Court of Cassation, No. 12-16.864 | Rory Wheeler, avocat (Paris) & solicitor (England)

Court of Cassation, First Civil Chamber, 12 June 2013, No. 12-16.864

Challenged decision: Paris Court of Appeal, Pole 1, First Chamber, 1 December 2011, No. 10/19655

S.A. VICTOCOR TECHNOLOGIES

vs.

SOCIETE BENTELER AUTOMOBILTECHNIK GMBH

On the sole ground, taken in its various parts, hereafter annexed:

Whereas, according to the judgment under appeal (Paris, 1 December 2011), the company Victocor technologies, whose registered office is in Belgium and which is specialised in the research, development, marketing and sale of anti-corrosion coatings for metal parts using the thermodiffusion zinc plating technique, signed on 22 October 2004 with the company Benteler automobiltechnik, based in Germany, which produces body and engine parts for the automotive industry, a “confidentiality agreement” under which they agreed not to disclose the information exchanged and to mutually recognise each other’s intellectual property rights. A dispute has arisen between them following the filing of a patent application by Benteler automobiltechnik in Germany, France and the United States (patent family D1), leading Victocor technologies to initiate arbitration proceedings under the arbitration clause included in the contract. An arbitral award issued on 8 July 2008 ordered Benteler automobiltechnik to pay a certain amount. Victocor technologies considered that certain patents filed in 2005 (patent families D2 and D4) in Germany, the United States and France by Benteler automobiltechnik had been filed in breach of their agreement. Consequently, Victocor Technologies once again implemented the arbitration clause. In an award rendered in Paris on 3 September 2010, the arbitral tribunal held, inter alia, that Benteler automobiltechnik violated Article 2 of the agreement, but that in the absence of evidence of damages, Victocor technologies' claims for financial compensation were ill-founded; on an action for annulment, the Court of Appeal set aside the award in so far as it held that the withdrawal of the application filed in the United States for the D4 patent family constituted a breach of contract by Benteler automobiltechnik and dismissed the action for the remainder;

Whereas Victocor Technologies complains that the judgment dismissed its request for partial annulment of the arbitral award;

Whereas, firstly, the Court of Appeal, which replied to the submissions without being obliged to follow the parties in the detail of their arguments, was able to find that there was no convergent interpretation of the parties of such a nature as to bind the arbitral tribunal. It found such a solution after noting that it was clear from the written submissions made before the arbitral tribunal and from the minutes of the proceedings that Benteler automobiltechnik’s main allegation was that Article 3.6 of the confidentiality agreement applied only to confidentiality obligations and not to intellectual property rights. The Court of Appeal’s reasoning also stems from the finding that Benteler also alleged that only if Victocor technologies' interpretation prevailed would it agree to rely on the same basis to support its counterclaim.

Secondly, the Court of Appeal, after holding that the arbitral tribunal found that the penalty clause invoked by Victocor Technologies was not applicable to infringements of intellectual property rights prohibited by Article 2 of the contract and that the company did not demonstrate that it suffered any damage as a result of the infringements, noted that the arbitrators found that there was no alternative basis for the condemnation sought by Victocor Technologies;

And whereas the arbitral tribunal found that the patent applications (D2 and D4 family) did not contain any confidential information, since the know-how incorporated in these applications already appeared in the state of the art, as it resulted in particular from a previously published Russian patent. The arbitral tribunal also found that Victocor technologies did not establish any prejudice, and that the German Patent Office had no knowledge of the Russian prior art, which had a substantial impact on the value of the patents. Thus, the Court of Appeal concluded that the arbitral tribunal did not primarily rule on the validity of the patents and neither disregard its mission, the principle of contradiction, nor international public policy;

It follows that the ground of appeal is unfounded;

FOR THESE REASONS:

DISMISSES the appeal;

ORDERS Victocor Technologies to pay the costs;

Pursuant to Article 700 of the Code of Civil Procedure, dismisses the application of Victocor technologies and orders it to pay the sum of EUR 3 000 to Benteler automobiltechnik GmbH;

Thus, done and judged by the Court of Cassation, First Civil Chamber, and pronounced by the President in its public hearing of the twelfth of June two thousand and thirteen.