Maars Holding B.V. and Others v. City Glass and Glazing Private Limited

This order concerns an application by Maars Holding B.V., Maars Partitioning Systems B.V., Maars Projecten B.V., and Maars France (collectively 'Maars'), who are defendants in a patent infringement action and claimants in a counterclaim for revocation, against City Glass and Glazing Private Limited, the proprietor of European Patent EP1651838 and claimant in the infringement proceedings.

Maars requested the Court to order City Glass to provide security for legal costs and other expenses in the amount of at least EUR 49,000, pursuant to Article 69(4) UPCA and Rule 158.1 RoP. Maars argued there was a serious concern about the recovery and enforceability of a possible cost order in its favour because of City Glass' financial situation and because City Glass is based in India.

City Glass opposed the application, arguing that it qualifies as a small or medium enterprise (SME) with limited financial capacity, and that granting security would limit its access to justice and unduly interfere with its right to an effective remedy under Article 47 of the Charter of Fundamental Rights of the European Union. City Glass further argued that granting security would be contrary to one of the objectives of the UPC Agreement, which is to facilitate the enforcement of patent rights for SMEs. Should the Court decide to order security, City Glass requested that the amount be limited to no more than EUR 19,000, that it could select the type of security, and that it be permitted six weeks to provide security.

The Panel considered the application admissible and justified to the extent laid out in the order. The Court noted that under Article 69(4) UPCA and Rule 158.1 RoP, the decision to order security for legal costs is at the discretion of the Court, which must consider the relevant legal framework including EU law, the principle of proportionality, and balance the interests of the parties.

The Court found that imposing security was justified because City Glass is established in India, where the enforcement of UPC orders is not straightforward, creating a real risk that a possible cost order in favour of Maars would not be readily enforceable. The Court also found, based on undisputed financial information provided by Maars, that City Glass' financial situation gave rise to a legitimate concern about recoverability. The Court dismissed City Glass' access to justice argument, noting that City Glass had not substantiated its contention that it would be effectively prevented from pursuing its patent infringement action even with a limited security, and that City Glass has no assets in the EU.

Regarding the amount, the Court noted that Maars' requested EUR 49,000 was based on the ceiling for recoverable costs of EUR 38,000 plus the regular court fee of EUR 11,000. However, the Court found no court fee was payable by Maars in the infringement action, and the court fee for the counterclaim should not be included as it was not initiated by City Glass. Taking into account the need to ensure City Glass could continue pursuing its patent right, the Court determined the security amount at EUR 19,000, which is 50% of the ceiling for recoverable costs.

The Court ordered that the security be provided by deposit on the dedicated UPC account, as requested by Maars, rather than by bank guarantee, to avoid disputes about suitable guarantors and guarantee conditions. City Glass was given six weeks to comply, with a deadline of 29 January 2025. The Court also informed City Glass that a decision by default may be given under Rule 158.4 if security is not provided within the time limit. Finally, the Court dismissed Maars' request for leave for interim appeal, finding it unnecessary to ensure consistency of interpretation of the Rules of Procedure given the guidance already available.