https://ipfray.com/upcs-court-of-appeal-clarifies-standard-for-default-judgment-against-claimant-enters-default-judgment-against-npe-suing-microsoft/

UPC’s Court of Appeal clarifies standard for default judgment against claimant, enters default judgment against NPE suing Microsoft

Florian Mueller

July 13, 2025

Context: A few months ago, the infringement action brought by Finnish non-practicing entity (NPE) Suinno against Microsoft in the Unified Patent Court (UPC) resulted in appellate clarification of the question of whether the owner and general manager may represent a company in the UPC (item 2.1 of our February 15, 2025 UPC Roundup). Regardless of counsel, Suinno didn’t make headway in the Paris seat of the Central Division (CD).

What’s new: The UPC’s Court of Appeal (CoA) entered two Suinno v. Microsoft decisions yesterday (Saturday, July 12, 2025). Suinno’s appeal against a security requirement of €300K was rejected (PDF). But Microsoft’s appeal of the CD’s denial of entry of judgment by default against Suinno for failure to give security succeeded, thereby ending the infringement action for good (PDF). The second decision references the first.

Direct impact: The hurdle for the CoA to grant a rehearing is extremely high, but Suinno could revive the case by means of an application (to be filed within one month of the default judgment) to set aside the default judgment. In that case, Suinno would have to provide the required security, if a failure to give security in time can be cured, which one of the headnotes suggests. The final part of the appellate decision does not declare the patent revoked. All it says is that default judgment is entered against Suinno (item II). The scope of Microsoft’s request for discretionary review is not 100% clear. It could be that part of Microsoft’s appeal didn’t succeed, even though the order imposes the entire costs of the appeal on Suinno.

Wider ramifications: The key clarification is that Rule 355.2 of the UPC’s Rules of Procedure (RoP) requires the court to perform a summary assessment of the claim before entering default judgment against a defendant, but the CD Paris was wrong to conduct such analysis instead of directly entering default judgment against the claimant simply for failure to give security in time. Another headnote clarifies that (in other words) it is necessary for default judgment to be entered when someone fails to provide security as it would otherwise be hard to enforce the security requirement in any meaningful way.

According to the decision and the record, Microsoft had asked the CD for default judgment not only with respect to non-infringement but also in favor of its revocation counterclaim (and against Suinno’s application to amend the patent). The way the CoA summarizes Microsoft’s successful application for discretionary review makes two scenarios possible:

• Microsoft may still have pursued the very same scope of a default judgment as in the court below (thereby including revocation), or
• it may have limited its request for discretionary review to just the infringement claim.

The question of whether a plaintiff failing to post collateral should also lose the patent due to a revocation counterclaim, regardless of the counterclaim’s merits, would actually be an interesting one, but is not discussed in the decision:

• The key holding of yesterday’s appellate decision is that a claimant will lose the case for failure to provide security, but a claimant won’t win without the court deeming the complaint (to put it differently than the UPC does) plausibly meritorious. The wording in the RoP is actually this: “A decision by default against the defendant of the claim or counterclaim may only be given where the facts put forward by the claimant justify the remedy sought and the procedural conduct of the defendant does not preclude to give such decision.”
• If that key holding was also applied to counterclaims, as yesterday’s CoA decision explicitly says (just not whether it also applied to the revocation counterclaim here), then the CD Paris was actually right to look at whether the revocation counterclaim appeared plausibly meritoriously. It had doubts that the patent was invalid, and therefore declined to enter default judgment to the effect of revocation.
• But one could also argue that the revocation counterclaim is procedurally required for an infringement defendant to raise an invalidity defense, as the Munich Local Division (LD) did in Headwater Research v. Motorola Mobility (item 3 of our July 6, 2025 UPC Roundup) where it held that defendants are entitled to security not only with respect to their costs of defending against an infringement claim but also those of pursuing a revocation counterclaim.
• 
  
• If the CoA accepted that the revocation counterclaim is a necessary part of the defense (given that it is the only way to assert invalidity when defending against an infringement claim), and if it furthermore applied that equivalency to the question of what effect a default judgment should have, then a patentee failing to give security might even lose its patent when there is a revocation counterclaim, even if the revocation counterclaim isn’t plausibly meritorious.
• 
  
• There would be an argument in favor of this strict approach: the infringement defendant will usually have to put significant time and money into the revocation counterclaim, and the one who started the whole matter (the infringement claimant) could salvage a weak patent just by failing to give security and accepting that the infringement claim fails. Then, one can also argue that the defense succeeded anyway in terms of fending off the infringement assertion (if the latter is rejected by a default judgment).
• 
  
• Here, Microsoft may have limited its appeal just to infringement, or the CoA may have implicitly declined to revoke the patent based on default.

The headnotes stress that the equitable aspect of default judgments means that parties against which a default judgment enters have the chance, under Rule 356 RoP, to lodge an application to set aside the default judgment. From a policy perspective it is debatable whether someone’s deliberate failure to post collateral should be cured by doing so later. In this case, the refusal to provide security goes back to last year.

There is nothing remarkable in the decision that affirmed the security order (the first one of the two decisions entered yesterday). Suinno just didn’t persuade the CoA that the amount was excessive.

In order to help our audience understand headnote (ii), here’s a minor linguistic thing: replace one “that” with “which” and it becomes clearer, as shown in the screenshot below.

Court and counsel

Panel 1a: President Dr. Klaus Grabinski, Judge Peter Blok and Judge-rapporteur Emmanuel Gougé.

Counsel for plaintiff Suinno (appellant on security, appellee on default judgment): Backström’s Petri Eskola.

Counsel for defendant Microsoft (appellee on security, appellant on default judgment): Bardehle Pagenberg (lead counsel: Professor Tilman Mueller-Stoy (“Müller-Stoy” in German)).