standing Judge Peter Blok, addressed both requests. On the request for discretionary review, the Court applied the established standard requiring consideration of whether the impugned order is manifestly erroneous or raises a fundamental question of law necessary for consistent application of the Rules of Procedure. The Court found that ASC merely presented reasons why it believed the order was incorrect but failed to demonstrate that any alleged errors were manifest. Specifically: (1) ASC failed to show that the Munich Local Division erred in finding Xiaomi had met the burden of presenting facts and evidence supporting a risk of cost recovery; (2) the fact that Xiaomi had submitted a licence offer and provided a bank guarantee did not render the Local Division's findings manifestly erroneous, since ASC did not accept the offer and the conditions for bank payment were not met; and (3) the Local Division did not err in rejecting ASC's alternative request regarding litigation insurance, as ASC could and should have obtained such insurance prior to the impugned order.
On the application for suspensive effect, the Court held that under R. 223 RoP, pending a request for discretionary review, the standing judge may decide an application for suspensive effect since the case is assigned to the standing judge at that stage under R. 220.4 RoP. The Court further interpreted ASC's reference to the expiring time limit as an application under R. 223.4 RoP. However, the application was rejected as having become devoid of purpose, since the request for discretionary review itself was being rejected, meaning there would be no appeal that could suspend the impugned order. Xiaomi's request for an extension of time to respond was also dismissed, as the time limit for compliance with the judge-rapporteur order expired on 22 May 2026, necessitating a prompt decision. The final order, issued on 19 May 2026, rejected both the request for discretionary review and the application for suspensive effect.
Practitioner Note
This case demonstrates the evidentiary and procedural standards applied in patent matters before Munich Local Division. Understanding the court's reasoning in Advanced Standard Communication LLC vs Xiaomi Inc. and Others is valuable context for structuring arguments or assessing risk in similar proceedings.
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