Big deal for Diehl, but Varec presses for disclosure

The IPKat is grateful to his old, old friend Tom O'Shea for drawing his attention to the Opinion of the Advocate General in Case C-450/06 Varec v État belge. This is ostensibly a public procurement case - and the IPKat never reads those - but the Court has been asked by the Belgian Conseil d’État (Council of State) whether a body hearing an appeal concerning the award of a public contract must protect the confidentiality of business secrets while remaining entitled to take account of evidence containing them.

The Belgian Defence Ministry invited tenders for the supply of tank track links. Two bids were received, one from Varec, the other from Diehl Remscheid. The contract was awarded to Diehl and the award decision, which listed a number of technical, administrative and legal grounds for excluding Varec’s bid, stated that Diehl satisfied all the selection criteria. That decision was based on, inter alia, consideration of certain plans and samples that were annexed to Diehl’s bid and which, at Diehl’s request, were returned to it after evaluation of the bids. Varec, challenging the award of the contract, asserts that Diehl’s bid did not in fact comply with all the criteria for the award. In order to evaluate that claim, it said, Diehl's plans and samples should be examined as evidence both by the reviewing court and by Varec after it asked for that review to take place. Diehl objected to lodging those plans and samples on the ground that they embodied confidential information and business secrets to which it did not wish Varec to have access. The auditeur (a sort of Advocate General in the Conseil d’État) considered that, if the contracting authority does not lodge a complete file, it has failed in its duty to assist in ensuring proper administration of justice and fair proceedings, and the Conseil d’État has no alternative but to annul the contested award.

Advocate General Eleanor Sharpston QC has taken the side of fair play against the argument that business secrecy is paramount. She advises the court to rule that:

"Article 1(1) of Council Directive 89/665, read in conjunction with the provisions of Council Directive 93/36 relating to the protection of confidential information, requires a review body

(a) to take cognisance of the whole of the administrative file and other evidence on which the contracting authority based its award and

(b) to accord confidential information the same protection as is accorded to it at the award stage.

Those obligations must be carried out subject to the right to a fair hearing and to equality of arms, which implies in particular that the review body should take care not to use any evidence withheld from one or more principal parties in any way which could infringe those rights".

The IPKat comments that confidentiality is not the subject of any pan-European IP right; it is merely legal recognition that is given to a set of facts and it is bound to be subservient to any principle of European economic policy that encourages fair competition.

Right: the IPKat conducts his own examination of the technology in question ...

Merpel says, but won't this make some contractors wary about bidding for public contracts at all - and won't this have a knock-on effect upon third parties whose confidential and valuable know-how might have to be disclosed to a competitor or a competitor's licensee?