IP in business transactions: Switzerland overview

A guide to intellectual property law in Switzerland. The IP in business transactions Q&A gives an overview of maintaining an IP portfolio, exploiting an IP portfolio through assignment and licensing, taking security over IPRs, IP and M&A transactions, and the impact of IP on key areas such as competition law, employees and tax.

To compare answers across multiple jurisdictions, visit the IP in business transactions Country Q&A tool.

This Q&A is part of the global guide to IP law. For a full list of jurisdictional Q&As visit www.practicallaw.com/ip-guide.

Contents

Overview of main IPRs

1. What are the main IPRs in your jurisdiction? How are they protected?

Patents

Patents are proprietary rights granted for technical inventions.

To qualify for patent protection, an invention must be:

  • Novel.

  • Non-obvious to a person skilled in the art (inventive).

  • Applicable in industry.

Patent protection requires registration in the Swiss Patent Register. A patent can either protect a product (for example, a pharmaceutical compound or the movement of a clock) or a process (such as a process for manufacturing chemical or pharmaceutical substances). In addition, patent protection can be available for already known substances or compositions that have not yet been used for a specific purpose (such as a new medical indication) or for existing processes applied in a new field.

An invention can be protected for a maximum of 20 years from the date of filing. For pharmaceuticals and pesticides, supplementary protection certificates can be granted for a maximum of five years after the 20-year protection period.

The national Swiss patent law is codified in the Federal Act on Patents for Invention (PatA) of 1954, which has been amended several times since its enactment. As a member of the European Patent Organisation, Switzerland is also party to the European Patent Convention.

Trade marks

A trade mark is a protected sign that is used in the course of trade to distinguish the goods and services of an undertaking from those of another undertaking.

A sign can only be registered as a trade mark if it is:

  • Distinctive.

  • Not misleading.

  • Not contrary to public policy, morality or applicable law.

A trade mark can consist of:

  • Letters (including words, combinations of letters or numbers and slogans).

  • Graphic images.

  • Three dimensional forms (shape mark).

  • Combination of colours (colour mark).

  • A series of sounds (acoustic trade mark).

  • Any combination of the above.

In addition, it is also possible to register position marks (that is, a graphic representation showing the exact position of special features attached to a certain product) and movement marks (that is, an animated sequence of pictures).

Trade mark protection requires registration of the mark.

A trade mark is protected for ten years from registration and can be renewed an unlimited number of times for additional ten-year periods.

Swiss trade mark law is governed by the Federal Act on the Protection of Trade Marks and Indications of Source. The current version was enacted on 1 April 1993.

Copyright

Copyright protects literary and artistic works with individual character such as literature, music, photographs, sculptures, films or operas. Software is also protected by copyright law. In addition, the legal framework protects neighbouring rights, which include the rights of:

  • Performing artists (such as musicians and actors) in their performances.

  • Producers of phonograms and videograms in their products (for example, CDs and DVDs).

  • Broadcasters in their radio and television broadcasts.

A work is protected under the copyright law from the date of its creation. Registration of copyright is neither necessary nor possible.

Copyright protection expires 70 years after the death of the author. Computer programs are protected for 50 years after the death of the author. Neighbouring rights are granted for 50 years from the performance/publication/emission of the protected matter.

The Federal Act on Copyright and Neighbouring Rights (CopA) entered into force on 1 July 1993. The CopA is currently being revised in order to better adapt the rights and obligations of creative artists, consumers and providers to the realities of the internet through targeted measures.

Apart from exploitation rights, Swiss copyright law grants certain moral rights to authors, such as the right to be named as the author of the work and to decide about making a work public. The CopA also entitles the author to preserve the integrity of the work and protect it from destructions. The statutory provisions of the CopA do not contain provisions regarding the waiving of moral rights and there is no relevant case law on this matter. However, in practice, it is established that the author of a work can waive its right to be named as the author of its work.

Design rights

Design rights protect the appearance of a product, namely the visible form of two-dimensional (for example, patterns such as fabric designs) or three-dimensional (models such as a piece of furniture) objects. The form is characterised through the use of lines, contours, colours, surfaces or materials.

To qualify for registration, a design must:

  • Be novel.

  • Have individual character (that is, be distinguishable from prior designs on significant points).

  • Not be contrary to public morality or law.

  • Not be dictated by the function of the object.

Design protection requires registration of a design in the design register. Unlike EU design law, Swiss design law does not protect unregistered designs.

A design is protected for five years on registration. The protection can be renewed four times for additional periods of five years each (with a maximum protection term of 25 years).

Design law is governed by the Federal Act on the Protection of Designs, as enacted on 1 July 2002.

Trade secrets and confidential information

Trade and manufacturing secrets (trade secrets) and confidential information are not considered as IPRs with statutory protection under Swiss law. Therefore, trade secrets and confidential information must be protected by way of agreement. However, certain legal provisions grant protection to trade secrets and confidential information in specific fields of law. For example, the Federal Act against Unfair Competition provides that the unlawful procurement of trade secrets by the inducement of employees and the exploitation of trade secrets obtained unlawfully are acts of unfair competition. Swiss labour law prohibits employees to exploit or disclose confidential information obtained unlawfully (in particular trade secrets) which have come to their knowledge during their employment.

Other

In addition to the main IPRs, Swiss law grants protection to the following IPRs:

  • Geographical indications. A geographical indication refers to the geographical origin of goods or services and can only be registered as a trade mark or part of a trade mark provided that it is not misleading and lawful. The Federal Act on Agriculture provides further protection for agricultural products and processed agricultural products.

  • Company names. The registered name of a company (companies are registered on one of the 26 cantonal commercial registers) is protected by the Swiss Code of Obligations (Article 956).

  • Domain names. The top-level domain ".ch" is managed by the foundation "Switch", which has been entrusted by the Swiss government to act as the national domain name registry. ".ch" domains can be purchased and registered by resellers (registrars).

  • Topographies. Topographies are three-dimensional structures of semi-conductor products (integrated circuits), regardless of how they are fixed or encoded. The Federal Act on the Protection of Topographies of Semi-Conductor Products, as enacted on 1 July 1993, grants protection to designs of topographies.

  • Plant varieties and their names. The Federal Act on the Protection of Plant Varieties (enacted on 20 March 1975) protects plant varieties that are new, distinct from existing varieties, homogenous and stable. New plant varieties can be registered.

For further information about the main IPRs, see Patents, trade marks, copyright and designs in Switzerland.

 

Maintaining IPRs

Search and information facilities

2. What facilities are available to conduct IP searches and obtain IP information on registered IP rights?

The Swiss Federal Institute of Intellectual Property operates the free of charge database "Swissreg", which allows searches regarding patents, supplementary protection certificates (SPCs), trade marks, designs, topographies and geographical indications. The database is accessible at www.swissreg.ch and indicates:

  • The name of the right's holder.

  • Whether the respective IPR is in force in Switzerland.

Patents

Swissreg contains information on granted Swiss and European patents that are effective in Switzerland and Liechtenstein. The database also provides information on published national Swiss patent applications (European patents are not published on www.swissreg.ch before they are granted with effect in Switzerland).

SPCs

Swissreg provides information on whether an SPC has been granted for a Swiss or European patent, and on whether such SPC is still valid.

Trade marks

It is possible to search for national trade mark applications and active trade marks.

The Swissreg database is not linked to the Madrid Express Database. Searches for international trade marks that are protected in Switzerland must therefore be conducted on the relevant World Intellectual Property Organisation (WIPO) database (www.wipo.int/romarin). The same applies to searches for international trade mark applications for which protection has been requested in Switzerland.

Design rights

Registered national design rights, whether in force or cancelled, can be found on www.swissreg.ch.

International design rights with effect in Switzerland must be searched with the relevant WIPO Hague database (www.wipo.int/designdb/hague), as Swissreg is not linked to this database.

Other

Swissreg also provides information on registered topographies.

Since 1 January 2015, ".ch" and ".li" (for Liechtenstein) domains can only be registered through private registrars. The exclusive registrar "Switch" offers free search of top-level domains (".ch" and ".li") at www.nic.ch.

 

Maintenance of main IPRs

3. What steps must a business take to maintain the registration and legally protectable status of its main IPRs?

Patents

The holder of a Swiss or European patent must pay annual fees. The fees for the first five years of protection are payable with the application. The fees for each subsequent year must be paid annually. If the patent holder fails to make a timely payment for the application or maintenance fees due, the patent application/patent will be cancelled. There is no use requirement to maintain the registration of patents.

Trade marks

A trade mark is registered for a period of ten years. The holder of a trade mark can renew its trade mark right by filing an application for an extension of the trade mark protection every ten years. If the trade mark holder does not apply for renewal of the trade mark and/or the renewal fees are not paid on time, the trade mark will be cancelled.

If the owner of the trade mark or an authorised third party (for example, a licensee) fails to use its trade mark for a period of five years, the trade mark holder loses the right to enforce its trade mark rights against third parties, unless he had good reasons for non-use.

Copyright

Copyright protection is not subject to registration or use requirements.

Design rights

The registered holder of a design right must apply for an extension of the design protection every five years (this extension can be requested for four terms of five years each). If an application for extension has not been filed and/or respective renewal fees have not been paid, the design right will be deleted from the design register. There is no use requirement to maintain the registration of designs.

All IPRs

The holder of an IPR forfeits its right to enforce its IPR if:

  • It knew or should have known that a third party infringed its IPR.

  • It tolerated such use by the third party.

  • The use conveyed the impression to the third party that the holder was aware of the use but did not act against it.

However, the alleged infringer must have acted in good faith and have acquired certain vested rights (in its allegedly infringing right). Swiss law does not provide for a fixed period of time after which the right to enforce the IPR is forfeit. The forfeiture of IPRs must be assessed based on the facts of each specific case.

 

Monitoring infringement

4. What steps can a business take to avoid infringing another party's IPRs and to monitor whether another party is infringing its IPRs?

To identify third party IPRs, in addition to market surveillance, a business can conduct searches on www.swissreg.ch for national and (registered) European patents, national trade marks, national designs, supplementary protection certificates and topographies with effect in Switzerland (see Question 2). The World Intellectual Property Organisation (WIPO) databases provide information on international trade marks and designs that have been granted protection in Switzerland (see Question 2). The official search tools of the Office for Harmonisation in the Internal Market provide information on Community trade marks and Community designs (www.oami.europa.eu/eSearch).

The Swiss Federal Institute of Intellectual Property (SFIIP) offers certain additional research and surveillance services with regard to patents and trade marks (see www.ipi.ch). Firms of patent and trade mark attorneys and specialised law firms have access to further databases provided by private vendors in order to offer monitoring services and assess possible infringements of IPRs.

Patents

The SFIIP offers several search services regarding potential prior art in a specific field of technology, freedom to operate searches and monitoring services.

Trade marks

The SFIIP provides search and/or monitoring services with regard to identical and/or similar national, international and Community trade marks.

Copyright

There are no databases available for copyright searches, as copyright is not a registered right. The existence of copyright can only be established through private investigations.

Design rights

The SFIIP offers certain search services regarding registered designs.

Trade secrets and confidential information

The only possibilities existing with respect to trade secrets and confidential information are market surveillance and the monitoring of newly published patent applications.

 

Exploiting IPRs

5. What are the main steps in conducting an IP audit in your jurisdiction to determine the content of an IP portfolio?

A valid transfer of IPR under Swiss law does not need to be recorded in a register. Therefore, the registered holder of an IPR as recorded in the register may differ from the actual legal holder of the IPR. This risk must be addressed by corresponding warranty provisions in the relevant agreements.

Patents

The content of a patent portfolio that is protected in Switzerland can be determined through searches on Swissreg and Espacenet (http://worldwide.espacenet.com/?locale=en_CH) (see Question 2).

Trade marks

Trade mark searches can be conducted on Swissreg (for national trade marks/trade mark applications) and the World Intellectual Property Organisation (WIPO) database (for international trade marks/trade mark applications for protection in Switzerland) (see Question 2).

Copyright

Copyright cannot be registered and can only be checked through the review of the relevant agreements under which the works have been created or through private investigations.

Design rights

Design rights can be searched on Swissreg or the World Intellectual Property Organisation (WIPO) database (see Question 2).

Domain names

The availability of a domain name and information on the holder of a registered ".ch" domain can be searched on www.nic.ch.

 

Assignment

Scope of assignment

6. On what basis can the main IPRs be assigned?

Patents

A patent or patent application can only be assigned to a third party in its entirety. However, it is possible to assign a European patent application for some of the designated countries only.

Trade marks

A trade mark can be assigned in part (that is, for certain goods or services only) or in whole (that is, for all registered goods and services).

Copyright

Copyright can be assigned in whole or in part (for example, in relation to some of the exploitation rights only).

Design rights

A registered design can only be assigned in its entirety. However, it is possible to only assign one or a part of the design that is part of a collective filing.

Trade secrets and confidential information

Trade secrets and confidential information can be transferred by agreement, which must include an obligation of the transferor not to use the secrets and information any longer and not to disclose them to any third party. Unlike assignments of other IPRs, no rights enforceable against third parties are transferred.

Domain names

A domain name can only be assigned in its entirety.

 

Formalities for assignment

7. What formalities are required to assign each of the main IPRs?

Under Swiss law, registered IPRs and applications for IPRs can be transferred by way of an assignment executed by the assignor. Registration and notarisation are not conditions for a valid transfer.

Patents

To be valid, the assignment of a patent or patent application must be in writing and duly signed by the assignor (or assignors if the patent is held by more than one person).

Trade marks

The assignment of a trade mark is valid if it is evidenced in writing and signed by the assignor. For third parties acting in good faith, the transfer only becomes effective on registration.

Copyright

Copyright can be assigned by agreement. No specific form is required and an oral agreement is sufficient.

Design rights

The formalities to validly transfer a design are the same as for patents and trade marks (see above, Patents and Trade marks).

Trade secrets and confidential information

No specific form is required for the assignment of trade secrets or confidential information.

Domain names

The holder of a ".ch" domain name is the owner of an online account with SWITCH. A ".ch" domain name can be easily transferred from one account holder to another by changing the name of the holder on the online tool.

 

Main terms for assignments

8. What main terms should be included in an assignment of IPRs?

The main terms of an IPR assignment agreement are:

  • A detailed description of the IPRs to be assigned (in particular registration numbers).

  • A description of the scope of the assignment (that is, total or partial assignment and assignment of corresponding rights (for example, the right to bring infringement proceedings, goodwill attached to the IPR, and so on).

  • Representations and warranties regarding the IPRs (if not included in a respective sale and purchase agreement).

  • The consideration, if any (consideration is not a legal requirement under Swiss law).

  • A description of the assignor's duties with regard to the transfer of the IPRs (for example, the duty to sign all necessary documents to register the assignment).

  • The allocation of costs and expenses that will accrue in relation to the assignment.

  • Applicable law and jurisdiction.

 

Licensing

Scope of licensing

9. On what basis can the main IPRs be licensed?

Patents

The right to use a granted patent or a patent application can be licensed in whole or in part (for example, it is possible to only grant the right to use a specific patented step of a process).

Trade marks

The owner of a trade mark that enjoys protection in Switzerland can license the use of its registered sign in whole or in part, for the whole of Switzerland or only parts of it.

Copyright

Copyright can be licensed in whole or in part, for the whole of Switzerland or only parts of it.

Design rights

Registered designs can be licensed in whole or in part, for the whole of Switzerland or only parts of it.

Trade secrets and confidential information

Trade secrets and confidential information can be licensed in whole or in part.

 

Formalities for licensing

10. What are the formalities to license each of the main IPRs?

Under Swiss law, the licensing of any IPRs is not subject to any formal requirements. In particular, registration is not a requirement (but is possible) to validly enter into a licensing agreement. In addition, a licence is not subject to any formal requirements. However, it is common and recommended to have a written licence agreement in place. If the IPR is held by more than one party, consent of all co-owners is required.

Patents

To enforce a licence against a third party who has acquired rights in the licensed patent, the licence must be registered.

Trade marks

A trade mark licence can be entered on the trade mark register at the request of the licensor or licensee. On registration, the licence becomes binding on the acquirer of the trade mark.

Copyright

The registration of copyright, and therefore of a copyright licence, is not possible.

Design rights

A design licence can be registered at the request of the licensor or licensee. On registration, a licence becomes enforceable against a third party who acquires rights to the (licensed) design right.

Trade secrets and confidential information

There are no formalities for the licensing of trade secrets and confidential information.

 

Main terms for licences

11. What main terms should be included in an IP licence?

The main terms of an IP licence are:

  • A detailed description of IPRs to be licensed (in particular registration numbers).

  • A description of the scope of the licensed IPRs (for example total or partial licence, territory of the licence and allowed use of IPRs).

  • The nature of the licence (that is exclusive, non-exclusive or sole licence).

  • Right to grant sub-licences.

  • Term of the licence.

  • Licensee fee (if any) and calculation method of the fee (for example, fixed percentage of the net sale of sold products produced or distributed under the licensed IPRs).

  • Payment terms.

  • Representations and warranties regarding the licensed IPRs.

  • Registration of the licence (if applicable).

  • Description of the licensor's duties with regard to the licensed IPRs (for example, the duty to sign all necessary documents to register the licence).

  • Defence/defence modalities in the case of challenges and enforcement rights/modalities in the case of infringements of the licensed IPRs.

  • Applicable law and jurisdiction.

 

Taking security

12. What are the key issues in taking security over the main IPRs?

As IPRs can have a material economic value, it is possible to provide a company's IPRs as a security for financing purposes, usually as part of a security package with other company assets (such as bank accounts, receivables or real estate). Typical IPRs used as a security are, depending on the business conducted by the company, patents, trade marks or copyright in software.

The valuation of IPRs is generally difficult. This can in particular cause problems if the pledge agreement provides for a right of appropriation (Selbsteintritt) of the pledged IPR in the event of default on the part of the pledgor/debtor. Swiss statutory law obliges the pledgee to duly account for the value of the pledged IPR, to deduct such value from the secured claim and to return any surplus to the pledgor. There is some debate among legal scholars as to whether a right of appropriation is admissible in cases where there is no determinable market price for a pledged asset. In addition, a straightforward default clause providing that the pledged IPR will become the property of the pledgee in the event of default is considered invalid under Swiss law. According to Swiss legal doctrine, the same principles generally apply to security assignments or other full-title security interests. Consequently, appropriation of the IPR by the pledgee/assignee requires a precise determination of the pledged IPR as well as valuation principles taking into account the interests of the pledgor/assignor.

The pledgee of a registered IPR bears the risk that the renewal fees for the pledged IPR (for example, for a patent) remain unpaid. This means that the respective IPR will expire and the pledgee will lose its security.

 
13. What are the main security interests taken over IPRs?

A pledge is the main security interest taken over IPRs. In addition, security assignments are possible under Swiss law. A pledge agreement must be made in writing (Article 900, Swiss Civil Code). The formal requirements for an assignment of security are the same as for assignment of IPRs (see Question 7).

Patents

Registration is not a requirement for the validity of a pledge over a patent. However, only registered pledges can be enforced against a bona fide acquirer of the patent who is not otherwise aware of the pledge.

Trade marks

Registration is not necessary for a pledge to be valid, but only a registered pledge can be enforced against a bona fide third party.

Copyright

As copyright is not eligible for registration, a pledge over a copyright work cannot be registered. Therefore, it is preferable to assign the copyright as a security.

Design rights

A pledge over a registered design is possible and must be registered to be enforceable against a third party.

 

M&A

Due diligence

14. What IPR-related due diligence is commonly carried out in both a share sale or merger and an asset sale?

The scope and depth of an IPR-related due diligence does not depend on the type of transaction (asset deal or share deal), but on the business to be acquired. For pharmaceutical or technical companies, the focus will be on patents (and related know-how). Copyright plays a more important role for sales of IT companies or businesses in the creative industry. The trade mark portfolio of a company forms part of the due diligence, regardless of a company's field of business.

Basic due diligence involves the following searches:

  • Identification of IPRs. The initial goal of IP due diligence is the identification of intangible assets of the company. This identification should reveal all material IPRs that are used by the company to conduct its business, in particular registered IPRs, as well IPRs that are worth protecting/registering.

  • Ownership of IPRs. On identification of the IPRs, due diligence focuses on the ownership of these IPRs. This verification involves searches in the relevant registers (such as Swissreg) to confirm that all relevant IPRs are registered in the name of the target/seller. In addition, due diligence should ensure that the target/seller has obtained all IPRs from its employees and/or third parties (such as consultants) created in the course of business. This can be examined through a review of employee agreements and respective third party contracts. See also Questions 22 and 23.

  • Review of licence agreements. The aim of the review is to identify IPRs licensed to third parties (out-licences) and (material) IPRs that are owned by third parties but licensed to the company (in-licences).

In addition to a basic search, the following searches can be conducted regarding companies engaged in the field of technology (for example, pharmaceutical or engineering companies):

  • Freedom to operate searches. These searches reveal whether the business activities of the company may infringe third party rights. For technical intangible assets, these searches must be carried out by qualified patent attorneys.

  • Validity searches. Validity searches identify third party IPRs that may affect the validity of patents of the target/seller (for example, revealing the obviousness or a lack of novelty of an invention).

  • Patentability searches. These searches (conducted by patent attorneys) clarify whether unprotected inventions or technologies of a target/seller are patentable. These searches must be carried out by qualified patent attorneys.

 

Warranties/indemnities

15. What IPR-related warranties and/or indemnities are commonly given by the seller to the buyer in both a share sale or merger and an asset sale?

Share sale or merger

The type and scope of warranties and/or indemnities granted to a buyer differ from case to case. However, a seller commonly gives the following warranties/indemnities:

  • All IPRs used or necessary to conduct the target's business are owned or lawfully used by the target, and the target does not infringe any third party IPRs.

  • All IPRs are valid and in full force and effect, and not subject to any encumbrance.

  • All necessary renewal applications have been filed and related payments have been made.

  • None of the target's IPRs are subject to pending or threatened claims by third parties.

  • All IPRs created by employees or third parties have been acquired by the target.

  • All commercially reasonable measures have been taken to keep the target's know-how secret.

Warranties and/or indemnities are important in a share deal since the statutory warranty provisions of the Swiss Code of Obligation are only related to the (physical) shares themselves, and not to the underlying business and related rights.

Asset sale

The warranty and indemnity provisions typically used in an asset sale do not substantially differ from those in a share deal (see above, Share sale or merger).

 

Transfer of IPRs

16. How are the main IPRs transferred in both a share sale or merger and an asset sale?

Share sale or merger

There is no transfer of IPRs. Control of the IPRs transfers as a result of the transfer of the shares in the company. In the case of a merger, it is recommended that the new holder is recorded in the relevant IP register.

Asset sale

The transfer of IPRs is executed by way of assignment (see Question 7). The change of ownership of the transferred IPRs should be registered.

 

Joint ventures

17. Is it common for companies to set up joint ventures in your jurisdiction to develop projects that heavily involve IPRs?

The set-up of joint ventures (JVs) to develop new products and services is common in Switzerland, particularly in the IT and pharmaceutical sectors, as well as in the field of technical engineering. As an alternative, companies can grant cross-licences for research and development purposes.

A JV agreement should contain the following IP-related provisions:

  • Definition of the IPRs (including ownership) that are assigned or licensed to the JV.

  • Scope of use of the existing IPRs (for example, the extent to which each party will be entitled to use the other party's (background) IPRs, and whether such right of use will be granted after the termination of the JV project).

  • Ownership of the newly developed IPRs (for example, whether the parties will have joint ownership, or whether the IPRs will vest in the JV, one party only or both).

  • Terms of use of the jointly developed IPRs (for example, whether each party will be free to use the jointly developed IPRs).

  • Maintenance and enforcement of developed IPRs (including allocation of related costs).

 

Competition law

Main provisions and common issues

18. What are the main provisions of your national competition law that can affect the exploitation of the main IPRs?

Swiss competition law aims to prevent the harmful economic or social effects of cartels and other restraints of competition (Article 1, Federal Act on Cartels and other Restraints of Competition (CartA) (in force since 1 January 1996)). The CartA does not apply to effects on competition resulting exclusively from the exploitation of IPRs. However, import restrictions based on IPRs must comply with the CartA.

CartA provides that the following are unlawful:

  • Agreements affecting competition (Article 5, CartA).

  • Abuses of a dominant position (Article 7, CartA).

These provisions are similar to Articles 101 and 102 of the Treaty on the Functioning of the European Union.

Agreements include those that are harmful at the level of competitors (horizontal agreements) (Article 5(3), CartA) and those between undertakings at different levels of the supply chain which are detrimental to effective competition (vertical agreements) (Article 5(4), CartA).

Horizontal agreements are unlawful if they:

  • Directly or indirectly fix prices.

  • Limit the quantities of goods or services to be produced, purchased or supplied.

  • Allocate markets geographically or according to trading partners.

Vertical agreements are considered unlawful if they:

  • Fix prices.

  • In the case of distribution contracts, allocate territories in a way that prohibit sales by other distributors in these territories.

Dominant undertakings behave unlawfully if they, by abusing their position in the market, hinder other undertakings from starting or continuing to compete, or disadvantage trading partners (Article 7, CartA). In particular, the law provides that the following behaviours are unlawful:

  • Refusal to deal (for example, refusal to supply or to purchase goods).

  • Discrimination between trading partners in relation to prices or other conditions of trade.

  • Imposition of unfair prices or other unfair conditions of trade.

  • Undercutting of prices or other conditions directed against a specific competitor.

  • Limitation of production, supply or technical development.

  • Conclusion of contracts on the condition that the other contracting party agrees to accept or deliver additional goods or services.

Any undertaking that participates in an unlawful agreement or behaves unlawfully by abusing its position on the market faces a fine of up to 10% of its revenues generated in Switzerland in the preceding three financial years (Article 49a, CartA).

 
19. What are the most common national competition law issues that arise in the exploitation of the main IPRs?

In practice, there are two main competition law issues with regard to the exploitation of IPRs in Switzerland:

  • Under Swiss law, trade mark rights and copyright exhaust internationally and patent rights regionally (on the level of the European Economic Area). Therefore, there is a considerable risk that holders of IPRs try to use these rights to restrain competition from abroad and restrict parallel importation. However, as a practical guideline, agreements that comply with European competition rules usually also comply with Swiss competition law.

  • IPRs can be used unlawfully to negatively affect vertical competition (for example, through price fixing by national distributors). The Swiss Competition Commission has issued a Notice on the Competition Law Treatment of Vertical Agreements on 28 June 2010 (enactment date 1 August 2010), which contains a catalogue of unlawful arrangements and practices affecting the market on different levels of the production and distribution chain. The aim of this notice is to harmonise Swiss rules with the respective European regulations (in particular, the notice provides that the corresponding EU provisions apply analogously). Consequently, agreements that are compliant with the relevant EU regulations on prohibited vertical restraints of competition will also comply with Swiss competition regulations.

To improve the enforcement of competition law at the European level, Switzerland entered into a treaty with the EU. This agreement does not affect material Swiss competition law but allows a closer co-operation of the Swiss Competition Commission and the European Commission, in particular regarding the exchange of information and the co-ordination of enforcement actions.

 

Exclusions/exemptions

20. What exclusions or exemptions are available for national competition law issues involving the exploitation of the main IPRs?

Under the Federal Act on Cartels and other Restraints of Competition, agreements affecting competition can be justified on grounds of economic efficiency if they:

  • Are necessary to:

    • reduce production or distribution costs;

    • improve products or production processes;

    • promote research into or dissemination of technical or professional know-how; or

    • exploit resources more rationally.

  • Do not enable the parties involved to eliminate effective competition.

 

Advertising

21. To what extent do advertising laws impact on the use of third party trade marks?

Comparative advertising is permitted under Swiss law (Article 3(e), Unfair Competition Act (UCA)) provided that such comparative advertising is not incorrect, misleading, unnecessarily injurious or imitative. In addition, pursuant to the general obligation not to commit unfair competition in the course of trade (Article 2, UCA) comparative advertising must not be used to exploit the reputation of a competitor's product or trade mark (free riding). Subject to these conditions, the use of a third party's trade mark in comparative advertising is permitted. However, there is no relevant case law on this matter, and the lawful use of a competitor's trade mark in comparative advertising should be assessed on a case-by-case basis.

 

Employees and consultants

22. Who owns each of the main IPRs created by an employee in the course of his employment? Must compensation be paid to the employee? What main steps can an employer take to ensure it owns each of the main IPRs?

Ownership

Employer and employee are free to agree on the ownership and compensation of IPRs created by an employee subject to:

  • Article 332(4) of the Code of Obligations (CO), providing for a mandatory special consideration for the transfer of inventions and designs created by an employee while performing activities under the employment contract, but not in fulfilment of its contractual duties to the employers (see below).

  • Certain restrictions with regard to the assignment of moral rights, such as the right to be named as an inventor or author.

Patents and design rights. If an employment agreement does not contain any deviating arrangement with regard to the ownership of inventions and designs, inventions and designs made or created by the employee in the course of employment and in performance of its contractual obligations belong to the employer.

Trade marks. Ownership of a trade mark is established by registration. Therefore, an employer can file a trade mark in its own name to become proprietor of a trade mark. If the trademark has been created by an employee, the employee may have copyright in certain aspects of the trade mark.

Copyright (including software). Swiss law does not contain provisions regarding the ownership of copyright works created by employees. Therefore, the general rule applies, meaning that copyright vests in the author of the work (that is, the employee). However, Swiss labour law entitles the employer to obtain all copyrights in a work and to provide in an employment agreement that all copyrights in a work belong to the employer.

If the work that has been created under an employment contract concerns a computer program, a special provision of the Swiss copyright law entitles the employer to exercise the exclusive right of use in the software created.

Compensation

Under Swiss law, compensation regarding IPRs created by employees can be freely negotiated.

In the absence of a contractual arrangement, Swiss labour law provides that an invention or design that is the result of the performance of an employee's contractual obligations need not be compensated by the employer (Article 332(1), CO). However, compensation must be paid if the employee makes an invention or creates a design outside the fulfillment of its contractual duties and the employer wishes to acquire this design or invention (Article 332(4), CO).

Main steps

To ensure that an employer acquires and owns any and all IPRs created by an employee, the employer should include a clause to that effect in the employment contract. The employment contract should be adjusted to the relevant field of business (that is, an employment contract in the creative industry should focus on the detailed assignment of copyright, and the employer of a technical engineer should ensure that it obtains all rights in any invention made by the engineer).

 
23. Who owns each of the main IPRs created by an external consultant? What main steps can a business take to ensure it owns each of the main IPRs?

Ownership

All IPRs in the work originally vest in the external consultant. Consequently, all IPRs must be transferred to the principal by agreement.

Main steps

To ensure that the principal obtains all IPRs that result from the consultancy agreement, the transfer of IPRs should be specifically addressed in the written contract. The parties can either agree that all IPRs in the work will be automatically transferred to the principal on creation, or that each IPR in the work will be assigned at a later date.

 

Tax

24. What are the main taxes payable by a licensor on the licensing of the main IPRs?

The main taxes that are payable by a licensor on royalties under Swiss law are income/profit taxes at ordinary rates. These income/profit taxes accrue at the communal, cantonal and federal levels. If the licensor is a company, the royalties form part of its profits and are therefore subject to corporate profit taxes. Revenues on licensing received by individuals or partnerships are subject to income tax at the level of the individual.

Royalty payments are not subject to any withholding tax in Switzerland. Withholding taxes at a rate of 35% can only be imposed on royalty payments if such payments qualify as constructive dividends (that is, non-arms' length royalty payments paid at intra-group level or to a company's shareholders).

 
25. What are the main taxes payable by a seller on the sale of the main IPRs?

Whether taxes are payable depends on the person liable to pay the taxes.

Revenues realised by a company on the sale of IPRs form part of the company's profits, and are subject to corporate profit taxes at the federal, cantonal and communal levels. However, IPRs can be transferred free of tax at book value under certain conditions.

Provided that the IPRs sold are part of an individual's private assets, the gains realised on sale are not taxable (tax-free capital gain). If the IPRs are part of an individual's business assets or assets of a partnership, income taxes are due at ordinary rates on the revenues realised on the sale of IPRs.

 

Cross-border issues

26. What international IP treaties is your jurisdiction party to?

Switzerland is party to the following international IP treaties:

  • Convention Establishing the World Intellectual Property Organisation.

  • WIPO Paris Convention for the Protection of Industrial Property 1883.

  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS).

  • Patent Cooperation Treaty.

  • Strasbourg Convention on the Unification of Certain Points of Substantive Law on Patents for Inventions 1963.

  • WIPO Strasbourg Agreement Concerning the International Patent Classification 1971.

  • Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure 1977.

  • Hague Agreement Concerning the International Registration of Industrial Design.

  • Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs.

  • Locarno Agreement Establishing an International Classification for Industrial Designs 1968.

  • WIPO Madrid Agreement Concerning the International Registration of Marks 1891.

  • WIPO Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks 1989.

  • WIPO Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks 1957.

  • Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks.

  • WIPO Trademark Law Treaty 1994.

  • Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods.

  • WIPO Berne Convention for the Protection of Literary and Artistic Works 1971.

  • UN Universal Copyright Convention 1952.

  • WIPO Rome Convention for the Protection of Performers, Producers of Phonographs and Broadcasting Organizations.

  • WIPO Convention for the Protection of Producers of Phonograms against Unauthorised Duplication of their Phonograms.

  • Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite.

  • WIPO Patent Law Treaty 2000.

  • WIPO Copyright Treaty 1996.

  • WIPO Performances and Phonograms Treaty 1996.

  • European Patent Convention 1973.

A detailed list of treaties can be found at www.wipo.int/wipolex/en/profile.jsp?code=CH.

 
27. Are foreign IPRs recognised in your jurisdiction?

The protection of IPRs is based on the principle of territoriality. This means that foreign IPRs are not automatically recognised in Switzerland and only qualify for territorial protection if they meet specific conditions set out in the relevant national IP legislation. However, Switzerland is party to several international treaties that enable or facilitate the recognition of foreign IPRs (see Question 26).

Patents

Switzerland is a member of the European Patent Organisation. Therefore, it is possible to apply for a European patent with effect in Switzerland. In addition, Switzerland is a party to the Patent Cooperation Treaty (PCT), which means that the holder of a foreign patent can file an international application (PCT application) and request protection for its patent in Switzerland.

Trade marks

As Switzerland is a party to the WIPO Madrid Agreement Concerning the International Registration of Marks 1891 and the WIPO Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks 1989, a foreign national trade mark can be registered with WIPO as an international trade mark with protection in Switzerland.

Design rights

Based on the Hague Agreement Concerning the International Registration of Industrial Design, which has been ratified by Switzerland, it is possible to obtain design protection for a foreign design by applying to WIPO for an international design with protection in Switzerland.

 

Reform

28. Are there any proposals for reform?

"Swissness" legislation

Since Swiss products and services enjoy an excellent reputation on the market, the Swiss legislator has decided to better protect the geographical indication "Switzerland" and the Swiss cross (white cross on red ground). A bill will come into force on 1 January 2017 with the aim to prevent the misuse of the geographical indication "Switzerland".

IP boxes

In June 2015, the Swiss government approved the third series of corporate tax reforms for parliamentary deliberation. Under this legislative project, a patent box will be introduced for cantonal taxes. The bill contains provisions for the preferential treatments of revenues from patents and similar rights associated with research and development (R&D) in Switzerland. The cantons will have additional options to introduce increased deductions for R&D expenditures.

 

Online resources

Swiss Federal Institute of Intellectual Property Law (SFIIP)

W www.ige.ch

Description. This is the website of the SFIIP, which is the governmental authority that registers and maintains IRPs in Switzerland. It contains general information on the main IPRs in Switzerland (in German, French, Italian and English). The website also provides links to official legal sources (such as the official online platform for Swiss statutory law) as well as links to court authorities.



Contributor profiles

Markus Wang, Partner

Bär & Karrer

T +41 58 261 55 10
F +41 58 263 55 10
E markus.wang@baerkarrer.ch
W www.baerkarrer.ch

Professional qualifications. Switzerland, qualified lawyer (admitted to the bar and to all Swiss courts)

Areas of practice. Contentious and non-contentious patent, trade mark, copyright and other IP-related issues, in particular in the pharmaceutical, biotech and IT sectors; licences and R&D agreements; regulatory matters in the fields of life sciences and healthcare.

Non-professional qualifications. Dr. iur.; LLM

Languages. English, German

Professional associations/memberships.

  • Swiss Bar Association (SAV/FSA).
  • Zurich Bar Association (ZAV).
  • International Association for the Protection of Intellectual Property (Association Internationale pour la Protection de la Propriété Intellectuelle) (AIPPI).
  • Institute for Intellectual Property Law (Institut für den Gewerblichen Rechtsschutz) (INGRES).

Jonas Bornhauser

Bär & Karrer

T +41 58 261 54 13
F +41 58 263 54 13
E jonas.bornhauser@baerkarrer.ch
W www.baerkarrer.ch

Professional qualifications. Switzerland, qualified lawyer (admitted to the bar and to all Swiss courts)

Areas of practice. Contentious and non-contentious patent, trade mark, copyright and other IP-related issues, in particular in the pharmaceutical, biotech and IT sectors; licences and R&D agreements; regulatory matters in the fields of life sciences and healthcare.

Non-professional qualifications. Dr. iur.; LLM

Languages. English, German

Professional associations/memberships.

  • Swiss Bar Association (SAV/FSA).
  • Zurich Bar Association (ZAV).
  • International Association for the Protection of Intellectual Property (Association Internationale pour la Protection de la Propriété Intellectuelle) (AIPPI).
  • Institute for Intellectual Property Law (Institut für den Gewerblichen Rechtsschutz) (INGRES).

Raphael Nusser

Bär & Karrer

T +41 58 261 56 98
F +41 58 263 56 98
E raphael.nusser@baerkarrer.ch
W www.baerkarrer.ch

Professional qualifications. Switzerland, qualified lawyer (admitted to the bar and to all Swiss courts)

Areas of practice. Contentious and non-contentious patent, trade mark, copyright and other IP-related issues, in particular in the pharmaceutical, biotech and IT sectors; licences and R&D agreements; regulatory matters in the fields of life sciences and healthcare.

Non-professional qualifications. Dr. iur.; LLM

Languages. English, German

Professional associations/memberships.

  • Swiss Bar Association (SAV/FSA).
  • Zurich Bar Association (ZAV).
  • International Association for the Protection of Intellectual Property (Association Internationale pour la Protection de la Propriété Intellectuelle) (AIPPI).
  • Institute for Intellectual Property Law (Institut für den Gewerblichen Rechtsschutz) (INGRES).

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