OPINION OF MR ADVOCATE GENERAL LENZ

   delivered on 4 June 1985 ( [1]*1 )

   Contents



   A -- Facts


   B -- Assessment


   I -- Preliminary remarks


   1. The investigation by the Bundeskartellamt


   2. The scope of the German patent


   (a) Proceedings before the German courts


   (b) Evaluation of the scope of the patent


   (i) The decision of the Bundespatentamt of 31 March 1978


   (ii) The decision of the Bundespatentgericht of 28 November 1979


   (iii) The judgment of the Oberlandesgericht München of 13 January 1983.


   (iv) Conclusion: the German patent does not cover the board


   3. Did separate markets exist for complete sailboards and for
   components?


   (a) Existence


   (b) Extent


   (c) Conclusion: there was a certain market for components


   II -- The assessment of the licensing agreements in the light of
   Article 85 (1) of the EEC Treaty (excluding the question of
   interference with trade between Member States)


   1. The approval requirement for boards (Article 1 (1) (1))


   (a) The agreements


   (b) Conclusion: the freedom of action of the licensees was restricted


   (c) The applicant's arguments


   (d) Assessment


   (i) Quality controls


   (ii) Ensuring an adequate degree of difference


   (iii) Promoting the development of the market, combating patent
   infringements


   (e) Conclusion: The Commission decision is correct


   2. Prohibition on sales of components (Article 1 (1) (2))


   (a) The agreements


   (b) Restriction of the licensees


   (c) Assessment


   (i) Possibility of altering the agreements


   (ii) Whether or not applied flexibly


   (iii) Combating patent infringements


   (d) Conclusion: the Commission decision is correct


   3. Calculation of royalties according to the net sale price of the
   complete product.


   (a) The Commission's arguments


   (b) The applicant's arguments


   (i) In the case of sales of components their value was taken as a basis


   (ii) In the case of sales of complete products there was no obstacle to
   sales


   (iii) Royalties on sales of boards not permissible


   (c) Conclusion: The Commission decision is correct only in part


   4. The notice `licensed by Hoyle Schweitzer' or `licensed by WSI'
   affixed to the boards (Article 1 (1) (4))


   (a) Shark and Ostermann not concerned


   (b) Restriction of trade


   (c) The applicant's arguments


   5. The no-challenge clause regarding the trademark (Article 1 (1) (5))


   (a) Does not apply to Shark and Ostermann


   (b) The applicant's arguments


   (c) Effect on sales


   (d) Commission decision open to challenge


   6. Production ban (Article 1 (2))


   (a) The original agreement


   (b) Subsequent amendments


   (c) Assessment


   (d) Conclusion: the Commission decision is correct


   7. The no-challange clause regarding the patents (Article 1 (3))


   8. Intermediate conclusion


   III -- Were the licensing agreements capable of affecting trade between
   Member States?


   1. The trade in rigs


   2. The other points in the Commission decision


   (a) The royalty clause


   (b) The production ban


   (c) The no-challenge clause on patents


   3. Conclusion: Only the requirement of prior approval and the ban on
   separate sales retrie; competition


   IV -- Article 85 (3)


   1. Failure to notify under Article 4 of Regulation No 17


   2. No advantages providing a justification under Article 85 (3)


   V -- The fine (Article 3 (1))


   1. Only one infringement meriting a fine instead of five


   2. The degree of fault


   (a) Ignorance of the protective scope of the patent -- negligent


   (b) Gravity of the infringement


   (i) The trade in components was insignificant


   (ii) The effect of the prohibitive clause was slight


   (c) The applicant's further arguments


   3. The Commission's decision to impose a fine on the basis of its own
   findings


   C -- Conclusions

   Mr President,

   Members of the Court,

   A --

   The proceedings in which I must give my opinion today concern a
   Commission decision in the area of competition law regarding agreements
   for the exploitation of patents on sailboards or (this is one of the
   points in issue) sailboard components.

   The following relevant facts should first be mentioned.

   Two Americans, Hoyle Schweitzer and James Drake, played a leading role
   in the development of sailboards. The applicant company was founded by
   Mr Schweitzer as a family firm. It holds (or held) patents in a number
   of countries. Where Europe is concerned, it held a patent in the United
   Kingdom for a `wind-propelled vehicle'. That patent was however revoked
   by the competent court in April 1982, and the decision was upheld by a
   judgment of the Court of Appeal in January 1984. In the Federal
   Republic of Germany a patent was applied for on 21 March 1969. After
   lengthy proceedings, the details of which I shall deal with later, a
   patent was issued on 31 March 1978. It refers to a rig (that is, the
   sail and rigging) for a sailboard. As I have already intimated, it is
   in issue in this case whether the patent applies only to the rig (the
   Commission's view) or whether it covers the rig and the board together
   as a unit (the view of the applicant). I shall come back to that point
   later.

   The `Windsurfer' sailboard model developed by the applicant was first
   distributed in Europe by the Netherlands firm Ten Cate Sports BV. By an
   agreement with the applicant concluded in 1973 and widened in 1976 that
   firm became the exclusive licensee for Europe of the applicant's
   know-how for the manufacture and marketing of the sailboards and of the
   trademark rights existing or applied for. The word marks `Windsurfer'
   and `Windsurfing' and a design mark registered first in the USA and
   then in France and Germany were also assigned to Ten Cate, with the
   obligation to use them.

   In 1976 and 1977, Ten Cate entered into licensing agreements with two
   German undertakings (Ostermann and Shark); whether or not it was
   authorized to do so need not be discussed here. The first of those
   agreements (I shall discuss them in more detail later) covered the
   exploitation of the German patent, which was then pending, and of other
   European patent applications, and the second covered only the
   exploitation of the German patent application. In 1978 the applicant
   took over those agreements.

   The applicant itself concluded licensing agreements with other German
   firms: on 1 July 1978 with the firm Akutec, on 1 January 1979 with the
   firms SAN Warenvertriebsgesellschaft mbH (SAN) and Klepper and on 21
   August 1980 with the firm Marker (I shall also discuss the contents of
   those agreements).

   In view of the resulting restrictions on the freedom of action of
   competitors a number of undertakings made complaints to the Commission,
   apparently brought with the main purpose of assisting the complainants
   themselves to acquire licences for the manufacture and distribution of
   sailboards. As a result of those complaints, on 27 January 1981
   discussions were held between the Commission, the complainants,
   representatives of the applicant and Ten Cate and representatives of
   the licensees referred to above (with the exception of Marker, against
   which no complaint had yet been made since it commenced production only
   in 1981).

   In the light of the views expressed by the Commission on the licensing
   agreements the applicant immediately took steps to amend the
   agreements. That led to the conclusion of new agreements (which are not
   the subject of these proceedings), in September 1981 with Akutec, in
   November 1981 with Klepper, in January 1982 with SAN, in February 1982
   with Marker, in September 1982 with Ostermann and in March 1983 with
   Shark. The applicant's declaration of its willingness to take those
   steps did not however prevent the Commission from initiating
   competition proceedings against it, by decision of 7 June 1982, and
   communicating a statement of objections to it in July 1982. In reply
   the applicant made a written submission in September 1982; an oral
   hearing was also held in September 1982, and a further exchange of
   correspondence ensued (in particular since the Commission, in a letter
   of 20 October 1982, referred to further documents which were to be
   taken into account in the proceedings).

   On 11 July 1983 the Commission adopted its final decision.

   Article 1 of the decision lays out the provisions of the agreements
   between the applicant and Ostermann, Shark, Akutec, SAN, Klepper and
   Marker which constituted an infringement of Article 85 (1) of the EEC
   Treaty. Article 3 (1) imposes a fine on the applicant in the amount of
   50000 ECU (DM 113793) in respect of certain of the infringements of
   Article 85 (1) set out in Article 1 ; the other provisions of the
   decision are not relevant here.

   On 13 September 1983 Windsurfing International Inc. (elsewhere
   abbreviated to WSI) brought an application before the Court for the
   annulment of the decision or the annulment or reduction in amount of
   the fine.

   B --

   Having regard to the extensive written and oral submissions which have
   been made, my views on that application, which the Commission contends
   should be dismissed, are as follows.

   I -- I should like to start with a number of preliminary remarks.

   1.

   The first of these relates to the fact that the licensing agreements
   now in issue were also the object of an investigation by the German
   Bundeskartettamt [Federal Restrictive Trade Practices Authority].

   After the applicant in these proceedings had been given the opportunity
   to state its views, that authority, in a decision of 30 September 1981
   with an extensive statement of grounds, held that it must be assumed
   that the German patent held by the applicant applied only to the rig
   and not to a complete sailboard unit. On that basis, and because the
   contracts with the German licensees related to a complete sailboard
   unit, the Bundeskartellamt came to the conclusion that restrictions
   going beyond the content of the industrial property rights of the
   applicant were unlawfully imposed on the licensees. That applied to the
   right of the licensor to lay down requirements regarding the board
   itself (which constitutes a restriction within a particular type of
   use), the prohibition on the marketing of rigs without approved boards
   and the obligation of licensees to affix the notice `manufactured under
   licence by Hoyle Schweitzer' to the boards. It was also true with
   regard to the fact that royalties were to be paid according to the
   value of the whole sailboard unit (since in that way the value of the
   board itself, not protected by patents, was included). WSI was
   therefore prohibited from applying the licensing agreements for the
   German patent regarding a rig for a sailboard in so far as the
   licensees Ostermann, Shark, Akutec, SAN, Klepper and Marker were
   required:

   (a)

   to fit licensed rigs only to boards whose prototype was approved by WSI
   or by its president,

   (b)

   to market rigs only in combination with boards, as complete sailboard
   units,

   (c)

   to affix to boards the notice `manufactured under licence by Hoyle
   Schweitzer', and

   (d)

   to pay royalties calculated on a percentage of net sales or rental
   income of complete sailboard units (rig and board).

   An action against that decision before the Kammergericht Berlin
   [Superior Court of Justice, Berlin] was apparently discontinued before
   a decision was reached.

   2.

   The second preliminary remark concerns the scope of the German patent,
   which is referred to along with the British patent (which clearly
   applies to the whole sailboard unit) in all the licensing agreements
   (in the agreement with Shark, indeed, only the German patent is
   mentioned).

   As I have already indicated, the Commission, like the Bundeskartellamt,
   proceeds on the basis that the German patent covers only the rig and
   not the board itself. That is an essential factor in its evaluation of
   the licensing agreements from the point of view of competition law,
   since in that evaluation it is important to know what the actual scope
   of the patent is and which of the restrictions imposed on the licensees
   go beyond it. The applicant considers that conclusion to be incorrect.
   In its view the German patent also covers the whole sailboard unit.
   Referring to the principles regarding the protection of industrial
   property to be drawn from Article 36 of the EEC Treaty it argues that
   should any doubt arise in that respect, its resolution is a matter for
   the competent national courts, and not for the Commission.

   If it is desired to clarify that point in advance, since it is relevant
   in several respects to the legal assessment of the Commission decision,
   I think the following points can be accepted.

   (a)

   The applicant referred to legal proceedings on this point in German
   courts; it is now clear that the resolution of the issue in that manner
   is unlikely, and it therefore does not appear reasonable to require the
   Commission to await the conclusion of those proceedings.

   As is known, when the applicant became aware of this problem, towards
   the end of 1980, it brought a test case for infringement of its German
   patent against an undertaking offering boards in Germany. After a
   decision of the competent Landgericht [Regional Court] the matter came
   before the Oberlandesgericht [Higher Regional Court], Munich, which in
   its judgment of 13 January 1983 rejected the arguments of the applicant
   (I shall come back to that judgment later). The applicant did not wish
   to let the matter rest there, but brought the case before the
   Bundesgerichtshof [Federal Court of Justice]. However, that court, the
   highest court of appeal, will no longer have the opportunity to resolve
   the issue, since, as we have been told, the applicant decided to
   withdraw its claim in October 1983, after concluding a licensing
   agreement with the defendant.

   Two other relevant legal actions have been brought by non-licensed
   undertakings. The first was an action for a declaration that the
   marketing of boards and sails of sailboards did not constitute a patent
   infringement; the second sought a similar declaration with regard to
   the marketing of masts. In the first proceedings, we were told, the
   claim was upheld by the Landgericht; in the second proceedings the
   Landgericht apparently came to the view that in such a case there was
   indeed a patent infringement. Appeals were then brought in both
   proceedings. Here, too, however, it is clear that the issue will not be
   resolved in the near future, since, according to the applicant in these
   proceedings, both appeals are in abeyance pending the outcome of
   settlement negotiations.

   (b)

   With regard to the actual problem of determining the scope of the
   German patent and the question whether the Commission is guilty of an
   error of assessment in that regard, it is not necessary to discuss the
   whole of the arguments presented by the parties on this point. It
   should simply be borne in mind that the applicant (aside from its
   clearly irrelevant reference to the fact that in other countries the
   boards themselves are covered by patent protection) attaches particular
   importance to a communication of the German Patentamt [Patent Office]
   of 21 August 1973 which holds out the possibility of a patent for the
   combination of board and rig; in so far as the proceedings for the
   grant of a patent are concerned the Commission, on the other hand,
   places particular emphasis on the alterations to the patent claims and
   patent descriptions proposed by the Patentamt on 24 January 1974, to
   which the applicant expressly agreed on 18 February 1974 and which in
   the Commission's view restrict the patent to the rig itself. Even
   though no particular grounds were stated for them, these alterations
   were certainly not mere changes of wording, as the applicant contends.

   From the relevant decisions made available to us it can be inferred
   with sufficient certainty that the Commission's assessment must be
   regarded as correct.

   (i)

   With regard to the decision of the Patentamt of 31 March 1978 it is
   therefore not only the fact that a patent was granted referring to a
   `rig for a sailboard' that is relevant. Particular significance must be
   attached to what was said in that decision concerning the aim of the
   invention (it refers to a particular arrangement of the rig), its
   novelty and advanced nature (here reference is made on the one hand to
   the split boom and to the joint by which the foot of the mast is fixed,
   that is, only to parts of the rig, and on the other hand to the
   manoeuvrability of the rig) and its advantages and level of
   inventiveness (where only remarks regarding the handling of the rig and
   its component parts are made).

   (ii)

   Certain statements of the Bundespatentgericht [Federal Patents Court],
   in its decision of 28 November 1979 regarding appeals brought against
   the abovementioned decision of the Patentamt, are also relevant. On the
   question of what should be regarded as the inventive new feature
   reference is made only to the sail and to the split boom of the
   sailboard. The court agreed that the invention amounted to a technical
   step forward, and spoke of it as a new rig arrangement. Furthermore, in
   reference to the level of inventiveness the court stated that the
   essential feature of the invention was the outward curving booms (that
   is, components of the rig).

   Similarly, in a royalty decision of 11 June 1980 (referred to in a
   letter of the Bundeskartellamt of 5 March 1981) the.
   Bundespatentgericht expressed the view that the board itself was not
   part of the combination protected by the patent.

   (iii)

   Convincing support for the point of view held by the Commission may be
   found in remarks made by the Oberlandesgericht München in its judgment
   of 13 January 1983 referred to above (from which it may be inferred
   that the applicant would have been unsuccessful in the proceedings
   before the Bundesgerichtshof), in which the court came to the
   conclusion that the board itself was not part of the combination
   protected by the patent.

   The court arrived at that view (without concentrating on the wording of
   the patent application) mainly on the basis of an evaluation of the
   whole of the content of the patent description and the general
   technical context. Accordingly, and with particular reference to the
   aim of the invention, the description of the solution, its advantages
   and the state of the art, it held that the inventive thought lay only
   in the particular arrangement of the rig. With regard to the fact that
   the rig was developed for use with the board, the court held that
   according to the Bundesgerichtshof the purpose of a device (use with a
   particular object) is not sufficient to make that object part of the
   protected combination if the inventive thought is not also reflected in
   that object itself (here, the board), and in that respect the fact that
   the board is adapted to the rig is not alone sufficient. Finally, the
   Court found confirmation of the correctness of its opinion in various
   elements of the grant procedure, in particular in the alterations
   proposed in the examiner's decision of 24 January 1974 (exclusion of
   the whole sailboard unit from the patent description, reference to a
   `rig for a sailboard' rather than to a `sailboard'), and in the patent
   class chosen.

   (iv)

   It must therefore be accepted that (without being guilty of unlawful
   interference in national patent law, inconsistent with Article 36 of
   the EEC Treaty) the Commission was entitled to proceed on the basis
   that the German patent had the scope described by it (that is, did not
   cover the board), and that in so far as the exploitation of the German
   patent is concerned the assessment of the licensing agreements from the
   point of view of competition law must be carried out on that basis.

   3.

   My final preliminary remark has to do with the market situation
   existing at the time, to which the licensing agreements in issue
   relate. It is relevant in a number of respects to the legal assessment
   of the agreements, and it is therefore not surprising that during the
   proceedings there was considerable dispute on this point.

   The applicant takes the view, supported by statements from persons with
   particular knowledge of the sector in question, that at that time
   (apart from sales of replacement parts for the repair of previously
   sold units) there was a market only for complete sailboards; separate
   markets for boards on the one hand and rigs on the other did not exist.
   The Commission considers that to be incorrect. Even if it must be
   recognized that the market for sailboards in Europe at first developed
   in such a manner described, in the second half of the 1970s, it must be
   accepted that even at the material time separate markets for components
   did exist to some extent.

   (a)

   In attempting to gain some appreciation of the situation (unfortunately
   the Commission, as it stated itself, neglected to carry out a detailed
   market study), the following findings may be made on the basis of the
   information provided in the pleadings (with their annexes) and in the
   light of the supplementary material provided at the Court's request.

   It may be concluded from the catalogues and advertisements submitted by
   the Commission with its defence that as early as 1979 and 1980
   components of sailboards (boards, rigs and parts thereof) were offered
   for sale separately. A similar pattern is revealed by information
   obtained by the Commission after the written procedure from countries
   in which there is no patent protection for sailboards. It must thus be
   accepted that in France and Belgium there were markets for sailboard
   components as early as 1979 and 1980. Information provided by a number
   of French undertakings (I shall leave aside that contained in the
   letter of 15 February 1985, since at the hearing the applicant disputed
   it vigorously and on good grounds) show that as early as 1978 boards
   were sold separately and that there were sales of rigs and parts of
   rigs from at least 1981.

   Further relevant information on this problem may be inferred from the
   royalty accounts of the applicant's European licensees, which were
   submitted to us. They show that sailboard components were also sold (in
   the case of Ostermann indications of this may be found in 1977, in the
   case of Ten Cate and Akutec from 1979 and in the case of Marker from
   1981), and the accounts of Shark in particular make it clear that
   deliveries of rigs and parts of rigs took place as early as 1978. The
   attempts made in late 1980 and 1981 by dealers and other manufacturers
   to order rigs or parts of rigs from the applicant's German licensees,
   referred to by the Commission, are also significant in this regard.
   Contrary to the applicant's contention, they cannot simply be
   disregarded on the ground that they reflect an artificial demand
   provoked by the German patent situation; patents, too, are market
   factors, and when they influence the development of the market that
   must be taken into account in the same way as other market conditions.

   The applicant's contention, as I have stated it above, is therefore
   untenable, as is its attenuated version, put forward towards the end of
   the procedure with the support of statements from experts in the field,
   according to which from 1981 at the earliest there was a very small
   market for special boards and particular rigs (for example, for
   children) or parts of rigs (for example, sails).

   (b)

   With regard to the extent and significance of the market for sailboard
   components at the time in question, however, that information is not
   sufficient to provide a reliable picture, and in so far as a few
   figures have come to light, they give the impression that, measured
   against sales of complete sailboards (the Commission estimated sales in
   Germany in 1980 at 80000), that market was not important even towards
   the end of the period in question. Citing a large Belgian undertaking
   (without further specification, naturally) the Commission stated that
   sales of sailboard components amounted to 8% in 1979 and 17% in 1980 of
   the sales of complete units. From French undertakings (who place some
   value on confidentiality) we have generally similar information
   regarding sales of sails in 1981, sales of boards from 1978 to 1981 and
   sales of rig components in 1981 (of the information contained in the
   letter of 15 February 1985 mentioned above regarding sales of complete
   units, boards alone and rigs alone by a French undertaking only those
   which relate to 1982 can be taken into account, since, as the
   applicant's representatives stated at the hearing without
   contradiction, the figures for previous years were clearly arrived at
   simply by applying the percentages calculated for 1982). In so far as
   the applicant's licensees in Europe are concerned, the royalty accounts
   (in so far as they are kept in detail) show that sales of sailboard
   components amounted to less than 10% of total turnover (in the case of
   Ostermann and Ten Cate, in respect of whom higher values are not to be
   found before 1981). No different or more striking picture is to be
   found in the case of Shark (where even in 1981 sales of rigs and rig
   components did not exceed a few hundred) or with regard to the
   (unsuccessful) orders for rigs, mentioned by the Commission, which in
   1980 and 1981 related to only a few hundred rigs (an Akutec telex of
   November 1981 speaks only of concern over the delivery of 10000 rigs to
   other manufacturers).

   That is not in the least surprising, but rather to be expected, if it
   is borne in mind that for all practical purposes windsurfing in Europe
   only developed in the middle of the 1970s and became more widespread
   towards the end of that decade, so that only then did a certain number
   of devotees have sufficient experience to give rise to a demand for
   special purchases and special combinations of equipment.

   (c)

   It must therefore be concluded (and that conclusion must be taken as a
   premise in further examination of the case) that at the time in
   question there was not only a market for complete sailboards, but also
   to a certain extent a market for components which was clearly more than
   a simple replacement part market (the applicant estimates the
   replacement part market at about 1 -- 3% of the total market). That
   market for components may have been quite small even in 1981 (the
   latest French statistics, which only exist since 1981, indicate that
   separate retail sales of rigs now amount to about 20% of total
   turnover). Is hard to speak (as the Commission did in its decision, at
   page 13 of the published version) of `brisk demand' for sailboard
   components; it is not unreasonable to assume that at that time over 90%
   of demand was for complete units.

   II -- The assessment of the licensing agreements in the light of
   Article 85 (1) of the EEC Treaty (excluding the question of
   interference with trade between Member States)

   I now come to the main section of the examination required by the
   action, the question whether the Commission's assessment, from the
   point of view of competition law, of various clauses of the licensing
   agreements (contained in Part A IV 1, 2 and 3 and Part B I 1 (a) to (g)
   of the decision) is tenable or whether, as the applicant contends, it
   is to be criticized.

   1.

   Article 1 (1) (1) of the decision (`the obligation on the licensees to
   exploit the licensed patents only for the manufacture of sailboards
   using boards which had been given WSI's prior approval')

   (a)

   In this respect it must be recalled that according to its agreement
   with Ten Cate (which relates only to the German patent application)
   Shark was obliged to manufacture and distribute rigs only for and in
   connection with sailboards consisting of several parts. When that
   agreement was taken over by WSI in 1978 a clause was added to it to the
   effect that a licence for one-piece boards would not be refused if they
   met the quality standard and could be clearly distinguished from
   existing licensed products. In a letter of 20 October 1980 WSI
   accordingly gave its approval for a one-piece sailboard having the same
   appearance as one previously produced by Shark in three pieces.

   The agreement with Ostermann (which covered industrial property rights
   existing and applied for in a number of countries) gave authorization
   for the manufacture and distribution of Ostermann's existing specified
   sailboard types, and required the approval of the licensor (originally
   Ten Cate, later WSI) for subsequent alterations.

   The agreement with Akutec (which related to the British patent and the
   German patent application) authorized the manufacture and distribution
   of a sailboard precisely described in the annex and made alterations
   subject to the approval of the licensor (in that regard paragraph 13 of
   the agreement stated that approval would not be `unreasonably withheld'
   if the alterations did not `deteriorate the quality of the product or
   infringe upon the rights of Ten Cate').

   Similar provisions were contained in the agreements with SAN and
   Klepper (in which the conditions for approval, along with quality
   requirements, speak generally of `the rights of any other licensee')
   and with Marker (in which reference is made to the German patent for a
   `wind-propelled apparatus', as well as to the British patent).

   (b)

   It is thus clear that the freedom of action of the licensees was
   restricted: they could not, without more, exploit the inventive thought
   in the context of its technical field of application, which concerns
   only one and not several separate markets. It is also clear, having
   regard to my remarks on the scope of the German patent, that the
   restriction of their freedom of action with regard to the boards
   themselves was certainly not covered by the specific subject-matter of
   the patent and could therefore be caught by Article 85 (1) of the
   Treaty.

   (c)

   It must however be examined whether the logical conclusion, that the
   licensing agreements are inconsistent with Article 85 (1), is affected
   by the applicant's attempts at justification.

   As we know, the applicant points out that the agreements apply equally
   to the German and British patents, and that the latter covers the
   entire sailboard unit. If it could therefore exert influence on the
   arrangement of the whole sailboard unit under the British patent, that
   must apply to the licensing agreements, since manufacturing and
   marketing were carried on in a uniform manner by all licensees and
   since at that time, moreover, in general only complete units were sold.
   Quite apart from the scope of the British patent, it is important to
   bear in mind that rigs can only be used together with boards. If the
   board is of insufficient quality the safety and efficiency of the whole
   unit is impaired. Seen from that point of view, it must be accepted
   that the licensor had an interest in ensuring an adequate level of
   quality for the whole sailboard unit. If the quality level is low, not
   only does the reputation of the licensor suffer but its royalties
   decline. It should also be borne in mind that under Californian law the
   licensor is responsible to a large extent for the safety of the whole
   sailboard unit. The applicant contends, moreover, that if the approval
   requirement also serves to ensure fair competition between the
   licensees, it cannot be regarded as restrictive of competition within
   the meaning of Article 85, any more than the endeavour to ensure by
   that means that a wide range of products is offered, which is necessary
   in order to develop the market and combat patent infringers (who
   nevertheless had a market share in Germany of 30%, according to the
   Commission's own information). It should also be taken into account
   that in practice new models were often manufactured without prior
   approval, that the applicant never refused approval for model
   alterations on the basis of quality requirements, and that in spite of
   the clause in question all licensees had brought on to the market a
   series of different units which did not, moreover, differ from each
   other more than did models produced by non-licensed undertakings.

   (d)

   Like the Commission, however, I have the impression that these attempts
   to remove the clause in question from the field of application of
   Article 85 (1) cannot succeed.

   (i)

   First, it may be considered that in so far as patent protection exists,
   agreements regarding the exploitation of an invention are excluded from
   Article 85 (1) only where it is permitted, according to objective
   criteria, to implement technical ideas (the technically faultless
   exploitation of the invention, as it is referred to in the 1962
   Commission communication regarding patent licensing agreements
   (Official Journal 1962, p. 2922)), while restrictions based on quality
   requirements must in any event be evaluated under Article 85 (3). In
   the long run that question does not however have to be dealt with
   definitively here. That is, even if it is assumed that quality controls
   regarding the whole sailboard unit (without regard to the scope of the
   patent and irrespective of the fact that even the British patent
   clearly does not contain particular features with regard to the board)
   were justified in principle (since the interest of a patent holder in
   the proper implementation of the inventive thought and the optimal
   exploitation of the patent, having regard to the fact that the board
   and the rig form a functional unit and the fact that at that time
   marketing was mainly carried out jointly, also justifies it in ensuring
   that the boards themselves are free of defects which would affect the
   use of the invention), in view of what the Commission has shown to be
   the practice it remains doubtful in this case whether the restriction
   of the licensees' freedom of action was really a matter of such
   controls. Nor does it seem acceptable that such a concern should be
   pursued by means of a vague approval clause which brings with it the
   danger that its use by the licensor (who is also a competitor of the
   licensees) may result in a division of areas of competition; objective
   criteria defined in advance are preferable for such a purpose. In so
   far as the applicant goes on to justify its quality controls by
   reference to California tort law, there is no evidence that liability
   for patent licensors is in fact as extensive as the applicant asserts.
   It may also be observed in that regard that the fact that Community
   competition law prohibits clauses of the type in question must surely
   have some effect on liability under American law where claims by buyers
   of the licensed object in the common market are concerned.

   (ii)

   In so far as the approval clause to which objection is made also refers
   to the rights of other licensees and their protection (according to the
   applicant it is a matter of preventing slavish imitation within the
   meaning of the Gezetz gegen den unlauteren Wettbewerb [Law on unfair
   competition] and of guaranteeing other industrial property rights
   (licensees' patents and registered designs)), in my view the Commission
   was correct to point out that the observation of legal limits of this
   nature is a matter solely for the licensees, and it is not up to the
   licensor to take on a protective function on the basis of its patent
   right. If such action is nevertheless provided for (the argument that
   it is intended to avoid claims for damages by other licensees does not
   seem to me to be convincing), in a clause such as that referred to, the
   wide discretion given to the licensor creates a serious danger that it
   may be used to ensure an adequate degree of difference between the
   products of the various licensees, that is, to regulate the market in a
   way inconsistent with competition.

   Evidence that that took place in this case may be found in a number of
   documents which make clear the practice of the applicant. I refer in
   that regard to the applicant's letter of 17 July 1978 to Shark, in
   which it was emphasized that new products (in particular boards or
   hulls) would only be approved if they `differ substantially from other
   licensed products' (a requirement which had already been emphasized
   when the applicant took over the Shark agreement). Reference may also
   be made to another letter of the applicant of 13 July 1978, in which it
   was stated that the board under consideration was too similar to the
   Windsurfer and that that was contrary to the applicant's licence
   policy. It should also be recalled that in November 1979 the applicant,
   apparently in reply to a complaint from Klepper, brought Akutec's
   attention to the fact that its model was too similar to a Klepper model
   (it asked Akutec to enter into contact with Klepper, so that Klepper
   could state its position to the applicant). Finally, I refer to a
   complaint made to the Commission on 20 January 1981 by an undertaking
   which had sought to obtain a licence, according to which the
   negotiations failed because the applicant required, as a condition of
   any agreement, that that undertaking's board should be different from
   the Windsurfer.

   (iii)

   Finally, in so far as the applicant attempts to justify such
   differentiation by appealing to considerations of market development
   and the combating of patent infringements, the reply must be that since
   a restriction of the freedom of action of licensees is involved the
   first ground could at most have some relevance under Article 85 (3),
   and that with regard to the second concern other measures compatible
   with competition law must be preferred.

   (e)

   With regard to the first clause considered in the Commission decision
   it must therefore be concluded that since they are not covered by the
   actual subject-matter of the patent (not even that of the Britfth
   patent) the restriction of licensees to a specific board type and the
   requirement of the licensor's prior approval for any alteration must be
   regarded as impermissible restriction of the freedom of action of the
   licensees and thus as limitation of competition, material to the
   application of Article 85 (1) of the EEC Treaty. That finding is all
   that is necessary for the moment; the applicant's arguments regarding
   the actual effect of the restrictions may at most be relevant to the
   question of the seriousness of the infringement, which I shall deal
   with later.

   2.

   Article 1 (1) (2) of the decision (the obligation on the licensees not
   to supply rigs manufactured under the German patent separately)

   (a)

   Such an obligation may clearly be seen in the agreement with Shark,
   which (in paragraph 3) speaks of the manufacture and distribution of
   rigs only for and in connection with multiple part sailboards,
   including replacement parts. The agreements with Ostermann and Akutec
   must be understood in the same way; in the case of Ostermann the
   agreement speaks of the manufacture and sale of its existing sailboard
   types, while in the Akutec agreement the product covered by the
   licensing agreement is defined as a specific `sailboard'.

   At first sight the three other agreements do not seem quite so clear,
   since in describing the product covered by the agreement they speak not
   only of a `specific free sail system, sailboat apparatus' but also of
   `components thereof' (the applicant placed particular emphasis on this
   in support of its contention that licensees were free to sell
   components). The agreements in their entirety (and the interests of the
   licensor) make it clear, however, that the latter phrase was intended
   to refer to ordinary sales of spare parts, and not to the regular sale
   of rigs separately. Paragraph 11 (according to which the licensee `will
   not manufacture or sell any item, or part thereof, within the scope of
   the licensed patents except for product as defined in paragraph 1 A
   hereof') is perhaps not entirely conclusive in that regard, since, as
   the applicant contends, that could also mean the prohibition of sales
   of sand and ice yachts. The Commission's interpretation is however
   supported by paragraph 2 of the agreements, which provides that `in the
   event one or more components of the product are manufactured by or for
   a licensee outside the Federal Republic of Germany and are then brought
   into the Federal Republic of Germany and assembled with the remainder
   of the components to form a completed product and royalties are paid on
   the completed product, then such shall be deemed within the license
   grant.' In that regard reference may also be made to the obligation
   placed on the licensee by paragraph 8 (`to place the legend
   "manufactured under licence from Hoyle Schweitzer" on the hull of each
   product'); I shall come back to that requirement in another connection.
   Since that labelling requirement was so important for the applicant, it
   cannot be presumed that it was waived where only rigs were sold; it
   must be understood as presupposing the obligation, in general, to sell
   complete units.

   (b)

   In view of the scope of the German patent a clause of such a nature
   clearly constitutes a restriction on the freedom of licensees, which is
   not covered by the specific subject-matter of the patent and is
   therefore caught by Article 85 (1). It must also be acknowledged that
   it influenced market relationships and competition, since it prevented
   manufacturers of boards from selling them to dealers to be made up into
   complete sailboard units or producing such complete units themselves
   using purchased rigs.

   (c)

   Here too the impression cannot be dispelled that the applicant's
   arguments in defence of its conduct do not defeat the Commission's
   finding.

   (i)

   In so far as it is asserted, with regard to the agreement with Shark,
   that until 1983 the applicant unsuccessfully endeavoured to alter that
   agreement, originally concluded by Ten Cate (in order to bring it into
   line with the agreements concluded by the applicant itself), and that
   Shark did in fact sell rigs separately to a significant extent (as may
   be inferred from the royalty accounts), it must be replied that the
   modification of the Shark agreement along the lines of the agreements
   entered into by the applicant itself would clearly not have led to any
   fundamental change with regard to the point now in issue. The actual
   conduct of Shark (and the applicant's lack of reaction) may at most be
   relevant in assessing the gravity of the infringement; it does not
   affect the finding that according to the content of the agreement a
   restriction of competition was intended (which is sufficient for the
   application of Article 85 (1)).

   (ii)

   the applicant goes on to submit that in reality the freedom of the
   other licensees to sell components was not restricted, and refers in
   that connection to the layout of the form used for royalty accounts,
   which contains a separate heading for sailboard components; it may be
   observed that according to what we know of the matter such sales were
   limited in extent (as in the case of Ostermann, Akutec and Market),
   which suggests the conclusion that such sales were nothing more than
   ordinary sales of replacement parts (the layout of the account form and
   the existence of a special pricelist for components are not
   inconsistent with that conclusion).

   Furthermore, a number of documents cast light on the use of the
   agreements in practice and entirely substantiate the Commission's view.
   In a letter of 7 February 1980, for example, SAN informed a customer
   that deliveries of replacement parts (specifically, split booms) were
   restricted to 3% of deliveries of complete units. Reference may also be
   made to a circular sent by the applicant to its European licensees on 1
   March 1980, in which it was recommended that parts should not be
   supplied to dealers who might use them to complete other boards; in
   view of the possi-'bility of termination of the licensing agreement
   that recommendation certainly had some weight. In a telex of 1 May
   1980, furthermore, the applicant strongly requested Klepper not to sell
   rigs to a competitor; Klepper replied that it too was of the view that
   rigs should not be supplied to unlicensed -manufacturers or dealers,
   and that any inquiry from that other manufacturer would therefore meet
   with a negative reply. The discussion at a meeting between the
   applicant and the licensees on 9 October 1980 (to the effect that
   licensees should offer the complete product, that replacement parts
   might make up 10 to 15%, and that new clients should only be supplied
   with complete boards) followed the same pattern. Mention should also be
   made of telexes sent by the applicant on 29 October 1981 to Akutec and
   Klepper, in which it is stated that the sale of rigs or rig components
   to undertakings who combined them with boards or sails was contrary to
   the licensing agreement (its significance is not affected by the fact
   that in a telex sent to the licensees on 13 April 1982 -- that is,
   after the material period -- it was emphasized that the sale of rigs to
   other manufacturers was not prohibited so long as a higher court had
   not confirmed the applicant's view regarding the scope of the German
   patent).

   (iii)

   Finally, the applicant cannot be heard to argue that it was at most a
   matter of preventing assistance being given to patent infringements
   (according to the applicant, a number of court decisions show that on
   several occasions other undertakings infringed the applicant's patents
   by using parts of licensees' rigs in the manufacture of so-called
   `mixed rigs'), and that it should be borne in mind that the licensees
   themselves had no interest in supplying rigs, since by so doing they
   would help their competitors to sell boards (the most expensive part of
   a sailboard) and their own sales of complete units would suffer.

   In that respect the Commission correctly observed that the sale of rigs
   by licensees cannot lead to indirect patent infringement, and that the
   patent does not therefore justify any restriction of the freedom of
   action of licensees on that basis. Furthermore, with reference to the
   contention that where it must be concluded that their customers use
   rigs for the manufacture of mixed rigs, licensees are obliged in good
   faith to refrain from assisting that activity, it is clear that the
   restriction of the freedom of action of licensees was not limited to
   such cases but applied across the board.

   Where the interests of the licensees are concerned, it must be
   acknowledged that the applicant's analysis of them may be correct.
   Support for its view may be found in a deposition submitted by the
   applicant according to which SAN, acting in its own interest, did not
   wish to supply rigs; further support is provided by the statement in
   the same deposition that at a meeting in 1979 in which the applicant
   did not take part the licensees agreed not to sell rigs separately and
   to limit supplies of replacement parts to a fixed percentage. Reference
   may also be made to a letter of 8 February 1980 from SAN (according to
   which the licensees had agreed not to supply an excessive number of
   split booms), to the fact that in the contested decision itself it is
   stated that the licensees sometimes justified their refusal to supply
   rigs by stating that their range contained no separate rigs or that
   their capacity was taken up by their own requirements, and finally to
   the fact that a number of the licensees apparently manufacture boards
   themselves. On the other hand, it must be recalled that Shark has sold
   rigs to dealers and other manufacturers since 1978; furthermore, the
   possibility cannot be excluded that the interests of some other
   licensees do not correspond to the applicant's description (since, like
   Akutec and Marker, they do not distribute products of their own), and
   it must be borne in mind that the interests of licensees might change
   according to developments in the market, but that the licensing
   agreements would not permit them to react.

   (d)

   The conclusion, therefore, can only be that the finding of competition
   law contained in Article 1 (1) (2) of the decision has not been
   refuted.

   3.

   Article 1 (1) (3) of the decision (the obligation on the licensees to
   pay royalties for rigs manufactured under the German patent only on the
   basis of the net selling price of a complete sailboard)

   (a)

   On that point the preamble to the decision states that because the
   German patent only relates to the rig, it is illegitimate to claim
   royalties for sales in Germany of components not covered by the patent
   because this imposes costs on the licensees which depress their sales
   without there being any compensating advantages due to the patent. The
   Commission adds that where the royalties were calculated on the basis
   of the price of a complete sailboard, the cost of the royalties for the
   rig alone was excessive and made it difficult to sell rigs separately.
   The clause served to reinforce the obligation only to sell complete
   sailboards, and this reduced the outlets of other board manufacturers.

   (b)

   Here it should be conceded that at first sight this is a compelling
   argument, so that it also seems right to find an infringement against
   Article 85 (1) in the case of the method of calculation of the licence
   royalties and its application. Yet if the arguments put forward on that
   point are taken as a whole, it is clear that the applicant's criticism
   of the Commission's assessment is correct at least in part.

   (i)

   In the first place, analysis of the agreements shows that it is simply
   not the case that royalties were calculated only on the basis of the
   price of a complete sailboard. This in any event applies to the
   original agreement concluded with Ostermann, which expressly stipulates
   that the royalty for replacement parts was 8% of the net ex-factory
   price (when the applicant took over the agreement it was amended in
   such a way that 5% of the price of a complete sailboard was payable in
   each case). The same must be true of the agreements with SAN, Klepper
   and Marker because the relevant definition of the product also included
   components of sailboards, and since the royalties were calculated on
   the basis of the price charged for the `product' it may be assumed that
   where components were sold their price was the appropriate basis of
   calculation. That also seems to have been the case in practice at least
   in so far as may be seen from the royalty accounts of Ostermann and
   Marker (if this cannot be established in the case of Klepper and SAN,
   that may be due to the fact that they in fact only sold complete
   sailboards; in SAN's case, it is also conceivable that since only a
   total figure is given for sailboards and components, components are
   included in that figure).

   The situation admittedly appears to be quite different for Shark and
   Akutec if the text of the agreements alone is anything to go by. In the
   agreement with Shark there is mention of a royalty amounting to 10% of
   the net sales proceeds of sailboards incorporating the rigs, and in the
   agreement with Akutec it is said that the royalty is determined by the
   price charged for the `product' (though this is defined as `specific
   free sail system sailboat apparatus'). Here too, however, practice
   shows -- as is also indicated by the fact that the royalty calculations
   for sailboards and components are different -- that in sales of
   components only the price of the component was taken into account for
   the royalty calculations. This may be seen from the abundant
   documentation relating to Shark (which also makes it clear that the
   royalties were calculated where applicable on the basis of the price of
   rigs or components of rigs -- booms or sails). The same may be assumed
   in the case of Akutec, since a telex message dated September 1979
   expressly requests that undertaking to give separate figures for
   sailboard components, and the royalty accounts for 1981 itemize sails,
   for example, separately.

   For that reason it is difficult to agree with the Commission's finding
   in its decision that the method of calculation of the royalties
   represented an obstacle to the separate sale of rigs and thereby
   imposed an additional restriction on the licensees' freedom of action.

   (ii)

   Further, I think that it is difficult to maintain that, where complete
   sailboards were sold and royalties were calculated on that basis, that
   was a restriction of competition because it meant that costs were also
   imposed on the sailboards.

   Here it should be pointed out that, as has already been established,
   the market situation prevailing at the material time was such that in
   the overwhelming majority of cases complete sailboards were sold. In
   view of that situation it was in fact the obvious thing to do to
   arrange for the royalty calculations to be made on this basis, and not
   only for bookkeeping reasons (which evidently led SAN to retain this
   method even after its agreement had been amended). Moreover it is
   significant that the amended licensing agreements provide for a
   correspondingly higher royalty in relation to the price of a rig alone
   (12.5% for Ostermann and Shark, rising subsequently to 14% in Shark's
   case, and 15% in all the other agreements). In view of the fact that
   this was accepted without demur and that German courts and authorities
   have not found it excessive either (as may be seen from a letter from
   the Bundeskartellamt [Federal Patent Office] to the Kammergericht
   [Superior Court of Justice, Berlin] dated 18 March 1982, and from a
   judgment of the Oberlandesgericht München [Higher Regional Court,
   Munich] of 4 November 1982 on an action for damages), it is not easy to
   see how the manner in which royalties were actually raised under the
   contracts criticized by the Commission can be held to constitute an
   anticompetitive barrier to the sale of rigs.

   (iii)

   In regard to the manner in which royalties were raised, the only actual
   cause for criticism is therefore that royalties were due on the sale of
   boards, which the German patent situation did not permit, and that this
   may have created difficulties for the separate sale of boards.

   In this regard it is quite out of the question to argue as the
   applicant has done that the value of the invention consisted in the
   fact that it made it possible to sell a complete sailboard and that the
   sale of boards was only possible because a licence had been granted for
   rigs and rigs supplied by the licensees were already on the market. The
   answer to that is simply that it conflicts with the legal position
   governing the German patent. It determines what restrictions on the
   licensees' freedom of action are permissible, and it appears to leave
   no room for introducing a cross-royalty because of the advantages
   afforded by the grant of the legally protected right to supply rigs.

   (c)

   Thus it may be concluded with regard to Article 1 (1) (3) of the
   decision that the Commission -- evidently because it misinterpreted the
   agreements -- has made assessments which are untenable in part and that
   its complaint that the method of calculating the royalties was in the
   result contrary to competition law does not, with one small exception,
   appear well founded.

   4.

   Article 1 (1) (4) of the decision (the obligation on the licensees to
   affix to the boards of sailboards marketed by them a notice stating
   that they were `licensed by Hoyle Schweitzer' or `licensed by WSI')

   In that connection it is stated in the preamble to the decision that in
   the case of sailboards manufactured and marketed in Germany, such a
   notice gave the false impression that the board was manufactured on the
   basis of certain industrial property rights or in accordance with
   certain technical know-how made available by the licensor. In addition,
   the licensees were restricted in representing themselves as technically
   independent, with regard to the board and in consolidating their
   reputation, and this affected their position in the market.

   (a)

   One criticism which may immediately be made on that point is that the
   abovementioned obligation (to affix a notice to sailboards) only
   existed under the agreements with SAN, Klepper, Akutec and Marker.

   By contrast, the licensing agreement concluded with Shark merely refers
   -- without any further indication -- to `notice: licensed by Ten Cate',
   and the case of the agreement with Ostermann is surely similar -- it
   merely refers to an obligation on Ostermann to display the licence
   notice on its products and in its advertising. Since, however,
   displaying a licence notice is not in itself objectionable provided a
   false impression is avoided, both the lastmentioned agreements must be
   treated as irrelevant for the purposes of this discussion for the
   simple reason that they do not provide for the incorporation of the
   notice in a component of the sailboard not covered by the patent.

   (b)

   However, it may also be questioned whether the duty to affix a notice
   contained in the other agreements actually influenced competition (that
   is all that is at issue in Article 85). That does not appear to me to
   be wholly beyond doubt. In fact it is difficult to believe that
   purchasers' decisions were decisively influenced by the notice; after
   all, it was to be found on all sailboards manufactured and marketed
   under licence in Germany. For them other considerations (the technical
   sophistication and price of sailboards and all aspects of advertising)
   were more important, and in that regard the licensees, who use their
   own trademarks as indeed is recognized in the agreements, had a free
   hand. In particular they were perfectly free to make it clear in
   advertising and in conversations with customers that the board of the
   sailboard incorporated their own technical know-how. It may even be
   argued that the mention of the American licensor's name actually helped
   the sale of the sailboards. It may therefore be said that the duty to
   affix a notice, to which objection has been taken, has not had any
   significant influence on the position in the market, and in this
   connection it is not irrelevant that the figures presented to the Court
   on the turnover of licensees from 1978 to 1980 show a strong rise, if
   not a very strong rise, for at least four of them (the precise figures
   may not be revealed at present for reasons of confidentiality).

   (c)

   I therefore take the view that the correctness of the finding in the
   Commission decision with regard to a notice of the licence is justly
   challenged. If that view is accepted there is no further need to
   examine the applicant's attempts to justify the clause, which are not
   very persuasive on the whole in any case (such as the argument that the
   sailboard is the most obvious place for such a notice because the sail
   already carries another device; or that because such a notice was
   always permissible for sales in the United Kingdom a different practice
   for the German market would make the task of production more difficult;
   or that the grant of licences made the marketing of the whole sailboard
   possible in the first place).

   5.

   Article 1 (1) (5) of the decision (the obligation on the licensees to
   acknowledge the word marks `Windsurfer' and `Windsurfing' as well as a
   design mark (so-called `logo') as valid trademarks)

   In this connection the preamble to the decision expresses doubts as to
   whether those marks, which were used by Ten Cate, are sufficiently
   distinctive or at least whether they have fallen into common usage as
   generic terms (which would militate against their registration or
   maintenance as valid trademarks under the law of all the Member
   States). The Commission goes on to state that in relinquishing the
   possibility of bringing these circumstances into play the licensees
   renounced the opportunity to use names or symbols which were important
   for public recognition in their advertising, thus giving a competitive
   advantage to the licensor and Ten Cate.

   (a)

   In this regard it is important in the first place that the decision --
   as is emphasized by the Commission at page 20 of its rejoinder -- is
   not concerned with the clause prohibiting the use of the trademark but
   merely with the exclusion of the right to challenge the validity of the
   trademarks. However, if that is the case it was wrong to cite the
   agreements with Shark and Ostermann in this connection, because, if I
   am not mistaken, they do not contain any obligation to recognize the
   trademarks (in the sense of a no-challenge clause) but only prohibit
   the use of the mark. Those licensees were therefore at liberty to
   challenge the validity of the abovementioned marks, and if they were
   successful in doing so there would be no room for the application of
   the prohibition on the use of the marks.

   (b)

   On the other hand it quickly becomes apparent that two of the
   applicant's arguments against the finding cannot be accepted.

   The first is that the annex to the licensing agreements only sets out
   the American marks, so that the clause at issue referred only to them.
   That argument is not in fact very convincing, first because of the fact
   that the marks referred to are registered in most of the Member States
   (see the applicant's statements at page 30 of the application), and
   secondly because of the fact that as the agreements did not relate to
   the American market the licensees were not active there. Furthermore,
   in its argument that marks used in Europe were indeed at issue, the
   Commission rightly referred to another clause of the licensing
   agreements (point 12 of the agreement) stipulating that printed
   material using the marks may only be used over a short period and must
   then be destroyed.

   The same applies to the submission that the purpose of the clause at
   issue was merely to ensure the recognition of the validity of the
   trademarks as long as they had not been declared invalid, in order to
   prevent the marks from being turned into generic designations, which
   was what the patent infringers were trying to bring about. On that
   point, as the Commission correctly stated, a quite different clause
   would have been required in order to prevent generic designations from
   arising. Secondly, in answer to the argument that the licensees were
   perfectly entitled to seek to have the abovementioned marks declared
   void in Europe, it may be pointed out that the applicant's
   representative in the discussions with representatives of the
   Commission in January 1981 stated that point 12 of the agreement with
   SAN (which is identical in content with clauses in the agreements with
   Akutec, Klepper and Marker) was to be regarded as a no-challenge clause
   in trademark law.

   (c)

   Here, too, it must be asked whether the no-challenge clause at issue
   has in fact had a significant effect on the competitive position of the
   licensees. Perhaps, as the applicant considers, generic designations
   have already grown up in the various languages, and consequently (this
   would need further investigation) there is no serious tendency for the
   English designation of the sport to have any influence. Furthermore, it
   may be assumed that the licensees possessing their own trademarks have
   enough alternative ways of using advertisements to encourage the sale
   of their products, and it may be useful to refer once again in this
   connection to the growth in their turnover from 1978 to 1980, described
   above. The Commission has not produced any facts showing any adverse
   effect on the competitive position of the licensees.

   (d)

   I am therefore of the view that the finding in Article 1 (1) (5) of the
   decision is open to challenge as a whole (and therefore not only with
   regard to the agreements with Shark and Ostermann) and that in that
   connection it is not sufficient, as the Commission considers, to
   refrain from setting a fine.

   6.

   Artide 1 (2) of the derision (the provision for termination of the
   licensing agreements should the licensee start production in a
   territory not covered by a patent, which only applied to the agreements
   with Akutec, SAN, Klepper and Marker)

   (a)

   If reference is made only to the texts of the agreements submitted to
   the Court, it is clear that the agreement with Akutec in fact provided
   (point 2 A) that the licensee had the right `to manufacture only at the
   site where the product is being manufactured on the date of execution
   of this agreement' and that (at point 20 A 4) provision is made for the
   termination of the agreement in the event of a `change by licensee of
   manufacturing site.' Taken in conjunction, those clauses can only be
   understood as meaning that no production (not even purely subsidiary
   production) may be carried out at another place, in particular outside
   Germany, and that therefore the provision for the termination of the
   agreements did not merely apply to the case where a licensee moved his
   whole production to another place.

   The agreements with SAN, Klepper and Marker are alike, in the versions
   laid before the Court, in providing for the right to manufacture the
   product in the Federal Republic of Germany (point 2), and they provide
   further that `in the event one or more components of the product are
   manufactured by or for licensee outside the Federal Republic of Germany
   and are then brought into the Federal Republic of Germany and assembled
   with the remainder of the component to form a completed product and
   royalties are paid on the completed product then such shall be deemed
   within the license grant.' In addition they provide (at point 18 A) for
   the termination of the agreement first in the event of a `change by
   licensee of manufacturing site to a country outside the Federal
   Republic of Germany' (18 A 4) and secondly in the case of `manufacture
   by licensee of all or any component of product in a country outside the
   Federal Republic of Germany and sale thereof directly to a country
   outside the territory' (18 A 5). From those provisions too it must
   undoubtedly be concluded that the licensees had no right to manufacture
   outside the Federal Republic of Germany even though the products were
   to be marketed outside that territory.

   (b)

   In the course of the procedure, however, reference was also made to
   changes which had been made to the agreements in that respect since the
   end of 1980 (although no documentary evidence of this was produced).

   According to the Commission's statements (see page 17 of the statement
   of objections addressed to the applicant), the agreements with SAN and
   Klepper were amended in December 1980 so as to provide that production
   was only permitted at the site where it was already taking place at the
   time of the conclusion of the agreement. In fact that merely meant --
   the same applies to the findings in the disputed decision with regard
   to Marker -- that an agreement like that already made with Akutec was
   the result, and the Commission took the view that no change relevant to
   the question of legal assessment had taken place.

   However, according to the applicant's submissions (minutes of the
   discussions of January 1981, p. 16), the amendments had the effect that
   the ban on manufacture and sale (point 18 A 5) in the agreements with
   SAN, Klepper and Marker was withdrawn and that it was made clear at
   point 18 A 4 of the agreements (change of manufacturing site to a
   country outside the Federal Republic of Germany) that under them
   production was also permissible outside the Federal Republic of
   Germany. In this regard it is apparent that the facts are not entirely
   clear. If the applicant's assertions are true (which, as I have already
   said, has not been proved), that would at most mean that the ban on
   manufacture abroad found by the Commission did not exist in respect of
   the unexpired duration of three of the agreements.

   (c)

   As regards the legal assessment of the clauses of the agreements with
   which I am concerned here, there can surely be little doubt that the
   imposition of a ban on manufacture and sale for areas where patent
   protection does not exist (this alone is what concerns the Commission)
   making it impossible to sell products without paying royalties
   constitutes a restriction of the freedom of competition exceeding the
   scope of the patents, which were confined to two countries. Moreover, I
   do not see how the applicant's attempts to justify those clauses could
   possibly succeed.

   This applies to its contention that the restriction should be seen in
   connection with controls on production for the German market (in the
   sense of quality controls). In this regard it is not only significant
   that it may be doubted whether quality controls were the applicant's
   real concern; it is also important to bear in mind what I have said in
   another connection with regard to the permissibility of direct quality
   controls and the possibility of obtaining sufficiently relevant results
   according to objectively-defined criteria. Furthermore, the Commission
   is right in thinking that it is not immediately obvious why moving
   production to another site should be thought to jeopardize the quality
   of the product when the licensees have used components from other
   undertakings on a large scale wholly in accordance with the agreements.

   The same goes for the applicant's contention that considerable
   investments are required to set up a manufacturing plant and that this
   explains why manufacturers were content to stay within their
   traditional local markets and did not engage in production abroad,
   which was unprofitable. On that point the Commission was right to argue
   that in the first place, manufacture by subcontractors (a common
   practice among licensees) is not associated with vast investment costs.
   More particularly, it is important that undertakings should always be
   free to take their own decisions in that respect. Where, however, they
   are prohibited from doing so by contract, they are subject to a
   restriction on competition and are generally entitled to complain of
   it.

   (d)

   The only conclusion to be drawn with regard to the finding in Article 1
   (2) of the Commission decision is therefore that its validity cannot on
   the face of it be challenged and that it has also not been shown in
   these proceedings that it was unfounded with regard to some of the
   agreements at least from the end of 1980.

   7.

   Article 1 (3) of the decision (the obligation on Shark and Ostermann
   not to challenge the licensed patents)

   Finally, the last point raised in this connection may be dealt with in
   a few words.

   It is clear that, as I have shown, the licensees were subjected to a
   restriction on their freedom of action which should be regarded as
   anticompetitive because it deprived them of the right to remove a
   hindrance to their economic activity (the condition that they should
   only manufacture or sell sailboards or sailboard components subject to
   payment of a royalty). I also agree with the Commission when it says
   that for the purposes of justifying such clauses under competition law
   the relations between the licensor and the licensee in private law --
   which are often what makes a challenge to patent law rights possible in
   the first place -- cannot take precedence over the public interest in
   ensuring the greatest possible freedom of activity. Moreover, little
   credence can be attached to the applicant's submission that such
   clauses are conducive to an increase in competition because they make
   the grant of licences more likely. In fact this is contradicted by its
   own subsequent conduct since unlike Ten Cate it went on to conclude a
   number of licensing agreements not containing no-challenge clauses.

   Against that, it must be conceded -- although this does not in any way
   affect the fundamental validity of the Commission's finding -- that
   such clauses are deprived of much of their significance from the outset
   where a patent has been granted (as in this case under German law)
   following an exhaustive investigation and where opposition proceedings
   were unsuccessful. In addition it is surely questionable whether the
   licensees really had an interest in challenging the patent (and whether
   therefore there was a real restriction on their freedom of action)
   since if they did so that might lead in certain circumstances to the
   opening up of the whole market sector to all comers and produce a
   considerable increase in the competition.

   8.

   At the end of this important part of the discussion the following
   intermediate conclusions may be drawn:

   It appears that the Commission cannot be criticized in its finding that
   the requirement of prior approval (Article 1 (1) (1)), the ban on
   moving the place of production (Article 1 (2)) and the no-challenge
   clause with regard to the licensed patents are of such a nature as to
   produce a restriction on competition. The Commission's finding on the
   method of calculation of the royalties (Article 1 (1) (3)) may be said
   to be too broad. The only cause for complaint is that royalties were
   due even on the sale of separate boards (which were not covered by the
   German patent). I further take the view that there is no reason to
   regard the obligation to affix the notice `licensed by Hoyle
   Schweitzer' or `licensed by WSI' and the no-challenge clause relating
   to the trademarks used (Article 1 (1) (4) and (5)).

   III -- Were the licensing agreements capable of affecting trade between
   Member States}

   The findings contained in Article 1 of the decision cannot in any event
   be upheld unless it is also established that the clauses they criticize
   were capable of affecting trade between Member States and in addition,
   as the Court has held, might do so significantly (meaning that they had
   some force).

   At point B I 1 (h) of the preamble to its decision, the Commission
   sought to show that this was true of the clauses of the licensing
   agreements to which it objected. It pointed in particular to the strong
   position of the licensees and Ten Cate in the German market and argued
   that the effect of the offending clauses was to render trade in board
   and rigs between Germany and the other Member States more difficult.
   The applicant denies that assessment. In the first place, it claims
   that it is especially significant that the market for components of
   sailboards was practically nonexistent at the material time and that
   the separate demand for rigs in Germany could not be regarded as normal
   and was essentially artificial. In the second place, it relies on the
   fact that the market share of locally produced sailboards on the
   principal markets (Federal Republic of Germany, France and the
   Netherlands) was 70 to 80% and concludes that international trade in
   that field was of purely marginal significance.

   1.

   In dealing with that point of contention I would dispose of the
   question of the demand for rigs alone (in the Federal Republic of
   Germany) by referring to what I have already said, which is that even
   if the demand is traceable to the special patent situation prevailing
   in the Federal Republic of Germany, still it certainly cannot be
   dismissed as `artificial.' It must also be accepted that although it is
   difficult to avoid the impression that the market for sailboard
   components was on a fairly modest scale at the time it cannot be
   maintained that it was so insignificant that it could be completely
   ignored for the purposes of the criterion of a significant effect on
   intra-Community trade, which has not been subjected to any very strict
   requirements by the Court of Justice. Besides, if the applicant's
   statements regarding the market shares of locally produced sailboards
   are in fact true it is clear on that basis also that trade between
   Member States existed on a scale which is wholly relevant for the
   purposes of Article 85 (1) if that trade was affected.

   If that is so the Commission's assessment of the clauses dealt with in
   Article 1 (1) (1) and (2) can scarcely be challenged. If the licensees
   were restricted in their freedom to use boards, that was capable of
   affecting trade between Member States because it was thereby made more
   difficult for the licensees to obtain boards from manufacturers in
   other Member States. On the basis of what is known of the licensees'
   production arrangements, it may also be assumed that it would not have
   been against the interests of most of them (since they did not
   manufacture themselves) to obtain supplies in that way. Furthermore,
   such supplies were undoubtedly available and in their interest (for
   instance from a large manufacturer in France), and it may certainly be
   assumed on the basis of the licensees' market shares in Germany that
   the distortion of trade associated with the restriction was on a quite
   significant scale. The same goes for the ban on the separate sale of
   rigs. It is true that at the material time there could not be said to
   be any foreign demand worth mentioning (as has already been
   established, the documents submitted by the Commission in annexes 8 and
   9 to its defence relate only to rig components). Against that, however,
   it must be added that the ban may have had the effect of reducing the
   outlets of foreign board manufacturers in Germany (where boards could
   be assembled together with rigs purchased separately to produce whole
   sailboards), and it cannot even be ruled out that that was the case to
   an appreciable extent.

   2.

   On the other hand, it appears extremely doubtful whether the criterion
   at issue is also applicable to the other clauses referred to in Article
   1 of the contested decision (here admittedly I leave out of account
   altogether those referred to at points 4 and 5, in particular because
   the growth in licensees' turnover is not consistent with a diminution
   in their freedom of action).

   (a)

   As we have seen, the royalty clause is open to criticism at least in so
   far as royalties were payable on boards not covered by the German
   patent (that is because it put an unwarranted difficulty in the way of
   the separate sale of boards). Here, however, -- apart from the fact
   that the market in boards was not in any event very large -- it should
   be borne in mind that it is unknown to what extent the licensees had
   any interest in such sales (for they must have been primarily concerned
   with exploiting the invention -- producing rigs -- and selling whole
   sailboards), and that the size of the intra-Community trade in that
   product is also unknown.

   (b)

   As regards the restriction of the right to undertake manufacture in a
   territory not covered by a patent, the Commission clearly accepts
   itself that the main concern in every case was with production for
   local markets and that this therefore has hardly any bearing on trade
   between States. Moreover, it appears extremely questionable whether the
   ban constituted a real impediment since it is surely doubtful that the
   licensees already had an interest in developing additional foreign
   production capacity when they had only just begun trading (this they
   have evidently not done even now although the amended agreements give
   them every right to do so).

   (c)

   Finally, with regard to the no-challenge clause dealt with in Article 1
   (3) of the decision, the preamble merely states that the clause
   reinforced the licensor's patent right against all competitors. Yet in
   the first place, it is questionable whether those rights can be said to
   have been reinforced in any real way since all other licensees and
   indeed any third parties were wholly at liberty to challenge the
   patent. It must also be acknowledged that this clause was clearly
   devoid of the slightest significance, as is shown in particular by the
   fact that Ostermann continued to refrain from challenging the patent
   even when the amended contract left it entirely free to do so and even
   after that concern was taken over by the applicant's largest
   competitor.

   3.

   The view I therefore come to is that if the Commission's findings in
   Article 1 of its decision are critically appraised in the light of all
   the criteria applicable under Article 85 (1), only those contained in
   Article 1 (1) (1) and (2) (prior approval of the boards by the
   applicant and the ban on separate sales) can be upheld. For the rest,
   the applicant's submissions in this regard should be upheld and the
   findings contained in Article 1 of the contested decision declared
   void.

   IV -- Article 85 (3)

   The decision also expresses a position on the question -- this requires
   thorough examination pursuant to Article 85 -- whether, if the
   agreements are not compatible with Article 85 (1), they may be exempted
   from the prohibition it contains by virtue of Article 85 (3). In the
   Commission's view that was not possible because both the formal
   requirements of that provision (notification to the Commission) and its
   substantive requirements were unsatisfied. Because the applicant
   considers that that assessment is also unfounded, a few remarks are in
   order on that point as well.

   1.

   Article 4 of Regulation No 17 provides that in the case of agreements
   concluded after the entry into force of the regulation (such agreements
   are at issue here), a decision in application of Article 85 (3) may
   only be taken if they have been notified to the Commission. As the
   licensing agreements in this case were not notified, it must be
   considered whether they are covered in this regard by the exception in
   Article 4 (2), which applies, as we know, to agreements to which not
   more than two undertakings are party where those agreements, inter
   alia, impose restrictions on the exercise of the rights of the assignee
   or user of industrial property rights.

   The Commission takes the view that this is not the case, and indeed it
   must immediately be admitted that nothing has been said in argument
   which might invalidate it.

   In that regard it is sufficient to point out that the restrictions
   dealt with in Article 1 (1) (1) and (2) (prior approval of the boards
   and the ban on separate sales, which are all that is now at issue)
   exceed the scope of the applicant's patent rights and therefore do not
   concern their exercise alone, because in any event the German patent
   does not cover the board. This much is clear as regards the requirement
   of approval for the boards (because it concerns the market for boards)
   ; but the same also goes for the clause prohibiting rigs from being
   sold separately because it directly affects the market for boards.

   In its argument to the contrary, the applicant clearly achieves nothing
   by saying that a board is unusable without the rig and that it is
   therefore necessary to have a complete combination, in which the board
   is also important, in order to exploit the invention. In the first
   place, it should not be forgotten that even at the time when the
   agreements were in force separate markets in sailboard components were
   present to some extent. In the second place the Commission is right in
   stressing that the exceptions to the requirement of notification must
   be interpreted strictly because they were introduced for restrictions
   on competition thought to be generally harmless. On that basis,
   however, there can be no justification for applying the words `exercise
   of the rights' in Article 4 of Regulation No 17 broadly and without any
   reference to the clear scope of a patent.

   2.

   In addition it is questionable whether the agreements satisfy the
   requirements of Article 85 (3), in particular the requirement of an
   improvement in the production or distribution of goods or the promotion
   of technical or economic progress and the requirement that the
   agreements must not impose obligations which are not indispensable to
   the attainment of those objectives.

   The Commission's assessment to that effect appears in any event to be
   correct as regards the clause prohibiting the separate sale of rigs
   because it did nothing but impose restrictions and no beneficial
   effects such as those required in Article 85 (3) were discernible.
   Moreover, the same applies to the requirement of prior approval
   referred to in Article 1 (1) (1) of the decision. For even if it is
   held that the licensor had a legitimate interest in maintaining a
   certain level of quality (which might be relevant as `improving the
   production of goods') that would require that objectively-defined and
   specific criteria should have been laid down in advance. Since these
   agreements contain a general and indefinitely-worded requirement of
   prior approval, they are incompatible with Article 85 (3) particularly
   if its practical application gives the impression of being concerned
   more with the division of the markets than with questions of quality.

   Here too the applicant's arguments appear to be irrelevant; it claims
   that its policy in granting licences made a substantial contribution to
   the rapid growth in the German market and that because of the
   importance it attached to a wide choice of models there had been an
   expansion in production. In truth it is not easy to see that those
   arguments contain anything of relevance for the purposes of Article 85
   (3). Furthermore, it must be assumed that similar economic results
   could have been produced by means of licensing agreements not
   containing unlawful restrictions since it can be taken for granted that
   the licensees were already concerned to stimulate the expansion of the
   markets by means of competition in the variety of their products.

   V -- Article 3 (1) of the decision (imposition of a fine on the
   applicant in respect of the infringements of Article 85 (1) found in
   Article 1 (1) (2), (3) and (4), and in Article 1 (2) and (3))

   As I said at the outset, the applicant seeks in any event to have this
   part of the decision declared void or at least to have the amount of
   the fine reduced (which is possible under Article 172 of the EEC
   Treaty). The arguments put forward in this connection make it necessary
   for me to state my views as follows.

   1.

   First it should be borne in mind that Article 15 (2) of Regulation No
   17 permits such fines to be imposed (within certain limits which it
   specifies) where undertakings intentionally or negligently infringe
   Article 85 (1) of the Treaty. It goes on to state expressly that regard
   is to be had to the gravity and the duration of the infringement.

   If my earlier assessment of the decision is right, it must be accepted
   that only one of the infringements of Article 85 (1) for which the
   Commission thought a fine should be imposed remains, namely the
   obligation not to sell rigs separately. That fact alone would be enough
   to make a substantial reduction in the fine appropriate since it is
   already clear that in setting the amount of the fine, the Commission
   was influenced by the consideration that four further infringements
   required a fine.

   2.

   Further, if the applicant's contentions regarding the subjective
   requirements of Article 15 and the `gravity of the infringement' are
   entertained and the question is raised whether they provide grounds for
   cancelling the fine altogether, or whether at least further arguments
   for reducing the fine have become apparent, the answer I suggest is as
   follows:

   (a)

   The applicant is clearly of the opinion that fault cannot be alleged
   against it because it could reasonably take the view that the German
   patent, like patents in other countries, encompassed the whole
   sailboard and that it was therefore justified in including terms for
   the manufacture and marketing of the whole sailboard in its licensing
   agreements.

   This, however, is difficult to accept. In general it should be said
   that different patent situations are not at all unusual since, as was
   well known to the applicant, the apparatus it had developed enjoys no
   patent protection at all in some countries. As regards the German legal
   position in particular, the Commission was right to point to the
   amendments made to the patent claim and the patent description in
   January 1974, which also provided the basis for the interpretation of
   the patent specification in June 1974. They make the assumption that
   the German patent also included the board appear at least negligent.
   Furthermore, an allegation of fault cannot be cast aside by referring
   to language problems and the fact that the applicant relied on the
   British patent when granting the licences, which were drafted by
   American lawyers and referred both to the German and the British
   patent. In that regard it is sufficient to note that the applicant had
   a German lawyer for the patent application procedure in Germany. He was
   in a position to take an opinion on the scope of the German patent,
   and, as the Court was told, he gained the applicant's express approval
   for the amendments made to the patent claim in January 1974.

   (b)

   It must, however, be accepted that in assessing the level of the fine
   from the point of view of the `gravity of the infringement', two points
   at least which are not mentioned in the decision should have been borne
   in mind.

   (i)

   It would follow from the account which I sought to give of the market
   situation that separate markets for sailboard components existed from
   1979/1980 at the earliest and that they were on a very modest scale. In
   the light of those facts it would have appeared quite normal at the
   time when most of the licensing agreements were concluded to assume
   that whole sailboards would usually be sold, and contractual terms to
   that effect could not be regarded as imposing unlawful restrictions.
   Since the demand for rigs among licensees has only been proven for the
   end of 1980 and the beginning of 1981, it must at least be held that
   the Commission's finding in its decision that the ban on the separate
   sale of rigs (which excluded suppliers of boards from the market)
   significantly affected the market as early as 1978 and 1979 and had a
   major effect in 1980 and 1981 is overstated and cannot be accepted in
   that form.

   (ii)

   As regards the practical effects of that clause, it should first be
   stated that if there really was a demand for rigs alone, it was clearly
   not rigorously applied (as is shown by the case of Shark). Secondly, it
   is evident that because the Commission did not question the licensees
   on that point, no reliable information is available as to whether they
   actually had any interest in the sale of separate rigs. At all events
   it is noteworthy that in a statement (by Mr Spanjer) submitted by the
   applicant it is said that SAN did not itself wish to sell rigs, and
   that the statement also mentions that the licensees had spontaneously
   agreed (the applicant was not involved) in 1979 not to sell rigs
   separately.

   (c)

   Against that I would say that other arguments canvassed by the
   applicant do not afford grounds for criticism of the decision to impose
   a fine and for further reducing the amount of the fine.

   That applies to its claim that the Commission has never adopted such a
   decision before. That argument is certainly not sufficient as an answer
   to the allegation of negligence.

   The same goes for the fact that the applicant expressed its readiness
   immediately after its discussions with the Commission in January 1981
   to amend the offending agreements. On that point the Commission was
   right to point out that that is only relevant in connection with the
   duration of the infringement. In fact that circumstance was taken into
   consideration since the Commission found infringements under Article 85
   (1) only in respect of the period up to 1981.

   The same also applies to the fact that the applicant is a comparatively
   small undertaking and that the patent infringers in Germany had a
   market share of about 30% (the effect of this is that the applicant
   loses the same amount in royalties). In that regard it is surely
   sufficient to point out that the Commission imposed a fine well below
   the upper limit set in Article 15 of Regulation No 17 (1000000 Units of
   Account or 10% of the turnover in the preceding business year).

   The same finally applies to the applicant's assertion that the
   restrictive practice at issue was created at the licensees' initiative
   and that they had put pressure on the licensor. No clear evidence of
   that has been supplied, and in particular the correspondence laid
   before the Court of Justice at its request suggests nothing of the
   kind, let alone that it was the licensees who expressed interest in
   this clause when the agreements were drafted. In so far as the
   applicant went on to advance the contention that the imposition of a
   fine on it alone was discriminatory, it must first be doubted whether
   an argument first put forward in the oral proceedings can in any event
   be considered. It may also be held that the Commission has shown
   convincing grounds, in view of the legal position and the parties'
   interests, for a different treatment of the applicant on the one hand
   and the licensees on the other.

   3.

   If, following what I have said, it is concluded that although it would
   be inappropriate to declare Article 3 (1) of the decision void in its
   entirety a significant reduction is none the less called for in view of
   the fact that only one infringement meriting a fine (the ban on the
   separate sale of rigs) is to be found, then it should also be examined
   for the sake of completeness whether there would also be grounds for
   reducing the fine if the Commission's assessment of the other clauses
   in respect of which it imposed a fine were held to be correct in the
   light of Article 85 (1).

   First, with regard to the clause stipulating that royalties were also
   due on the sale of boards, I suggest that it should be borne in mind,
   as the Commission clearly did not, that any market for boards was on an
   insignificant scale at the time and also that it is not clear that the
   licensees had any interest in such sales, which might be made more
   difficult by the royalty clause.

   As regards the obligation to affix a licence notice to the board, again
   it should be noted that as is shown by the trend of the licensees'
   turnover figures, it cannot have done any harm to their possibilities
   for development.

   With regard to the ban on manufacture in a territory not covered by a
   patent, it must be a cause for criticism that no inquiry was carried
   out into whether it ever had any practical significance or whether, as
   seems probable, the absence of an interest on the part of the licensees
   made it a dead letter.

   Finally, in regard to the no-challenge clause under patent law, it is
   significant that the clause was included in the licensing agreements by
   Ten Cate and that it clearly was difficult for the applicant to make
   amendments (which Ostermann and Shark did not themselves demand) when
   it took over those agreements. Furthermore it must be acknowledged that
   the applicant itself did not have an interest in the inclusion of such
   clauses (they are wholly absent from the licensing agreements which it
   initiated itself); similarly, it is to be assumed that they were also
   of no significance to Shark and Ostermann since they never considered
   challenging the patent even later when they were no longer prevented
   from doing so.

   I therefore come to the conclusion that the fine should be reduced even
   if the Court does not follow the view expressed here and accepts the
   Commission's legal assessment of the facts.

   C -- In conclusion, my opinion may be summed up as follows:

   It is my conviction that the application brought by Windsurfing
   International is well founded in part. Accordingly, Article 1 (1) (3)
   (in so far as it extends to more than the charging of royalties on the
   boards), Article 1 (1) (4) and (5), and Article 1 (2) and (3) of the
   Commission decision should be declared void. In addition the fine
   imposed upon the applicant in Article 3 should be reduced quite
   substantially, and the sort of figure that occurs to me is 10000 ECU.
   Finally I consider that such an outcome to the proceedings makes it
   appropriate to order each party to bear its own costs.
     __________________________________________________________________

   ( [2]*1 ) Translated from the German.

References

   1. file:///tmp/lynxXXXXXiB7sj/L109781-6403TMP.html#t-ECRCJ1986ENA.0200061201-E0001
   2. file:///tmp/lynxXXXXXiB7sj/L109781-6403TMP.html#c-ECRCJ1986ENA.0200061201-E0001