Enforcement of UPC decisions: Clarifications from the Court of Appeal on penalties for non-compliance

On October 14 2025, the UPC Court of Appeal issued a decision (UPC_CoA_699/2025) clarifying the requirements and procedure for penalties for failure to comply with, in particular, injunctions and the order to produce information as well as other remedies.

The Court has partially upheld the appeal, finding in principle that to better ensure legal certainty, the penalty conditions, i.e. the maximum monetary amount, and the deadline for compliance should be indicated in the decision on the merits. If this has been omitted initially for whatever reason, the penalty conditions can be set in a subsequent order.

Without an order setting, in particular, the maximum penalty first, enforcement via penalty payments is not possible.

Background of the decision

The present decision originated from an infringement action brought before the Mannheim Local Division by a Japanese company against a US competitor.

The first-instance proceedings ended with a partial victory for the claimant. Specifically, an injunction was issued including the provision of a penalty in case of non-compliance. The defendants were in addition ordered to provide information under Article 67 UPCA, as well as to destroy, withdraw from the market, and remove from sales channels the products at issue. However, the Court did not set a specific deadline for implementing these additional measures nor determine the penalty amount in case of non-compliance.

After the decision was issued, the claimant notified the Court of its intention to enforce the order pursuant to Rule 118.8 RoP. In this notice the claimant also set deadlines for the defendants to fulfil their outstanding obligations. The deadlines were three weeks for providing the required information; one week for destruction, withdrawal, and removal of goods. Subsequently, the claimant requested the Local Division to order the defendants to pay a penalty for their prolonged delay in compliance.

Since the defendants did not provide any evidence proving their compliance with the order, and the Court found the deadlines set by the claimant in the Rule 118.8 notice reasonable, the Court ordered a penalty payment of EUR100,000 for past non-compliance and an additional penalty for any future breaches.

The defendant appealed, arguing in particular the absence of a prior order setting the penalty amount.

Detailed analysis

As mentioned, the Court of Appeal partially agreed with this argument not least in the interest of providing legal certainty.

It found that the penalty, including its maximum amount, and any final deadline for compliance with certain parts of an order should be included in the decision on the merits. Nevertheless, Rule 354.3 RoP expressly allows deciding on such penalty and its conditions by means of a subsequent decision.

This does not change the fact, though, that an order enforcing an obligation by setting a penalty has to be based on a prior order that provides for such a penalty (the so-called penalty order). The enforcement notice by the claimant is insufficient in this respect. It is only by virtue of the penalty order that the claimant may apply to the Court that issued it, requesting that the opposing party be ordered to pay a penalty.

The Court of Appeal has agreed for the (rare) cases where the order imposing a penalty does not indicate a deadline for complying with the obligations imposed, it will be for the claimant to indicate a deadline to the counterparty. Where the obligations derive from a decision on the merits, this can be done in the enforcement notice under Rule 118. In the case of interim measures, whose enforcement does not require notification under Rule 118, the indication may be given at the time of, or shortly after, their service. It will then be for the Court, during enforcement proceedings, to assess whether the deadline indicated by the party was appropriate.

Where justified by the circumstances of the case, the Court may reduce the penalty compared with the maximum set in the penalty order, taking into account the principles of reasonableness and proportionality. Factors to be considered may include the extent of the non-compliance, its duration, and the economic capacity of the party concerned.

The burden of proof for compliance with an obligation accompanied by a penalty lies, in any event, with the defendant, who must otherwise provide evidence of circumstances that prevented proper and timely compliance, or the reasons that, in its view, may justify a reduction of the penalty.

Having clarified the principles on penalty payment – as well as some other procedural issues – the Court of Appeal set aside the challenged decision insofar as it had ordered immediate payment of a penalty for past non-compliance, since no prior order setting that penalty existed. Instead, the penalty was only based on the enforcement notice by the claimant under Rule 118 rather than a prior penalty order.

By contrast, the panel found the penalty order for potential future non-compliance to be legitimate, as it was irrelevant that it had been imposed by a decision subsequent to the order on the merits since a penalty order is possible at any time if omitted previously.

The decision thus provides more clarity both on how requests by claimants, especially the enforcement penalties, should be drafted in statements of claim and, even more importantly, provides guidance to the judges of the court on how they should structure their decisions and what information – to the extent relevant for any deadlines for compliance – they may want to request from the parties.