Audi v Network System Technologies (UPC_CoA_217/2024, UPC_CoA_219/2024 & UPC_CoA_221/2024)
Decision date:
17 September 2024
Osborne Clarke summary
- When considering an application for security for costs, the court must consider whether the financial position gives rise to a "legitimate and real concern" that the costs order may not be recoverable or enforceable.
- The burden of proof as to why the security is appropriate is on the defendant making the request. The claimant must then challenge the reasons and facts and argue why a security order would interfere with its right to an effective remedy.
- The relative financial position of the claimant in comparison to the defendant is not a criterion under Rule 158 RoP. This is especially the case where the limited level of funding provided to a special purpose patent enforcement entity is a deliberate business decision.
- The Court of Appeal held that the Court of First Instance has a margin of discretion when deciding on security for costs requests and therefore the review on appeal is limited. Nevertheless, the Munich LD's decision was set aside as it could not have reasonably come to the decision on the facts of the case. NST was ordered to provide adequate security for costs to Audi. The Munich LD had imposed too high a standard of proof on Audi by requiring it to provide "precise evidence" that NST is or would be insolvent by the time of a costs decision. On the basis of the evidence Audi provided, the Court of Appeal held that there was a "legitimate and real concern" that a possible costs order may not be recoverable.
Issue
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