The Unified Patent Court (UPC) Court of Appeal has ruled that the claimant, Syntorr, can use their After The Event (ATE) insurance as security for costs.
Background
Syntorr, based in Cyprus, brought patent infringement proceedings before the UPC against the Arthrex companies concerning EP 2 670 898.
Arthrex applied for security for costs before the Munich Local Division, and the Court ordered Syntorr to provide EUR 2 million in security by way of a bank guarantee or cash deposit.
Syntorr sought a discretionary review by the Court of Appeal, arguing that they should be allowed to use their existing ATE insurance, obtained from a Maltese insurer with a EUR 4 million limit of indemnity and an anti-avoidance endorsement as security.
Court of Appeal decision
The Court of Appeal decided that the test is whether the claimant’s financial position gives rise to a legitimate and real concern that a possible costs order may not be recoverable, or may be enforceable only in an unduly burdensome way.
The Court of Appeal held that the ATE insurance formed part of Syntorr’s financial position and so should be considered.
Since the policy was non-voidable and non-cancellable, its terms were intended to benefit Arthrex directly, the policy could be enforced through a straightforward claims mechanism, and the insurer complies with EU regulatory requirements (the Solvency II Directive), the ATE insurance was found to be satisfactory means of security. These were important points that were considered when assessing whether the ATE insurance policy had adequate terms to act as security for costs.
Conclusion
This ruling confirms that ATE insurance policies with adequate terms can be used as security for costs. This is welcome news for companies wishing to pursue UPC litigation but concerned about the financial implications.
If you have any questions about UPC litigation or strategy, please contact our team of UPC experts.
