Intellectual property issues

Paris Convention

Is your jurisdiction party to the Paris Convention for the Protection of Industrial Property? The Patent Cooperation Treaty (PCT)? The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)?

Switzerland is a party to all these international treaties.

Contesting validity

Can the licensee be contractually prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations in your jurisdiction?

There is no statutory rule that prohibits the conclusion of non-challenge clauses in licence agreements under Swiss law. Pursuant to an older Supreme Court precedent, a prohibition to challenge the licensed rights is allowed and can in some cases even be inferred from the circumstances of the case, even if it is not explicitly contained in the agreement.

The majority of Swiss scholars consider non-challenge clauses to be fundamentally valid under Swiss competition law. Pursuant to a more recent doctrine, however, such clauses can be potentially problematic and prohibited as a matter of competition law.

Invalidity or expiry

What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?

The expiry or invalidity of an IPR leads to the termination of a licence agreement concerning such a right if the parties have not agreed otherwise. The parties are allowed to agree otherwise and often do so, in particular if several rights are licensed in the same agreement or if additional assets, such as know-how, are licensed.

Save for special circumstances, the licensee is in principle not entitled to be refunded the royalties paid under the licence agreement prior to the underlying right being declared invalid or prior to the invalidity becoming apparent to any third party. Swiss courts consider that the appearance of the validity of the right has an economic value, from which the licensee has benefited during the term of the agreement.

After the termination of the licence agreement, the licensee can freely compete with the licensor, unless the parties have agreed otherwise.

Requirements specific to foreigners

Is an original registration or evidence of use in the jurisdiction of origin, or any other requirements unique to foreigners, necessary prior to the registration of intellectual property in your jurisdiction?

Foreign applicants must designate an address for service in Switzerland for the notification of any office actions and other communication from the relevant authorities. There are, however, no requirements that are unique to foreigners with regard to the documents to be filed with the Swiss Federal Institute for Intellectual Property (FIIP).

If the applicant for the registration of an IPR claims the priority of a foreign prior right (article 4 of the Paris Convention for the Protection of Industrial Property 1883), the applicant must file the original certificate of registration of the jurisdiction of origin with the FIIP.

Unregistered rights

Can unregistered trademarks, or other intellectual property rights that are not registered, be licensed in your jurisdiction?

Yes. Unregistered IPR (such as copyright) can be licensed under Swiss law.

Unregistered signs, know-how and celebrity or personality features (which are not considered to be IPR) can also form the subject matter of licence agreements (‘untypical’ licence agreements).

Security interests

Are there particular requirements in your jurisdiction to take a security interest in intellectual property?

Under Swiss law, there are no form requirements for licence agreements. Licence agreements are valid even if concluded orally or tacitly.

Licence agreements concerning patents, trademarks, designs and plant varieties can be entered into the respective registers. The registration of the licence makes it opposable to third parties, as explained in question 3.

A pledge of IPR can only be validly entered into in writing. The pledge can (but does not need to) be entered into the respective register. However, similarly to the registration of licences, the registration makes the pledge opposable to third parties.

Proceedings against third parties

Can a foreign owner or licensor of intellectual property institute proceedings against a third party for infringement in your jurisdiction without joining the licensee from your jurisdiction as a party to the proceedings? Can an intellectual property licensee in your jurisdiction institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor? Can the licensee be contractually prohibited from doing so?

The owner of an IPR can always institute proceedings against third parties for infringement without having to join the local licensee to the proceedings. An exception to this rule only applies if the parties agreed otherwise in the licensing agreement, in which case the IPR owner may be contractually prohibited to act independently.

Any person who holds an exclusive licence into a patent, a trademark, a design (irrespective of whether it is entered into the register) or copyright is entitled to institute infringement proceedings and request financial compensation resulting from the infringement, provided that this is not expressly excluded by the licence agreement. The exclusive licensee can be contractually prohibited from instituting infringement proceedings, if this is explicitly mentioned in the licence agreement.

Both exclusive and non-exclusive licensees can join an action for damages filed by the rightsholder in order to claim their own loss or other damages. Non-exclusive sub-licensees can also join an action for damages instituted by the exclusive licensee to claim their own damages.

Sub-licensing

Can a trademark or service mark licensee in your jurisdiction sub-license use of the mark to a third party? If so, does the right to sub-license exist statutorily or must it be granted contractually? If it exists statutorily, can the licensee validly waive its right to sub-license?

Trademarks and service marks can be sub-licensed under the conditions set out by the main licence agreement. It is disputed among Swiss legal scholars whether sub-licences can be granted in the absence of explicit contractual provisions. Whether the licensee has the right to grant sub-licences is therefore a matter of contractual interpretation in every specific case. It is thus advisable to include a corresponding section in the main licence agreement.

Most Swiss scholars agree that non-exclusive licences generally cannot be sub-licensed without the licensor’s prior consent.

The licensee can waive its right to sub-license.

Jointly owned intellectual property

If intellectual property in your jurisdiction is jointly owned, is each co-owner free to deal with that intellectual property as it wishes without the consent of the other co-owners? Are co-owners of intellectual property rights able to change this position in a contract?

Under Swiss property law, co-ownership may either be what is called united ownership or ownership in common.

Each owner in common has the right to the whole thing. This means that the joint owners do not possess an undivided share in the IPR. Conversely, united owners possess an undivided share in the right.

The traditional view is that the principles of property law also apply to IPR. Subject to any agreement to the contrary, parties that engage in joint work such as joint R&D projects are traditionally held to be joined in a simple partnership and as a result are held to be owners in common. For copyrights, this view has been confirmed by the Federal Supreme Court. For patents and trademarks, no judgment has been issued yet. However, the Swiss Patent Office issued a statement in early 2000 according to which there is a general presumption that - subject to an agreement to the contrary - co-owners of a patent are held to be owners in common. A dissenting view has emerged in literature more recently, according to which the general principles of property law shall not be applicable to patent law in view of a special provision in the Patent Act. This modern view advocates that where a patent is granted to two people, subject to an agreement to the contrary, the co-owners are held to be united owners of the patent (ie, each person or entity owns an equal undivided share in the patent).

Regardless of which notion of co-ownership is applied, the grant of licences always requires the consent of all co-owners under Swiss law. Contrariwise, the assignment of a co-owner’s interest in the IPR is only possible under united ownership, whereas owner’s in common always need the other co-owner’s consent.

In any event, the parties are free to agree on the type of co-ownership they prefer and they can provide detailed rules on the exploitation of the corresponding IPR. The above-outlined default legal regime applies only if the relevant agreement does not provide specific rules or is unclear in this respect.

First to file

Is your jurisdiction a ‘first to file’ or ‘first to invent’ jurisdiction? Can a foreign licensor license the use of an invention subject to a patent application but in respect of which the patent has not been issued in your jurisdiction?

Switzerland is a ‘first to file’ jurisdiction. Both Swiss and foreign licensors are allowed to license an invention subject to a patent application but in respect of which the patent has not been issued.

Scope of patent protection

Can the following be protected by patents in your jurisdiction: software; business processes or methods; living organisms?

Software, business processes or methods are, in principle, not patentable.

Software and methods for doing business are explicitly excluded from patent protection under the European Patent Convention. Certain exceptions exist for software or business-related innovations that solve a technical problem. Simply, this means that in order to be patentable, a software or business-related product must be either capable of causing a change in the physical nature or technical functioning of clearly technical features, or reflecting technical considerations required to carry out the invention. However, only if such technical features are non-obvious to a skilled person, a patent can be granted. As a result, software code itself cannot be the subject matter of a patent, but patents can be granted for computer-implemented technical inventions. Software code is, however, protected as a work under copyright law.

Pursuant to the Patent Act, the human body and its elements, naturally occurring gene sequences and ‘inventions whose exploitation is contrary to human dignity or that disregard the integrity of living organisms or that are in any other way contrary to public policy or morality’ are not patentable. The Patent Act also explicitly excludes patents on plant varieties and animal varieties; it also excludes essentially biological processes for the production of plants or animals.

Trade secrets and know-how

Is there specific legislation in your jurisdiction that governs trade secrets or know-how? If so, is there a legal definition of trade secrets or know-how? In either case, how are trade secrets and know-how treated by the courts?

Trade secrets and know-how are protected by general contract law, the Federal Act against Unfair Competition (UCA) and the Swiss Criminal Code.

There is no statutory definition of trade secrets under Swiss law. Pursuant to court precedents and scholarly writing, trade secrets are defined as information that is not publicly available and actually kept secret by its owner. In addition, the owner has to have an interest in keeping the information from becoming publicly known.

Trade secrets are not considered as exclusive rights by Swiss courts. The remedies under the UCA include injunctions against the use of information obtained in breach of a confidentiality undertaking and damages for breach of confidentiality.

Does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties in your jurisdiction, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?

The parties to a licence agreement can agree on restricting the use and the disclosure of the licensor’s trade secrets both during and after the termination of the agreement.

There are no statutory rules on the ownership of improvements of know-how made by the licensee. In the absence of explicit contractual provisions, the agreement must be interpreted, whereby such an interpretation should not lead to a result that is inconsistent with competition law.

Copyright

What constitutes copyright in your jurisdiction and how can it be protected?

Pursuant to the Federal Act on Copyright and Related Rights (CA), copyrighted works are literary and artistic intellectual creations with an individual character, irrespective of their value or purpose (article 2(1) of the CA). This includes, in particular:

  • literary, scientific and other linguistic works;
  • musical works and other acoustic works;
  • works of art, in particular paintings, sculptures and graphic works;
  • works with scientific or technical content such as drawings, plans, maps or three-dimensional representations;
  • works of architecture;
  • works of applied art;
  • photographic, cinematographic and other visual or audiovisual works; and
  • choreographic works and works of mime (article 2(2) of the CA).

Computer programs are also protected under copyright law (article 2(3) of the CA).

The CA also protects derivative works in their own right. Derivative works are works that are based upon pre-existing works, whereby the individual character of the latter remains identifiable, in particular, translations and audiovisual or other adaptations of pre-existing works (article 3 of the CA). The protection of the pre-existing work is reserved, that is to say the use of the derivative work is subject to the consent of the owner of the copyright into the pre-existing work.

Works are protected by copyright law as from their creation. In other words, it is neither necessary nor possible to register copyrighted works with a state authority.