25/05/2023
The Administrative Committee of the UPC have recently published guidelines for the determination of Court fees and the ceiling of recoverable costs of the successful party in UPC actions.
The guidelines are an attempt to provide a uniform framework for determining case value and to provide simple and practical guidance on value determination. Indeed, they note that the most practicable method for determining the value of an action for determining the value-based fee would be by determining an appropriate licence fee. On the other hand, when having to determine the value of a case at the beginning of proceedings, such as when determining the Court fee, basing it on lost profits of the claimant (or profits gained by the defendant) may be considered too complex for that stage of proceedings.
Three guiding principles for the Court are set out:
(i) The method of determining a value-based fee should be as simple as practically possible.
(ii) The valuation should relate to the sum of the values of the (main) remedies claimed.
(iii) The valuation should be based on the parties’ valuation if the parties agree.
The guidelines then set out more detailed steps for calculating the value of infringement and revocations actions, as well as actions for declarations of non-infringement, compensation for licenses of right, and interim relief.
Unsurprisingly, the value of the damages component of an infringement action should correspond to the value of the damages sought. For other components of an infringement action (e.g., injunctions), the value should be calculated as a royalty calculation based on the defendant’s turnover or the market share the defendant has taken or may reasonably be assumed to take, with a royalty rate based on (i) existing licenses of the claimant, (ii) generally accepted industry rates, or (ii) a determination of the Court after hearing the parties.
On the other hand, for revocation actions, the value should be determined having regard to the value of the patent being revoked. This may be assumed to either be the value of an appropriate license fee based on the turnover of the parties for the remaining lifetime of the patent. Alternatively, the value may be based on a royalty calculation based on the defendant’s turnover or the market share the defendant has taken or may reasonably be assumed to take (as in an infringement action) raised by up to 50%.
The values of other types of action are generally suggested to be calculated in line with the value of an infringement action, in some cases with a suggested multiplier.
However, it is important to note that in every case the final decision is down to the relevant judge(s) deciding the issue, and the guidelines make it clear that they are free to deviate from the guidelines as required by the circumstances of a case. Hence, whilst it is always nice to have guidelines, they are still sufficiently vague that their practical implementation will undoubtedly be the subject of very heated debate during the infancy of the Court, and it will be interesting to see how the approach of the Court develops.
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.
