[A2k] Switzerland’s intellectual property rules are often different from what you might expect

[Malini Aisola]

Switzerland’s intellectual property rules are often different from what
you might expect

By James Love
June 25th, 2009

http://www.keionline.org/blogs/2009/06/25/swis-ip-notwhatuexpect/

The US Department of State “2009 Investment Climate Statement for
Switzerland” provides an interesting and often unexpected portrait of
the intellectual property landscape for a country that is often a
hard-liner in global IPR negotiations. For example, DOS claims that
“Switzerland is the primary source of illegal medicines entering the
EU,” that “the unauthorized downloading of multimedia content and the
provision of that content to family members or friends for personal use
is not prohibited,” that parallel trade of IP goods is often allowed,
that Switzerland has liberal copyright exceptions, and that Switzerland
is considering broad mandatory licensing provisions governing patented
research tools Note also that Switzerland is not the US 301 or EU list
of IPR priority countries. The following are some highlights from DOS
report.

While most “parallel imports” of products covered by copyright and
trademark protection are subject to ‘international exhaustion’
treatment, patents until 2009 were subject to national protection, with
exceptions for parallel imports of generic drugs under specific
registration and safety guidelines and fertilizers and tractors from
third countries.
      * In 2008, consumer and retail industry supporters in parliament
pushed hard for regional exhaustion on patented products sold in the
EU/EEA area, which are often cheaper since they bypass expensive Swiss
distribution channels. This proposal met a lukewarm reception from the
Federal Council and conservative political parties sympathetic to the
Swiss pharmaceutical industry on the grounds regional exhaustion would
weaken R&D investments in Switzerland. In December 2008, the parliament
adopted the principle of regional exhaustion for patents, with an
exception for pharmaceuticals, which are still subject to national
exhaustion. Retail prices are expected to drop by 3.5-7.5% as a result
of this measure.
      * The Swiss copyright law explicitly recognizes computer software
as literary works and establishes a remuneration scheme for private
copying of audio and video works, which distributes proceeds on the
basis of national treatment.
      * In order to comply with the WCT and WPPT WIPO treaties
Switzerland has already signed, the government proposed new amendments
to the existing copyright law, which were adopted by parliament on
October 5, 2007 and put into force on January 24, 2008. The audiovisual
industry used this opportunity to express strong reservations against
the scope of the exception for private copying, but later expressed
satisfaction that the revised legislation still prohibits the
circumvention of technological protection measures. However, the
unauthorized downloading of multimedia content and the provision of that
content to family members or friends for personal use is not prohibited.
Public libraries and broadcast libraries are also allowed to sell the
works they possess, which may contain multimedia content, to their
patrons. These libraries have also been exempted from paying a copyright
fee to the industry. The United States will continue to monitor the
implementation of the legislation. The United States has also raised
certain questions regarding potentially broad mandatory licensing
provisions governing research tools, in the context of pending Swiss
patent law amendments.
      * In general, Swiss legislation applies to illegal acts committed
within Switzerland’s national boundaries, which means that a Swiss user
knowingly purchasing or downloading pirated audiovisual work from a
foreign website cannot be prosecuted by the authorities. Downloading or
copying a file from the internet for purely private purposes is allowed,
and these files may be passed to friends and family members. The
industry is particularly concerned that there is little willingness
among consumer groups and the government to narrow the scope of personal
use to avoid blatant abuse.
      * The primary concerns of the industry with regard to the changes
are: 1) the revision widens the scope for exemptions, thus depriving the
copyright owners of their rights; 2) the collection of royalties through
the collecting societies is inadequate because it only provides 60% of
the royalties to the producers who use these funds to subsidize Swiss
artists; and 3) the revision offers little protection to the industry
digital encryption programs (DRMs) as a result of the wide Swiss
definition of “private copying”. Public broadcasters will also be
allowed to keep industry performances in their archives and charge
individual users for access, thus bypassing the industry’s online sales.
      * According to the Business Software Alliance (BSA), software
piracy continues to be a significant problem.
      * The EU estimates that Switzerland is the primary source of
illegal medicines entering the EU (39.2% of the medicine seizures).
      *
http://www.state.gov/e/eeb/rls/othr/ics/2009/117194.htm

2009 Investment Climate Statement – Switzerland
Bureau of Economic, Energy and Business Affairs
US Department of State
February 2009

Switzerland is a member of the major international intellectual property
rights conventions and was an active supporter of a strong IPR text in
the GATT Uruguay round negotiations. Switzerland has one of the best
regimes in Europe for the protection of intellectual property and
protection is afforded equally to both foreign and domestic
rights-holders.

Patent protection is broad, and Swiss law provides rights to inventors
that are generally similar to those available in the United States.
Switzerland is a member of both the European Patent Convention and the
Patent Cooperation Treaty (PCT), making it possible for inventors to
file a patent application in the United States (or other Patent
Cooperation Treaty country, or any member of the European Patent
Convention) followed by an application with either the PCT office or the
Swiss patent office to receive harmonized protection in Switzerland. If
filed in Switzerland, patent applications must be made in one of the
country’s three official languages (German, French, Italian), and must
be accompanied by detailed specifications and, if necessary, by
technical drawings. The duration of a patent is 20 years. Patents are
not renewable beyond the original 20-year term, but patent term
restoration is possible for products, such as pharmaceuticals, that
require an extensive testing period prior to marketing. According to the
Swiss Patent Law of 1954, as amended, the following items cannot be
covered by patent protection: surgical, therapeutic and diagnostic
processes for application on humans and animals; inventions liable to
disturb law and order and offend “good morals;” and biological processes
for breeding species of plants and animals. In most other areas,
coverage is similar to that in the United States. Should an American
firm have concerns about possible patent infringement in Switzerland,
access to the courts is readily available and there is a
well-established and highly regarded patent bar. On June 22, 2007, the
parliament adopted a revision of the Swiss patent law that provides for
the protection of patents on bio-technologies and is EU compatible. This
revision on biotechnical inventions entered into force on October 11,
2007.

While most “parallel imports” of products covered by copyright and
trademark protection are subject to ‘international exhaustion’
treatment, patents until 2009 were subject to national protection, with
exceptions for parallel imports of generic drugs under specific
registration and safety guidelines and fertilizers and tractors from
third countries.

In 2008, consumer and retail industry supporters in parliament pushed
hard for regional exhaustion on patented products sold in the EU/EEA
area, which are often cheaper since they bypass expensive Swiss
distribution channels. This proposal met a lukewarm reception from the
Federal Council and conservative political parties sympathetic to the
Swiss pharmaceutical industry on the grounds regional exhaustion would
weaken R&D investments in Switzerland. In December 2008, the parliament
adopted the principle of regional exhaustion for patents, with an
exception for pharmaceuticals, which are still subject to national
exhaustion. Retail prices are expected to drop by 3.5-7.5% as a result
of this measure.

The Swiss copyright law explicitly recognizes computer software as
literary works and establishes a remuneration scheme for private copying
of audio and video works, which distributes proceeds on the basis of
national treatment. Owners of television programming enjoy significant
protection and are remunerated for rebroadcast and satellite
retransmission of their works, while rights holders have exclusive
rental rights. Collecting societies are well established. Infringement
is considered a criminal offense. The term of protection is life plus 70
years. In order to comply with the WCT and WPPT WIPO treaties
Switzerland has already signed, the government proposed new amendments
to the existing copyright law, which were adopted by parliament on
October 5, 2007 and put into force on January 24, 2008. The audiovisual
industry used this opportunity to express strong reservations against
the scope of the exception for private copying, but later expressed
satisfaction that the revised legislation still prohibits the
circumvention of technological protection measures. However, the
unauthorized downloading of multimedia content and the provision of that
content to family members or friends for personal use is not prohibited.
Public libraries and broadcast libraries are also allowed to sell the
works they possess, which may contain multimedia content, to their
patrons. These libraries have also been exempted from paying a copyright
fee to the industry. The United States will continue to monitor the
implementation of the legislation. The United States has also raised
certain questions regarding potentially broad mandatory licensing
provisions governing research tools, in the context of pending Swiss
patent law amendments.

Under Swiss law, anyone found guilty of infringing the copyright laws
can be fined up to several thousand francs and, in extreme cases, face
imprisonment. Making an illegal copy with the aim of selling or sharing
it without authorization is against the law. Internet providers or joint
patent holders can also be considered as accomplices if they fail to
carry out the required measures to prevent such illegal sales, but many
experts believe it is not easy to trace offenders. In general, Swiss
legislation applies to illegal acts committed within Switzerland’s
national boundaries, which means that a Swiss user knowingly purchasing
or downloading pirated audiovisual work from a foreign website cannot be
prosecuted by the authorities. Downloading or copying a file from the
internet for purely private purposes is allowed, and these files may be
passed to friends and family members. The industry is particularly
concerned that there is little willingness among consumer groups and the
government to narrow the scope of personal use to avoid blatant abuse.

The primary concerns of the industry with regard to the changes are: 1)
the revision widens the scope for exemptions, thus depriving the
copyright owners of their rights; 2) the collection of royalties through
the collecting societies is inadequate because it only provides 60% of
the royalties to the producers who use these funds to subsidize Swiss
artists; and 3) the revision offers little protection to the industry
digital encryption programs (DRMs) as a result of the wide Swiss
definition of “private copying”. Public broadcasters will also be
allowed to keep industry performances in their archives and charge
individual users for access, thus bypassing the industry’s online sales.

According to the Business Software Alliance (BSA), software piracy
continues to be a significant problem. This appears to be due
substantially to illegal copying by individuals and some small and
medium-sized establishments. However, software piracy appears to have
decreased in recent years, with the rate of software piracy in
Switzerland falling from 26% of the market in 2007 to 25% in 2008 (a
loss reduction equivalent to an estimated SFr 53 million). However, the
industry estimates that CD/DVD piracy across Europe is on average even
higher at 35%.

The Swiss audiovisual industry lobby (SAFE) started a campaign in 2005
entitled “stop-piracy” aimed at suing individual users in order to
increase the awareness of the legal risks and potential lawsuits
associated with piracy. The International Federation of the Phonographic
Industry (IFPI) has sued 300 Swiss internet users over the past two
years to enforce its rights. After the lawsuit is filed, if the Swiss
investigating judge determines there is a copyright violation, a legal
assistance request is forwarded to the Special Tasks Unit of the Swiss
Federal Department of Justice and Police, which forces the internet
access provider to provide the full details of the fraudulent customer.
The procedure is costly and was recently criticized by the Federal Data
Protection and Information Commissioner (FDPIC), who said that tracking
IP addresses was illegal since it violated the principle of
“telecommunication secrecy”. In June 2008, the FDPIC asked a Swiss
company to stop tracking IP addressee because it contravened existing
Federal Data Protection Law. When the company refused to do so, the
FDPIC appealed the request to the Federal Administrative Court. A final
ruling on this matter is still pending.

In May 2008, the European Commission reported that 2% of pirated goods
entering the EU were transiting through Switzerland, a marked drop from
the 5% reported in 2006. The EU estimates that Switzerland is the
primary source of illegal medicines entering the EU (39.2% of the
medicine seizures). However, Switzerland is not on the EU list of IPR
priority countries.

Trademarks are protected. Switzerland recognizes well-known trademarks
and has established simple procedures to register and renew all marks.
The initial period of protection is 20 years. Service marks also enjoy
protection. Trademark infringement is relatively rare in Switzerland,
since there are few street vendors are few and those tend to avoid
illegitimate or gray market products.

Switzerland offers significant protection for layout designs of
semiconductor integrated circuits, trade secrets, and industrial
designs. Protection for integrated circuits and trade secrets is
generally similar to that available in the United States, and protection
for designs is somewhat broader. Because of the complexities involved in
ensuring protection in each of these areas, individuals and corporations
seeking protection are advised to engage the services of a lawyer
specialized in these fields.

To bring Switzerland into conformity with its TRIPS commitment dating
from the WTO Uruguay Round, Swiss authorities have established a 10-year
protection period for test data submitted as part of the pharmaceutical
approval process.

Protected Designation of Origin – Switzerland and the EU both recognize
Protected Designation of Origin (PDO labels) as an “essential element”
in the liberalization of agricultural products, and are currently
negotiating a bilateral recognition agreement on designations of origin.
Currently, labels awarded to wines and spirits are recognized under WTO
rules. To date, 21 products already benefit from the PDO label.

------------

In the past, cartels were endemic to the Swiss economy. Companies in a
number of industrial and service branches organized themselves, through
trade and industry associations, into horizontal and vertical cartels.
Such arrangements existed in the market for prescribed medicines,
sanitary ware, kitchen equipment, optical products, books, beverages,
food retailing, dietary products, and many other sectors of the economy.

The Swiss cartel law specifically allows cartels unless the government
concludes that they are harmful to society or the economy. On June 12,
2003, the Swiss Parliament adopted a revised competition bill, which
subsequently entered into force on April 1, 2004. The most significant
improvements in the revised law include the authority to sanction
anti-competitive behavior without prior warning, with a maximum fine of
ten percent of a firm’s total combined revenue for the past three years.
Whistle-blowing companies that cooperate with regulators are eligible
for a reduced fine (leniency program). The transition period for
adapting to the new law ended on April 1, 2005. According to IMF and
OECD reports, Switzerland’s gross domestic product could grow by an
extra 0.5-0.8% a year if all cartels were eliminated.

In general, the Competition Commission considers vertical agreements
with less than 20% of market share as insignificant, whereas others
potentially face a fine. Cartels with over 50% of market share will be
fined. Restrictions on the sale of components or spare parts are
generally unlawful.



--
Malini Aisola
Knowledge Ecology International
1621 Connecticut Avenue NW, Suite 500, Washington DC 20009
malini.aisola@keionline.org|Tel: +1.202.332.2670|Fax: +1.202.332.2673