Claimant, a German company, licensed to Defendant, an Italian company, know-how for the construction and operation of an industrial plant of a given capacity. Their agreement, governed by German law, contained a clause requiring Defendant to keep all technical information and documents secret and not to use them or allow them to be used for the design or construction of similar equipment. Claimant accuses Defendant of having infringed their agreement by exceeding the agreed capacity and by sharing the technical information it had received with a company with which it was affiliated and producing and marketing competing plants. Claimant asks the arbitral tribunal to forbid Defendant to use the technical information for purposes other than those specified in their agreement and to order it to pay damages to Claimant for unlawful use and transfer of such technical information. Defendant alleges that the licence agreement is void under European Community competition law.

'Validity of the licence agreement

10.1

(a)

[Defendant] considers, by making reference notably to Article 85 of the EC Treaty, that the agreement is void on the ground that [Defendant] cannot validly be indefinitely prohibited from building, using or distributing a similar installation.

10.2

(b)

The Arbitral Tribunal considers that the Licence Agreement and Article 4 thereof are valid.

10.3

As explained above, under the Licence Agreement [Defendant] has acquired a know-how licence for . . . according to [Claimant's] process. After having at first wanted to acquire the relevant part of the installation from [Claimant], [Defendant] thereafter limited itself to the know-how connected thereto, since it believed it could build the installation itself in Italy at a lower cost. It was certain for the contracting parties that the licence covered only the building of an installation of this type and its subsequent use for the manufacture of . . . It was totally ruled out that other installations be built using the same know-how and, a fortiori, that such know-how be exploited for the purpose of building installations intended to be sold to third parties. This is why the confidentiality clause had been inserted in Article 4 of the Licence Agreement.

10.4

By reason of said purpose, the agreement appears to be an atypical licence agreement. Its purpose is not to allow for the reiterated use of the licence and the distribution of the equipment thus produced, but the one-off construction of part of an installation, and then the exclusive use thereof by the party having acquired the know-how.

10.5

The Arbitral Tribunal does not see in what manner the confidentiality clause imparts a one-sided character to the agreement within the meaning of section 138 of the German Civil Code (BGB).

10.6.1

The facts furthermore do not constitute an infraction of the legislation on concerted economic practices restricting competition within the meaning of Article 85(1) of the EC Treaty. There is no competitive relationship between the parties to the Licence Agreement containing the confidentiality clause in Article 4, as [Defendant] acquired the know-how merely as an end user, for the purpose of building and using a given installation.

10.6.2

In any event, the Licence Agreement comes within the scope of application of the Community block exemption regulation (Commission Regulation (EEC) No. 556/89 of 30 November 1988 on the application of Article 85(3) of the Treaty to certain categories of know-how licensing agreements, Official Journal L 61, 4 March 1989). Indeed, a confidentiality clause such as that contained in Article 4 of the Licence Agreement, which is a truly indispensable element for any transfer of secret know-how, is expressly permitted by Article 2, para. 1, points 1 and 3, of the Regulation, due to the fact that it is "generally not restrictive of competition".

Thus, there are permitted:

1. an obligation on the licensee not to divulge the know-how communicated by the licensor; the licensee may be held to this obligation after the agreement has expired;

. . .

3. an obligation on the licensee not to exploit the licensed know-how after termination of the agreement in so far and as long as the know-how is still secret;

10.7

It is the Arbitral Tribunal's opinion that these provisions are undeniably fulfilled. Thus, as set forth above . . ., the transfer of the know-how and the confidentiality clause are connected to the transferred know-how, that is, to the . . . according to [Claimant]'s process. This appears clearly from [Defendant]'s request for information, [Claimant]'s reply and the various documents drawn up upstream of the agreement that was entered into at first orally and then in writing. The content and scope of the know-how and therefore of the confidentiality clause are thus adequately identified.

Given that the know-how has also not fallen into the public domain, as explained above . . ., it must continue to be considered as being secret.'

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Original in German