LD Munich, April 23, 2026, order on cost security, UPC_CFI_617/2025

A bank guarantee provided by a defendant, as part of an objection of compulsory licence under antitrust law, as security for any potential licence payment obligations towards the claimant and thus to avert an injunction claim asserted by the claimant (“FRAND security”), does not, in principle, relieve the claimant of the obligation to provide security for costs, even if the amount of the bank guarantee exceeds the amount of the security for costs. Neither does the bank guarantee constitute a valuable asset of the claimant to which the defendant may have recourse for recovery of his costs, nor does the provision of the bank guarantee allow the conclusion that the defendant is obliged to pay licence fees to the claimant against which he could offset a claim for recoverable costs (sec. 21).

It depends on the terms of an “After The Event insurance” (ATE) policy and their interplay, the defendant’s objections to them, and the court’s diligent assessment as to whether, in light of the terms of the ATE insurance, the claimant’s interest in the effective enforcement of its patent rights outweighs defendant’s interest in security for costs. It follows that taking out ATE insurance as such – even with an anti-avoidance endorsement – is not adequate to automatically remove an obligation to provide security once it has been ordered. Any doubt about the terms of an ATE insurance policy raises the question of whether the claimant is still obliged to provide security for legal costs. In the event of a dispute, the court would have to decide whether the ATE insurance is suitable to dispel the concerns about claimant’s financial position. However, the Rules of procedure do not provide for this. Instead, the obligation to provide security for legal costs can only be fulfilled by means of a bank guarantee or a deposit (R.158.1 RoP), and the court is only required to give a decision by default if such a security has not been provided (R. 158.4 RoP) (sec. 29 seq.).