1. Introduction – options to terminate proceedings before a decision on the merits
The Unified Patent Court (UPC) is a court for settling disputes, as the Agreement on a Unified Patent Court (UPCA) underlines in its first article. This does however not mean that the dispute is always settled by a decision on the merits.As long as there is no final decision, if a settlement is reached between the parties, the claimant may apply to withdraw his action (Rule 265 Rules of Procedure, RoP). Moreover, the parties may conclude their action by way of settlement at any time during proceedings (Rules 11, 365 RoP). Thirdly, if an action has become devoid of purpose and if there is no longer any need to adjudicate on it, one party or both parties may motion for a respective order by the Court to dispose of the action (Rule 360).How do these three ways for terminating UPC proceedings and their consequences differ? And is there a best-practice solution suitable for all cases?
2. General principles applying to all options
Some general principles apply equally to all the above options. First, if the claimant withdraws the action or if the parties reach a settlement (regardless of whether they use Rule 365 or Rule 360 RoP), the party liable for the court fees will generally be reimbursed depending on the process of the proceedings. This reduction according to Rule 370.9 (b) and (b) RoP does, however, only relate to court fees (fixes and value-based fees), but not to other costs, such as costs for legal representation. Second, the party liable for the costs is determined in accordance with Art. 69 UPCA. While generally, the unsuccessful party bears the costs of the proceedings, there are several exemptions in Art. 69 UPCA, specifically if equity requires otherwise or if a party has caused the court or another party unnecessary costs.Aside from this, however, there are different requirements as well as different advantages and disadvantages that need to be considered against the background of the individual case to determine the most efficient way of termination.
3.Withdrawal according to Rule 265 RoP
The claimant may withdraw the action as long as there is no final decision and provided that the other party has no legitimate interest in the action being decided by the Court (Rule 265 RoP). For example, the Court of Appeal (CoA) established a legitime interest and, in turn, rejected the withdrawal in a case where the appellant had withdrawn its appeal only regarding two of the five respondents, arguing that the two respondents had a legitimate interest for the proceedings against them to continue as they would be affected by the appeal decision (CoA, 4 June 2024, UPC CoA 183/2024). In contrast, the mere fact that the other party had incurred costs for the defense is not a legitimate reason to reject the withdrawal (Local Division (LD) Munich, 24 October 2024, UPC CFI 98/2024).If the court permits the withdrawal, the proceedings are terminated, the decision will be entered into the register and the court will issue a cost decision. Although Rule 265 RoP governs a unilateral withdrawal of the action, it may well be that the parties have concluded a mutual agreement internally and agreed that the claimant will withdraw the action. According to the CoA, a decision on costs is not required if both parties have waived such decision (cf. CoA, 15 January 2025, UPC CoA 629/2024, 631/2024, 632/2024; 24 January 2025, UPC CoA 505/2024; see in contrast LD Munich, 7 January 2025, UPC CFI 208/2024, 504/2024). This enables the parties to also establish a mutual agreement regarding costs.If the Court decides on the costs, the party that withdrew its action is in principle the unsuccessful party within the meaning of Art. 69 UPCA and shall bear the costs of the proceedings. However, exceptions may apply for example where the claimant has caused unnecessary costs, i.e. costs triggered by a measure that was not necessary and/or inappropriate for the enforcement of rights or legal defense and that can be separated as such (LD Munich, 11 October 2024, UPC CFI 300/2023).
4.Termination of proceedings according to Rule 365 RoP following a settlement
Secondly, Rule 365 RoP provides for the confirmation by the Court of a settlement which, if requested by the parties, may be enforced as a final decision, which is a significant difference to the other options. The details of the settlement can, at the request of the parties, be declared as confidential, partially or in its entirety (LD Paris, 26 July 2024, UPC CFI 419/2023; 29 January 2025, UPC CFI 468/2023). Subject to such decision on confidentiality, the decision of the Court on the confirmation of the settlement shall be entered on the register (LD Paris, 26 July 2024, UPC CFI 419/2023).Concerning costs, paragraph 4 of Rule 356 RoP provides that a decision on the allocation of costs shall be rendered in accordance with the terms of the settlement or, failing that, at the Court’s discretion.
5. Rule 360 – a third option to terminate proceedings covering different scenarios
Turning now to Rule 360 RoP, it envisages a scenario where “an action has become devoid of purpose and that there is no longer any need to adjudicate on it”. It can be applied at the request of a party or at the Court’s own motion; but if an application is made by only one of the parties, the other needs to be heard.For example, in the context of infringement proceedings, a defendant that issues a cease-and-desist declaration may unilaterally request the Court to apply Rule 360 RoP. If the plaintiff agrees, proceedings will be ended (i.e. settled) by application of Rule 360 RoP (LD Munich, 19 December 2023, UPC CFI 249/2023). However, the other party may also oppose the request, in which case the proceedings will continue (LD The Hague, 19 June 2024, UPC CFI 130/2024). Additionally, Rule 360 RoP may be also applied following unanimous applications by both parties declaring that they had concluded their actions by way of settlement (CD Munich, 23 July 2024, UPC CFI 75/2023). This route has the advantage that there is no need for a settlement agreement to be submitted to the court.Furthermore, Rule 360 RoP has been applied to other kinds of termination of proceedings scenarios, for example: following a revocation action, the patentee waives its patent from the registry (CD Paris, 16 May 2024, UPC CFI 372/2023); or where the patent has been revoked at the EPO during opposition proceedings (LD Munich, 11 October 2024, UPC CFI 300/2023).Unlike Rule 265 RoP, Rule 360 RoP is silent on a cost decision; but so far UPC decisions that have applied Rule 360 RoP have also decided on the allocation of costs in view of Article 69 UPCA if there was a disagreement between the parties in this respect (CoA, 4 October 2024, UPC CoA 2/2024; LD Munich, 19 December 2023, UPC CFI 249/2023; CD Paris, 16 May 2024, UPC CFI 372/2023 and LD Munich, 11 October 2024, UPC CFI 300/2023). Similarly, if requested by the parties, UPC courts will decide on the reimbursement of court fees following an order disposing of the action.
Summary
To summarize, there is no one-fits-all solution to terminate proceedings. Instead, it always depends on the circumstances of the individual case and all the options outlined above should be considered when terminating a dispute before a decision on the merits.
By Mar Conde and Nico Schur.