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Intellectual property

IP rights

How can franchisors protect their intellectual property (eg, trademarks and copyright)?

Trademarks and patents are protected provided they are registered in the public registry or in accordance with international treaties. The registrant benefits of legal exclusivity.

Copyrights do not require registration. A work qualifies for copyright protection if it meets the legal requirements for copyright protection.

Must IP licences be registered?

Registration is not mandatory. Trademark and patent licences may be registered. They then become binding on any rights to the trademark subsequently acquired (Article 18 (2) of the Trademark Protection Act and Article 34(3) of the Patents Act).

Know-how

How can franchisors protect their know-how and trade secrets?

There is no general definition of ‘know-how’ in Swiss law. The Swiss Competition Commission defines ‘know-how’ as a package of practical information, resulting from experience and testing, which is secret (not generally known or easily accessible), substantial (significant and useful for the production of the contract products), and identified (described in a sufficiently comprehensive manner) (Article 7 of the Communication on Vertical Agreements).

The owner of know-how does not benefit of legal exclusivity. However, to the extent that know-how is considered a business secret, the owner is protected against disclosure, espionage or the use of knowledge illegally acquired, according to the rules of the Unfair Competition Code and the Criminal Code.

Confidentiality clauses – often combined with contractual penalties in case of breach – are a common element of franchise agreements in order to protect franchisor know-how.

Breach

What are the consequences of a franchisee’s breach of the franchisor’s IP, know-how or trade secret rights and what remedies are available to the franchisor in this regard?

If a confidentiality clause is (allegedly) violated by a party, the non-breaching party may claim enforcement of the clause before the competent court and the arbitral tribunal, respectively. Injunctions and preliminary injunctions are both possible before or during main court proceedings. Often, parties agree on a contractual penalty for breaching confidentiality.

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