Düsseldorf Local Division UPC_CFI_26/2024

Order

of the Court of First Instance of the Unified Patent Court issued on 15 June 2025 concerning EP 3 110 069 B1

CLAIMANT:

Headwater Research LLC , represented by the Member of the Managing Board, Mr. Dr. Gregory Raleigh, 110 North College Avenue, Suite 1116, Tyler, TX 75702, USA

represented by:

Dr. Michael Schneider and Jochen Ehlers, EISENFÜHR SPEISER, Gollierstraße 4, 80339 Munich, electronic address for service:

mschneider@eisenfuhr.com

DEFENDANTS:

Samsung Electronics GmbH , represented by its CEO Man Young Kim, Am Kronberger Hang 6, 65824 Schwalbach/Taunus, Germany, Samsung Electronics France, S.A.S. , represented by its CEO Menno Van Den Berg, 6 Rue Fructidor, CS 2003, 93400 Saint-Quen-Sur-Seine, France, Samsung Electronics Benelux B.V. , represented by its CEOs Choon Young Park, Ji Hoon Lee and Jeewook Kim, Evert van de Beekstraat 310, 1118 CX Schiphol, The Netherlands, Samsung Electronics Co. Ltd. , represented by its Chairman Mr. Lee Jae-yong, 129, Samseongro Yeongtong-gu Suwon-si, Gyeonggi-do 16677, Republic of Korea,

all Defendants represented by:

Dr. Martin Köhler, Hoyng ROKH Monegier, Steinstraße 20, 40212 Düsseldorf, electronic address for service:

PATENT AT ISSUE:

European patent n° 3 110 069 B1

PANEL/DIVISION:

Panel of the Local Division in Düsseldorf martin.koehler@hoyngrokh.com

DECIDING JUDGES:

This order is issued by Presiding Judge Thomas, by the legally qualified judge Dr Thom acting as judge-rapporteur, the legally qualified judge Agergaard and the technically qualified judge Augarde.

LANGUAGE OF THE PROCEEDINGS: English

SUBJECT OF THE PROCEEDINGS: Patent infringement action - R. 158 RoP application for security for costs

PARTIES' REQUESTS

Defendants request the Court

to order Claimant to provide within 6 weeks security for legal costs and other expenses incurred by the Defendants which the Claimant may be liable to bear in the amount of EUR 400.000,00, to issue a decision by default against the Claimant if the Claimant fails to provide adequate security within the time limit set by the Court.

Claimant requests that the Court the application is dismissed.

BACKGROUND AND SUMMARY OF FACTS

Claimant's claims for infringement (ACT_3932/2024) and Defendants have filed a counterclaim for revocation (CC_35641/2024). The value of the proceedings has not been set by the Court but the Claimant has proposed a value of the infringement procedure of EUR 3 million. The Defendants propose that the value of the counterclaim should be at least the same as the infringement action.

SUBMISSIONS OF THE PARTIES

Defendants argue that enforcing a potential cost order against the Claimant would be unduly burdensome for the Defendants as the Claimant has its registered offices in Tyler, Texas in the United States of America, which has not ratified any international agreement regarding the recognition of foreign judgments. The office´s address provided by the Claimant belongs to an office building that is used by a large number of companies. As the Claimant is a non-practicing entity (NPE) without operative business and having several cases pending before the UPC, national and US courts, it bears a significant financial risk. There is no publicly available information about the Claimant´s assets and financial situation and the investor funds are likely not available for cost reimbursement.

Claimant argues that mere foreign domicile does not warrant such an order but a demonstrable risk of non-enforceability of costs and/or concrete indications of financial instability are required. It is commonplace in the United States of America to enforce foreign judgments. Furthermore, the Defendants are well acquainted with the identity of the Claimant, including its address and place of incorporation. The US legal systems provides for safe and reliable measures to serve orders of the UPC to US residents. There is no insolvency risk, the Defendants failed to present tangible facts therefore. The Claimant is registered owner of large patent portfolio, currently involving 96 patent families worldwide, including 59 active patents and patent applications registered with the EPO. In particular, the patents valid under the EPC would form a substantial security asset in the EU that

creditors would have access to. The Claimant generates recurring revenues from monetizing its portfolio through granting licenses worldwide.

GROUNDS OF THE ORDER

Based on Article 69(4) of the Agreement on a Unified Patent Court (UPCA), at the request of the defendant, the Court may order the applicant to provide adequate security for the legal costs and other expenses incurred by the defendant which the applicant may be liable to bear, in particular in the cases referred to in Articles 59 to 62 UPCA.

According to R. 158.1 of the Rules of Procedure of the UPC (RoP), at any time during proceedings, following a reasoned request by one party, the Court may order the other party to provide, within a specified time period, adequate security for the legal costs and other expenses incurred and/or to be incurred by the requesting party, which the other party may be liable to bear. Where the Court decides to order such security, it shall decide whether it is appropriate to order the security by deposit or bank guarantee.

The Defendants base their request merely to the argument that it would be unduly burdensome for them to enforce a cost decision against the Claimant and the allegation that, they believe Claimant will not have adequate financial means to cover the legal costs and other expenses it might be liable for.

The Court of Appeal of the UPC (CoA) has on its order 29 November 2024 (UPC_CoA_548/2024, APL_52969/2024 - Aarke v SodaStream) ruled that, when deciding on a request for security for costs, it is not required that it is proven that enforcement is impossible. It is sufficient for a defendant to establish that enforcement of a cost order is unduly burdensome. The burden of showing this is on the applicant of an order for security for costs. To this end, the applicant shall not only provide evidence as to the foreign law applicable in the territory where the order shall be enforced, but also its application. The Defendants have not provided evidence of the applicable foreign law, just an argument about such, nor have they provided evidence about the application of such law. The Claimant argues that the enforcement of UPC orders and decisions is not unduly burdensome in the United States of America. The Court finds already based solely on the above that the Defendants have not provided sufficient evidence for the application for security for costs to be accepted. Furthermore, the Court notes that, according to the UPC case law, US courts routinely recognise and enforce judgments of foreign courts (Local Division Munich, 23 April 2024, UPC_CFI_514/2023, ORD_12227/2024 - Volkswagen v Network System).

Furthermore, the Defendants have failed to submit any substantiating facts indicating a tangible risk of insolvency. In particular being an NPE as such is not sufficient to give rise to a risk of insolvency of the Claimant. In contrast, Claimant has explained that it owns a large portfolio of 95 patent families worldwide, half of them registered in the EU. Claimant undisputedly generates recurring revenue by granting licenses worldwide. The fact, that the Claimant enforces its patent rights in various legal disputes is per se no reason, why the Claimant may not be able to cover legal costs. Moreover, the Claimant has access to funds from third party investors in its business model and therefore has access to diverse financial resources. Claimants also confirms that it does not need to rely on a specific litigation funding agreement in order to cover cost risk associated with the present case.

Therefore, the Defendants fails to demonstrate a lack of financial capacity on part of the Claimant.

ORDER:

The request for security for costs is dismissed.

Issued in Düsseldorf on 15 June 2025

NAME AND SIGNATURE

Presiding Judge Thomas

Legally qualified Judge Dr Thom

Legally qualified Judge Agergaard

Technically qualified Judge Augarde

DETAILS OF THE ORDER:

App_ under main file reference ACT_3932/2024 and CC_35641/2024

UPC number:

UPC_CFI_26/2024

Type of procedure:

Infringement action and Counterclaim for revocation