Short Summary
This procedural order from the Local Division Munich of the Unified Patent Court concerns a request for security for costs in a patent infringement action involving European patent EP 3 878 161 B1. The defendants requested that the claimant Iagon provide security for costs of EUR 112,000, citing concerns about Iagon's financial position and the enforceability of any cost order in the United Arab Emirates. The court rejected the defendants' request, finding that the defendants had not sufficiently credibly demonstrated that Iagon's financial position or the enforceability of a cost order in the UAE justified ordering security for costs.
Detailed Summary
IAGON LTD, a company registered in Ras Al Khaimah, United Arab Emirates, initiated a patent infringement action against four defendants, including Influx Technologies USA LLC and Influx Technologies Limited, before the Local Division Munich of the Unified Patent Court concerning European patent EP 3 878 161 B1. The defendants jointly requested that the court order Iagon to provide security for costs in the amount of EUR 112,000, either by deposit or by a bank guarantee issued by a bank licensed in the European Union, within one month from the date of service of the order. Iagon opposed the request, asking the court to reject it or, in the alternative, to reduce any security ordered to an appropriate amount.
The defendants argued that there was a considerable risk that Iagon lacked sufficient liquidity to reimburse the costs of the proceedings and that enforcement of any cost order would be disproportionately burdensome. They pointed to Iagon's registered office in Ras Al Khaimah, UAE, noting that the UAE does not provide a publicly accessible company register and has no current agreements with the EU to simplify service or enforcement of court decisions. They relied on Iagon's MiCA White Paper, which showed that Iagon was established in 2024, had not undergone any audit, and had modest revenues relative to expenditures. They also referenced the financial distress of the Norwegian company IAGON AS, which shared the same CEO as Iagon, according to its 2022 annual accounts.
Iagon countered that there was no legitimate and real concern regarding the recoverability of any costs order and that no impediment to enforcement had been demonstrated. Iagon argued that its MiCA White Paper, issued on 12 November 2025, showed that its financial resources were sufficient to sustain operations for 36 months, that it had no material outstanding liabilities, and that it faced no financial risks regarding its long-term viability. Iagon further contended that IAGON AS was a legally distinct company and that the 2022 financial information was outdated. Regarding enforcement, Iagon submitted reports indicating that the UAE had a steadily improving and functioning enforcement regime for foreign monetary judgments.
The court applied the legal framework under Article 69(4) UPCA and Rule 158.1 RoP, noting that the ordering of security for costs is a discretionary decision. The court explained that while the burden of substantiation initially lies with the applicant, once credible reasons and facts are presented, it is up to the other party to challenge them in a substantiated manner. The court also noted that the mere fact that a party has its registered office outside the EU or EEA, or that its financial situation is not fully known, is not in itself sufficient to justify an order for security for costs, and that proof of actual insolvency is not required.
On the financial position, the court acknowledged that the MiCA White Paper indicated some concern due to Iagon's recent establishment, lack of audit, and modest revenues relative to expenditures. However, the court found that the same document showed Iagon had sufficient resources to support operations for 36 months with no outstanding liabilities, and that the outdated 2022 information about IAGON AS concerned an affiliated, legally distinct company. The court therefore concluded that the defendants had not presented in a sufficiently credible manner that security for costs was appropriate based on Iagon's financial position.
On enforceability, the court recognized that Iagon's registered office in the UAE, a non-EU/EEA country, was a relevant factor. However, the court found that the defendants had not provided concrete examples of actual difficulties enforcing cost orders in the UAE, while Iagon had referred to reports indicating that monetary claims were generally enforceable there. The court therefore concluded that the defendants had not sufficiently substantiated that enforcement would be unduly burdensome.
Ultimately, the court rejected the defendants' request for security for costs in its entirety, finding that the defendants had not presented in a sufficiently credible manner that such an order was appropriate based on either Iagon's financial position or the enforceability of a cost decision. The order was issued on 2 September 2026 by Judge-Rapporteur Daniel Severinsson, with the possibility of panel review under Rule 333 RoP.
Practitioner Note
This case demonstrates the evidentiary and procedural standards applied in patent matters before UPC Court. Understanding the court's reasoning in IAGON LTD vs Influx Technologies USA LLC and Others is valuable context for structuring arguments or assessing risk in similar proceedings.
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