Prerequisites for Penalty Payments: The Court of Appeal on Rule 354 RoP Enforcement
The Court of Appeal clarifies the strict procedural sequence for imposing penalty payments under Rule 354 RoP. A formal penalty order in the operative part of a decision is an absolute prerequisite for enforcement.
The doctrinal framework governing the enforcement of Unified Patent Court orders has required careful navigation as early decisions test the boundaries of the Rules of Procedure. The exact prerequisites for imposing financial penalties for non-compliance have now been clarified by the Court of Appeal in UPC_CoA_699/2025, resolving a critical tension between advance warnings and retrospective enforcement.
Why did the Local Division Mannheim impose penalties without a prior order?
The dispute arose after Fujifilm Corporation successfully sued Kodak for infringement of EP 3 511 174. The Local Division Mannheim issued a final decision granting an injunction, which included an explicit order for the payment of a penalty in case of non-compliance.
However, the situation differed for the ancillary orders. The Court granted requests for the provision of information, destruction, recall, and removal from channels of commerce. For these specific measures, the Local Division exercised its discretion not to set a fixed time period or an upfront penalty amount. The panel reasoned in its grounds that the comprehensiveness of the information rendered is sufficiently ensured by the possibility of severe penalties to be imposed later.
When Fujifilm subsequently alleged non-compliance and filed an enforcement notice, the Local Division ordered Kodak to pay a €100,000 lump sum plus daily penalties. Kodak appealed, arguing that penalties could not be imposed under Rule 354.4 RoP without a formal penalty order having been issued first.
Does Rule 354.4 RoP permit penalties based only on the grounds of a decision?
The Court of Appeal sided with the appellants on the procedural mechanics of enforcement. The panel established that any order to pay any penalty sum in enforcement proceedings pursuant to this Rule, must be based on a prior penalty order having been made, either in the operative part of the main decision or order, or of a further order or decision to that effect.
Crucially, the Court of Appeal held that it is insufficient if the Court only in the grounds for its order or decision referred to the possibility that upon non-compliance of any order a penalty may be imposed. A claimant cannot simply send an enforcement notice or allege non-compliance to trigger payments. A formal penalty order under Rule 354.3 RoP is a strict prerequisite.
How must claimants set deadlines when the Court leaves them open?
Because the Local Division had not set a fixed time period for the provision of information, the parties disputed whether Kodak was in default. The Court of Appeal clarified that in the rare case that no time period is specified in the decision, it is the responsibility of the claimant to set a time period for compliance.
If the defendant disputes the reasonableness of this timeline, the Court determines a reasonable period based on party submissions during enforcement proceedings. The panel noted that this judicially determined time period applies retrospectively. A time period that is too short simply triggers the commencement of a reasonable period as established by the Court.
When is a certified translation required under Rule 118.8 RoP?
Kodak also challenged the enforcement notices on procedural grounds, arguing they lacked the translations required by Rule 118.8 RoP. The Court of Appeal rejected this argument by drawing a sharp distinction between enforcement mechanisms.
The panel ruled that a translation is required only for orders the claimant actually wishes to enforce via national authorities, such as a local bailiff. Orders that are only enforced by means of the possible forfeiture of a penalty sum do not require translation, since this enforcement is effected directly through the Unified Patent Court. The Court also confirmed that service of an enforcement notice is validly executed through upload to the Case Management System, without requiring separate postal service by the Registry.
What must litigators change when drafting requests for relief after UPC_CoA_699/2025?
Claimants can no longer rely on general warnings tucked into the reasoning of a judgment. Practitioners must explicitly request a penalty order under Rule 354.3 RoP for every single substantive measure they seek, including ancillary orders for information and destruction.
Furthermore, the application must include suggested penalty amounts and specific time periods for compliance. For defendants, the decision confirms that the burden of proof that a penalty reinforced order has been fully and timely complied with lies squarely with them. Defendants must proactively provide a substantiated account of their compliance measures rather than waiting for the claimant to initiate enforcement proceedings.