Liability Risks Before the UPC: How U.S. Companies Need to Prepare

UPC Munich

In less than 2.5 years, the Unified Patent Court (UPC) has established itself as a hallmark for high-profile patent litigation. This venue is a reality that U.S. companies need to be aware of (and in case such awareness was not yet present, definitely need to wake up to). Why? U.S. companies are “at both sides of the v” before the UPC. On both the offensive and defensive sides, U.S. companies are in the top tier when it comes to “who sues” and “who is sued” before the UPC.

Below are the 10 most important questions that define liability risks before the UPC, both from a defendant’s and a plaintiff’s perspective. These questions will be put into perspective and compared to U.S. district court and International Trade Commission (ITC) litigation. Also below the video of my presentation on this same topic from the 4th Annual IPWatchdog Life Sciences Masters™ conference, which was recorded October 28, 2026.

1) Is injunctive relief the general rule or the exception?

The UPC Agreement is clear: where a decision finds an infringement of a (valid) patent, the court “may” grant an injunction against the infringer. Thus, the court enjoys discretion when awarding injunctive relief. As of today, with over 50 judgments handed down on the merits by the Court of First Instance and the Court of Appeal, there is not a single matter where injunctive relief was denied or watered down (e.g. by use-up periods). Only one case is known (related to preliminary injunctions) where injunctive relief was suspended in relation to one customer of the defendant (Local Division Düsseldorf, Decision of October 31, 2024, UPC_CFI_368/2024 – Valeo Electrification v. Magna). Thus, as of today, before the UPC, injunctive relief is the general rule and not the exception (similar to the ITC).

Nevertheless, proportionality considerations are a foundational part of the EU legislative system, the jurisprudence of the Court of Justice for the European Union (CJEU) and the UPC Agreement itself. Thus, cases will come where the UPC will accept limitations to injunctive relief (e.g. medicinal products where a patient cannot be readily transitioned to a non-infringing alternative, where critical telecom infrastructure is affected, etc.). But to sum it up: there are no “eBay-factors” that would have to be applied before the UPC when deciding on requests for injunctive relief.

2) Preliminary injunctions without proving irreparable harm (injury)?

Applications for interim relief are a standard occurrence at the UPC, and these applications account for about 20% of all UPC traffic. They are independent proceedings, i.e., a separate fast track from proceedings on the merits. The granting of provisional measures is at the discretion of the Court after weighing the interests of the parties (Art. 62(1) UPC-Agreement, R. 211.3 Rules of Procedure). In this context, the relationship between the proceedings on the merits and PI proceedings must be taken into account. From a procedural point of view, the main proceedings are the rule, whereas summary preliminary injunction proceedings are the exception.

The question must therefore be asked whether the granting of provisional measures is “necessary”. In other words: why is it justified that the patentee “jumps the main action queue”? Irreparable harm is certainly a sufficient, but not a necessary, condition for meeting this test (UPC Court of Appeal, Order of 25 September 2024, UPC_CoA_182/2024 – Mammut Sports v. Ortovox Sportartikel, para. 237; ECJ, Decision of 28 April 2022, C-44/21  – Phoenix/Harting, ECLI:EU:C:2022:309, para. 32). Broadly speaking, it merely has to be assessed whether it is “unreasonable” for the patentee to wait until the conclusion of the proceedings on the merits. Therefore, interim relief is awarded by the UPC in cases of price erosion based on the marketing of the allegedly infringing product, loss of a monopoly (i.e. a situation where a second product enters the market), or congestion of the market due to long-term purchasing decisions of customers.

In a nutshell: in situations where competitors are fighting over market shares there is a decent chance that the UPC considers the grant of a preliminary injunction as being “necessary”.

3) Which territories are covered by a UPC judgment?

The jurisdiction of the UPC is limited to European Patents, i.e. the traditional European Bundle Patents on the one hand and the new European Patents with Unitary Effect (“Unitary Patents”) on the other. According to Art. 34 UPC-Agreement, decisions of the UPC shall cover the territory of those Contracting Member States (CMS) of the UPC for which the European Patent has effect.

Simply put:

• if a Unitary Patent is successfully asserted the UPC-judgment covers all the 18 UPC-States of “UPC Land”, since a Unitary Patents covers as a single right those 18 countries (which include the most important EU states, such as Germany, France and Italy).
• if a traditional European Bundle Patent is successfully asserted, the UPC-judgment can also cover these 18 UPC-States, provided that the patent was validated in those 18 countries (which is mostly not the case, other than in the areas of pharma and life sciences).

This year, however, the Court of Justice of the European Union (CJEU) issued a landmark ruling and de facto upgraded the territorial scope of UPC decisions (ECJ, Decision of February 25, 2025, C?339/22 – BSH v. Electrolux). This territorial upgrade relates to situations where the defendant is domiciled in one of the 18 countries of UPC Land and sued before the Local Division(s) competent for this country (e.g. a German based entity being sued before one of the four Local Divisions of the UPC in Germany, i.e. Düsseldorf, Mannheim, Munich and Hamburg). For such cases, the plaintiff can assert the European Patent for up to 39 countries, namely all Member States of the European Patent Convention, provided that the European Patent was validated in these countries. Thus, under this precedent of Europe’s highest-ranking court, UPC Land was expanded from 18 to 39 countries

This decision is huge, and we have already seen a number of UPC cases where it has been put into practice. The practical relevance predominantly applies to the UK, since over 50% of all European Patents are validated in the UK. Even if it sounds odd, pursuant to this ruling, the UPC can issue an injunction for the UK, and the UPC has already done so (Local Division The Hague, Decision of October 10, 2025, UPC_CFI_386/2024 – HL Display v. BSR).

4) How long does it take to get a first instance and a final decision?

The UPC promised to deliver expeditious, high-quality decisions. This mission is set out in the Rules of Procedure as follows: “Proceedings shall be conducted in a way which will normally allow the final oral hearing on the issues of infringement and validity at first instance to take place within one year.”

The UPC Court of First Instance does, generally speaking, live up to this principle and is delivering its decisions within 12-18 months. However, the second instance (there is no third one at the UPC) is even faster, due to the more limited written procedure, with only one brief for each party. That said, a final UPC decision is available in less than 2.5 years. The first decisions proving this are out, e.g. UPC Court of Appeal, Decision of October 3, 2025, UPC_CoA_534/2024 – Philips v. Belkin. Here, the Statement of Claim was filed on June 1, 2023, before the Local Division in Munich and the final decision of the UPC Court of Appeal was handed down on October 3, 2025.

Compared to U.S. timelines, the UPC is comparable to the ITC, and it is often faster to obtain a final decision before the UPC than to obtain a first instance decision before the U.S. district courts.

5) Is there a bond requirement?

The Rules of Procedure afford discretion to the Court whether to make the enforcement of a judgment subject to the provision of a security. Pursuant to R. 352 RoP, decisions and orders may be subject to the rendering of a security (whether by deposit or bank guarantee or otherwise) by a party to the other party for legal costs and other expenses and compensation for any damage incurred or likely to be incurred by the other party if the decisions and orders are enforced and subsequently revoked.

In the past, the UPC exercised this discretion in a very restrictive manner, since securities were ordered only in about 10% of all main actions and in about 40% of all preliminary injunction proceedings. Thus, a first instance decision is often a final decision and entails the power to take a product off the market in up to 18 countries.

This empirical result is due to the fact that the UPC established a two-prong test. Pursuant to this test, a security is ordered if (i) the financial position of the claimant is insufficient (“good for the money”) or (ii) the enforcement law of the country where the claimant is domiciled gives rise to concern that difficulties would be expected in connection with the enforcement of any possible damages (e.g. Local Division Munich, Order of September 19, 2023, UPC CFI 2/2023; Order of August 27, 2024, UPC_CFI_74/2024). The request for enforcement security must be substantiated by the defendant who bears the burden of proof in this regard.

6) Do UPC injunctions have teeth? What happens if the alleged infringer is in contempt of court?

Winning and enforcing an injunction is one thing – but what happens if the alleged infringer simply ignores the court ruling? The UPC will not tolerate such behavior, which is proven by existing precedents. Generally, the UPC’s decisions and orders provide for periodic penalty payments in the event that a party fails to comply with the terms of the order (cf. Rule 354.3 RoP).

These penalties are payable to the Court (and not the plaintiff). However, this is not decisive. The relevant question is the amount of the penalty payments which shall be set by the Court having regard to the importance of the order in question.

To that end, the following two precedents are interesting:

• Threat of EUR 1k re. each single product put on the market in violation of a permanent injunction by the Local Division Mannheim (Decision of February 6, 2024, UPC_CFI_210/2023 – Panasonic v. Oppo; value in dispute: EUR 50 Mio; attacked embodiments: smartphones and smartwatches)
• Threat of up to EUR 10k re. each single product put on the market in violation of a permanent injunction by the Nordic Baltic Regional Division (Decision of July 21, 2025, UPC_CFI_380/2023 – Edwards v. Meril; value in dispute: EUR 3 Mio; attacked embodiment: delivery device for a transcatheter heart valve)

One final aspect in this regard: the UPC’s penalty orders may be appealed, but such appeal will not have suspensive effect. The UPC Court of Appeal just recently issued a comprehensive order on the system of penalty orders whose detailed headnotes are worth reading (UPC Court of Appeal, Order of 14 October 2025, UPC_CoA_669/2025 – Fujifilm v. Kodak).

7) Are directors personally liable for patent infringement?

Directors of a company are, as a general rule, not liable for patent infringements committed by the company. The situation before the UPC is comparable to the situation in the United States in this respect. However, once the company violates a first instance decision, this general rule can turn into the exception.

On October 3, 2025, the Court of Appeal held in the matter of Philips v. Belkin (UPC Court of Appeal, Decision of October 3, 2025, UPC_CoA_534/2024, UPC_CoA_19/2025, UPC_CoA_683/2024) that the “mere” position of managing director does neither make the director an infringer nor an accomplice or accessory to a company’s patent infringement. A director can only be held liable if the contested action of the managing director goes beyond the typical professional duties as managing director. This is particularly the case if the director deliberately uses the company to commit patent infringements (e.g. one-product companies selling counterfeit drugs). These situations are, however, exceptional scenarios.

Provided that a director seeks legal advice in relation to the alleged patent infringement, the director can generally rely on this advice until a decision has been issued by the Court of First Instance establishing the company’s patent infringement. That said, the director(s) must be very careful once such first instance decision is handed down and enforced. In such a case, any future violation of the first instance decision can not only imply personal liability of the director but could also open up the door for seeking interim relief against the director.

8) What is the range of UPC damages awards?

The range of UPC damages awards is a black box as of today, since not a single decision on the amount of damages has been handed down by the UPC yet. However, this will change over the next 24 months.

What is already clear is that UPC is a one-stop shop for damages. This means that the UPC’s competence to adjudicate damages is as broad as its competence to issue injunctive relief. Thus, for a standard case, the UPC can award damages for patent infringements in up to 18 countries. In the BSH v. Electrolux situations, where the defendant has its domicile in a UPC Contracting Member State, a UPC damages award can cover up to 39 countries. In case of acts of infringement giving rise to damages within the EU by a defendant not domiciled in the EU which has property located in a UPC Contracting Member State, and where the dispute has sufficient connection with a UPC Contracting Member State, the UPC may – if it has international jurisdiction e.g. due to acts of infringement within a UPC Contracting Member State – also exercise jurisdiction in relation to damages arising in EPC Member States outside the EU.

The way damages are calculated is set forth in Art. 68 (3) of the UPC-Agreement:

“When the Court sets the damages:

(a) it shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the injured party by the infringement; or

(b) as an alternative to point (a), the Court may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of the royalties or fees which would have been due if the infringer had requested authorisation to use the patent in question.”

That means that the Court has two methods to set the damages. When comparing the UPC damages system to the present practice in the United States, three points are noteworthy: (1) no jury is involved when UPC damages are set; (2) infringer’s profits play an important role; and (3) punitive or treble damages are not foreseen (which is unsurprising as such a damages award would likely contravene the EU’s ordre public, and also since the UPC-Agreement makes clear in Art. 68 (2) that damages shall not be “punitive”).

9) What are the current success rates for infringement and invalidity?

As of October 31, 2025, it only makes sense to look at the success rates before the Court of First Instance of the UPC (the sample size of the cases already decided by Court of Appeal in proceedings on the merits is simply still too small as not even a handful of cases were decided yet).

When it comes to infringement, plaintiffs prevailed in 51% of the cases on the merits (and 59% of the preliminary injunction cases). Thus, in the majority of the tried cases, the patent in suit was held to be valid and infringed. This rate is unsurprising as the judges of the UPC always made clear that the court wants to be perceived as a neutral and unbiased venue. However, this rate must be put into perspective: on the one hand, this rate is high given the number of UPC proceedings which settled prior to trial and prior to a decision having been handed down. On the other hand, this rate is low as many of the proceedings supporting this success rate were cases relating to patents which had previously been litigated before the national European courts prior to bringing them to the UPC, with the goal to broaden the territorial scope of the existing national judgments obtained prior to the entering into force of the UPC-Agreement.

When it comes to central stand-alone invalidity suits (so called “central revocation actions”), the following must be borne in mind. These actions must be filed before the Central Division of the UPC, whereas the infringement cases are brought before the Local Divisions. That said, the Central Division’s main task is deciding on the question of validity of such patents, which the plaintiff (after internal diligence) requests the Court to review. The current invalidity rates are rather moderate (compared to the situation before the EPO and the German Federal Patent Court) with only 33% of all patents invalidated in their entirety and 24% of the patents in suit upheld as granted. Thus, the lion share of 43% of all patents were upheld in amended form. Here, the main difference between UPC and U.S. proceedings come into play, as it is possible before the UPC to defend a granted claim with further limitations that are only present in the patent specification (provided that there was original support for such combination of features).

10) What happens if a UPC decision was enforced and later on overturned?

Of course, UPC liability is not a one-way-street. If a decision or order of the Court is varied or revoked once it had been enforced, the Court may order the party which has enforced such decision or order, upon the request of the party against whom the decision or order has been enforced, to provide appropriate compensation for any injury caused by the enforcement (cf. Rule 354.2 sentence 1 RoP). This liability is a strict liability as the CJEU held in the decision Bayer v. Richter (CJEU, Decision of September 12, 2019, C?688/17), which is also binding on the UPC pursuant to Art. 20 UPC-Agreement and the Preamble of said agreement.

What does this mean in practice? Enforcing a Preliminary Injunction or a first instance injunction comes at a risk if this decision becomes overturned due to a different finding of infringement on appeal or, in particular, if the patent-in-suit is invalidated in parallel invalidity suits. In this regard, it must be borne in mind that the UPC-system permits multiple parallel invalidity attacks: as the UPC Court of Appeal made clear in its decision Carrier v. Bitzer, UPC invalidity (revocation) and EPO opposition proceedings are two independent tracks. Where one body upholds the patent and the other revokes it, the decision revoking the patent will prevail (UPC Court of Appeal, Order of May 28, 2024, UPC_CoA_22/2024 – Carrier v. Bitzer). The same holds true for parallel invalidity attacks before the UPC and the national EU courts (whose competence is of course limited to the national parts of the European bundle patent which are in suit).

However, one point is worth remembering: if a final decision of the UPC Court of Appeal is available and enforced, the liability for an unjustified enforcement is likely limited (which situation may arise if, following the conclusion of the action, the patent is amended or revoked). The Rules of Procedure stipulate in Rule 354.2, sentence 3, for such situations that the decision or order simply ceases to be enforceable (but do not stipulate a liability aspect). It remains to be seen what the UPC concludes from the plain wording of the rules.