January 7, 2026
Introduction
A recent decision from the UPC Court of Appeal provides critical guidance on the conditions for awarding damages under the Unified Patent Court Agreement (UPCA). The ruling clarifies that damages are contingent upon fault and sets a high bar for proving non-economic harm, such as reputational damage.
Facts and Procedural History
The case (UPC_CoA_8/2025) concerns a patent infringement action brought by Oerlikon (Plaintiff and patentee) against Bhagat Textile Engineers (Defendant). Oerlikon is the owner of European patent EP 2 145 848 with unitary effect, which relates to a false-twist texturing machine. Oerlikon accused Bhagat of infringing this patent by exhibiting a corresponding machine at the ITMA trade fair in Milan and subsequently obtained an order for the preservation of evidence. At first instance, Bhagat neither contested the infringement nor the validity of the patent. The Milan Local Division found in favor of Oerlikon, holding Bhagat liable for infringement and awarding provisional damages of €15,000 for reputational damage. Bhagat filed an appeal against this decision.
Decision of the Court of Appeal
The Court of Appeal partially overturned the decision of the first instance. The award of provisional damages was set aside, and Oerlikon’s request for damages was rejected. On all other points, the appeal was rejected, and the first instance decision on costs was notably upheld. Due to the partial success of both parties, the costs of the appeal were apportioned equitably.
Key Findings of the Court on Damages
Fault as a Prerequisite for Damages (Art. 68 UPCA): The Court reaffirmed that claims for damages require a finding of fault on the part of the infringer. It must be established that the infringer “knew or had reasonable grounds to know” they were engaging in infringing activity. If neither negligence nor willful intent can be proven, the patent holder is not entitled to damages.
The Implied “Duty to Monitor”: Crucially, the Court established that as an active market participant and direct competitor, the defendant “was at least reasonably expected to monitor the patent landscape.” Consequently, ignorance of the patent was not a valid defense against the finding of at least negligence. This imputes a proactive duty of awareness onto companies operating in a given technological field.
Moral Prejudice / Reputational Damage (Art. 68(3)(a) UPCA): While a claim for damages due to reputational harm is possible in principle, it was rejected in this case. The Court found that the patentee’s submissions were based mainly on “general statements” and were insufficient to prove actual reputational damage. Evidence such as press releases confirming the infringer’s presence and success at a trade fair did not, in itself, provide information about any reputational harm suffered by the patentee.
Procedural Advice and Implications
Substantiating Non-Economic Harm: To obtain damages for moral prejudice, the patentee must provide concrete and specific evidence of the damage suffered. General assertions about the infringer’s market success are insufficient.
Freedom-to-Operate as a Standard: The ruling effectively treats the monitoring of the patent landscape as a standard of care for active market players. Conducting regular Freedom-to-Operate (FTO) analyses is therefore an essential risk management tool to counter potential allegations of negligence.
This article is intended for general informational purposes only.
Authors
Klaus Platzer
Mingyan Xi