UPC Administrative Committee publishes guidance on case valuation methods, costs ceilings and court fees

The value of a case before the UPC will be determinative of court fees and the applicable ceilings for recoverable costs. So the UPC Administrative Committee's publication of guidance on the determination of the value of a case before the UPC, alongside guidance on the scale of ceilings for recoverable costs, is welcome.  A table of court fees, including fixed fees and additional value-based fees, had already been published last year.

Summary

In order to determine the court fees and also the ceilings on costs that apply the value of the case must also be determined:

• • UPC court fees, are made up of fixed fees plus an additional value-based fee, so the valuation of the case is an important element.
  • Costs ceilings are also set based on the value of the claim basis

The guidance states that "The most practicable method, in most cases, will be a valuation based on an appropriate licence fee". The various guidances for each type of claim or case set out means for calculating value, but the guidance says that the ways it suggests that value is calculated are just one way of doing it: "The Guidelines do not interfere with the liberty of judges to apply in a given case other methods which may be required by the circumstances of the case." So we must understand this to mean that the guidance would not prevent the judge using other criteria/assessments in particular circumstances.  See more on this guidance below.

The scale of ceilings for recoverable costs of representation was previously set out in draft form back in 2016 (published on the UPC preparatory committee's website which was withdrawn once the new UPC website was established).  The draft has now been confirmed at the same rates as set out in 2016. The guidance states that the ceilings will be reviewed after 2 years (from 25 April 2023) and then every three years.

There are also provisions to allow the ceiling to be raised or lowered and details about how quickly parties need to apply to the court on changing ceilings (up or down).  The request to raise or lower the ceiling will be dealt with by the Court without delay after having heard the parties and at the latest before closure of the interim procedure (see more on this procedure below).

What is the value of the case – needed for both the court fee and the costs ceiling

The statements published set out "non-binding guidance" for the UPC judges on how to assess the value of a claim, which will be needed in order to determine the Court fees and also the costs ceiling to be applied.

The guidance states that "the method of determining a value-based fee should be as simple as practically possible. The most practicable method, in most cases, will be a valuation based on an appropriate licence fee".

"A valuation based on the claimant’s loss of profits or the defendant’s profits gained may also be applied, where appropriate, but will normally be too complex to be determined at the beginning of proceedings resulting in a mini-trial".

Further, the valuation should relate to the summed up values of the main remedies claimed (injunction for the future, damages for the past), not excluding, where appropriate, the value of other remedies claimed.  Where the parties agree on a valuation the Court should in principle base its valuation on their estimate.

The guidance sets out specific approaches to particular actions: infringement actions, counterclaims for revocation and revocation actions, actions for DNI, actions for compensation for licences of right, and interim relief pursuant to Art 62 UPCA (provisional and protective measures).

For example, a calculation of the value of the injunction claim and the damage claim should, the guidance says, be based on a royalty calculation as follows:

(1) The defendant’s turnover in the alleged infringing product for the future up to the expiry of the patent (injunction claim) and for the past (damage claim) should be calculated based upon the known existing turnover of the defendant or, if not known or not yet existent, the market share the defendant has taken and/or may reasonably be assumed to take.

(2) A royalty rate should be applied to (1) based upon:

(i) the existing royalty rate for the same invention charged by the claimant, or

(ii) the generally accepted industry rate for the type of invention in question, or

(iii) a royalty rate determined by the Court after hearing the parties.

(3) Where a damage claim

(i) is limited to awarding damages in principle, the value of that claim (pursuant (1)) should be reduced by 50%;

(ii) specifies the amount of damages, the value should correspond to the amount claimed.

Ceilings on recoverable costs

The draft guidance previously issued on ceilings on recoverable costs back in 2016 has now been accepted and formalised.

Recoverable costs that come from representation have a ceiling as set out in the table below.

The publication states that the ceiling will be applied to each instance of the Court proceedings regardless of the number of parties, claims or patents concerned, and that in a case of partial success, the ceiling applicable in the case will correspond to the proportion of success of the party seeking cost recovery.

Limited situations are contemplated where, for example because of the particular complexity of the case or multiple languages used in the proceedings, the Court may upon request by one party, having regard to the financial capability of all the parties in the light of the principle of fair access to justice, raise the ceiling laid down in the table:

• by up to 50 % of the applicable level in the scale corresponding to a value of the proceeding up to and including EUR 1 million;
• by up to 25 % of the applicable level in the scale corresponding to a value of the proceeding of more than EUR 1 million and up to and including EUR 50 million;
• up to EUR 5 million in cases with a value of the proceeding of more than EUR 50 million.

As mentioned above there are also provisions dealing with reduction in the costs ceiling:

• Upon request of one of the parties, the Court may lower the ceiling applicable with regard to that party if, in the event that the requesting party is unsuccessful, the amount of re-coverable costs of representation to be awarded to the successful party would threaten the economic existence of the requesting party, in particular if the latter is an SME, non-profit organisation, university, public research organisation or natural person.
• When deciding upon a request to lower the ceiling, the Court will take into consideration the circumstances of the case and all available information on the parties, including, where possible, the procedural behaviour of the parties, the applicable level of the ceiling for recoverable costs in comparison with the annual turnover of both parties, the type of economic activity of both parties, as well as the impact the lowering of the ceiling would have on the other party.

A request to raise or lower the ceiling must be made as soon as possible and practicable in the proceeding. This may be with the Statement of claim by the plaintiff, or with the Statement of defence by the defendant but the guidance says it must be lodged in sufficient time to enable the Court to make a decision before the closure of the interim procedure. The request must also include all reasonably available evidence.

Table of ceilings of recoverable costs

For more on the UPC visit our UPC Hub and read our UPC blog post series.

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