Wabtec Corp. has agreed to pay Faiveley Transport Malmo AB $3.9 million, the result of an arbitration ruling, received Dec. 24, involving claims filed against Wabtec by a Swedish subsidiary of Faiveley Transport. "We are pleased that the arbitration process is concluded and that the ruling will have no impact on our ability to provide products and services to our customers now and in the future," said Wabtec in a statement.
"In 1993, we entered into a license agreement with SAB WABCO, then an affiliated company, in which SAB WABCO granted us a license to the intellectual property and know-how related to the manufacturing and marketing of certain transit braking components," said Wabtec.
"In 2005, Faiveley Transport purchased SAB WABCO. The license agreement was terminated at the end of 2006 and Wabtec reverse-engineered the products at issue. In 2007, Faiveley Transport Malmo filed a request for arbitration with the International Chamber of Commerce alleging breach of contract and trade secret violations relating to Wabtec's manufacture and sale of the limited number of transit braking components covered in the license agreement.
"The Arbitral Tribunal's ruling entitles Wabtec to continue to manufacture and sell these components for current and future contracts using its reverse-engineered manufacturing drawings, and it says that Wabtec should pay Malmo a reasonable royalty based on past and predicted future sales of these components through 2011. In the fourth quarter, we will record a one-time charge for the royalty payment, which, due to the uncertain outcome and timing, was not included in our 2009 guidance for earnings per diluted share of between $2.40-$2.50," Wabtec said.