Members of the working group: Lara Dorigo (chair), Theodore Choi, Philipp Groz, Peter Ling, Joseph Schmitz, Martin Toleti and Raphael Zingg.
The english translation of the summary is included on Swisslex and legalis only.
Please answer all questions in Part I on the basis of your Group’s current law. You may differentiate your answers based on different IP rights if applicable under your Group’s current law.
1. Does your current law draw a distinction between justified and unjustified allegations of infringement of IP rights?
Please answer YES or NO and add a brief explanation.
NO. Swiss law does not contain specific provisions regarding unjustified allegations of IP infringement. Such distinction results from the application of unfair competition and other laws, such as criminal law and general civil law principles.
Under general principles of unfair competition law, it is established legal practice that unjustified infringement allegations can have anti-competitive effects and influence the competitive relationship between competitors or between suppliers and customers. A warning is anti-competitive if it is objectively incorrect (e.g. a non-existent IP right (Swiss Federal Supreme Court («FSC») 108 II 225) or non-infringed IP right (FSC 4P.183/1995)) or if it exerts an excessive influence on the formation of will because of an undue manner of the assertion (FSC 4A_265/2021). A factually unjustified allegation of infringement can therefore constitute unfair obstruction, disparagement or misleading statements within the meaning of Art. 3 para. 1 lit. a and lit. b of the Unfair Competition Act (UCA).
In addition, unjustified infringement allegations can constitute a manifest abuse of rights under the general duty of good faith stipulated in Art. 2 Civil Code (CC). This applies in particular if allegations are made without performing a diligent infringement assessment (OG BL Judgment of June 16, 1987) or despite having knowledge of invalidity or serious doubts with respect to the validity of the asserted IP rights.
In serious cases and under specific circumstances, the warning could even qualify as a coercion under Art. 181 of the Swiss Criminal Code (SCC) or as wilful defamation (Art. 174 SCC), or even, in case of false report to authorities, a false accusation (Art. 303 SCC) or misleading the authorities (Art. 304 SCC).
2. What are the criteria for communications to be considered as an unjustified allegation of infringement under your current law?
– An allegation of patent infringement qualifies as unfair competition if the patent holder is aware of the invalidity of the patent or must at least seriously doubt its validity (FSC 108 II 225 «Faltrollladen») or is aware of or has serious doubts as to the lack of patent infringement (Swiss Federal Patent Court («FPC») O2018_004).
– In the case of information or warnings to competitors or third parties concerning the grant of a patent or its infringement, the patent holder acts unfairly, if he/she has knowledge of the invalidity of the patent or must have serious doubts about its validity, but nevertheless relies on the register entry (SMI 1978, 216: FSC of May 2). Such unjustified accusation of infringement of an intellectual property right against third parties constitutes disparagement within the meaning of Art. 3 para. 1 lit. a UCA if the content is incorrect, misleading or unnecessarily harmful (FPC O2018_004).
– Objectively incorrect or misleading infringing statements or incorrect or misleading information constitute unfair competition, even if the perpetrator is not aware of their incorrectness. If a person is unable to grasp the meaning of a patent claim, such person is obliged to seek advice from patent counsel before accusing another person of infringing rights by referring to the patent claim. Failure to do so may qualify as acting contrary to good faith (SMI 1987, 273: OG BL of June 16, 1987).
– The warning is abusive if it exceeds the threshold of unfairness so that it is incompatible with good faith. A warning is all the more likely to be abusive if it was issued carelessly and without examining the factual and legal situation (FPC O2018_004). This would be the case if the warning is repeatedly made despite convincing counter-arguments (FSC 4P.183/1995).
3. What kind of communications and by whom are considered as allegations of infringements of IP rights under your current law?
E.g., inter partes correspondence, mass communications, communications by advisers, etc.
In principle, the individual recipient is irrelevant in the qualification of a statement as an allegation of infringement. However, a distinction must be made with regard to the proportionality of the means used.
Communications to the alleged infringer are generally issued in pursuit of legitimate interests. Such communications are addressed to the perpetrator of the assumed infringement, which is best positioned to verify and counter the allegation.
Mass communications to infringer(s) may be considered unjustified, if they are pursued systematically and unduly aggressively. It is likely that an unsubstantiated allegation of infringement of a large number of IP rights or against a large number of alleged infringers with unduly short response deadlines would be considered an abuse of rights.
Warnings issued to third parties or the public may constitute acts of unfair competition, and in particular disparagement. An infringement allegation addressed to the public, or to customers or consumers represents a market intervention with potentially far-reaching consequences and can result in serious disadvantages for the alleged infringer. From the point of view of proportionality, stricter requirements must therefore be placed on the admissibility of such infringement allegations. Because third parties cannot easily analyze the allegations, the person alleging infringement has a duty to provide information and the infringement allegation must be moderate in tone and content.
If the addressee is an authority, special provisions of criminal law might be applicable. An intentional infringement of an IP right qualifies as a criminal act under Swiss law. Reporting such offense or accusing a person who is not guilty of this crime to the authorities against better knowledge is subject to criminal penalties (Art. 303 and 304 SCC).
4. Under your current law, does the doctrine concerning unjustified allegations apply to all kinds of allegedly infringing activities alike?
Please answer YES or NO and add a brief explanation.
YES. All kinds of allegedly infringing activities can be the subject matter of unjustified allegations and the applicable laws do not distinguish between different infringing activities.
5. What kind of remedies are available under your current law to the party who has been subject to such unjustified allegations of infringement:
a) Damages? Please answer YES or NO and add a brief explanation.
YES. Pursuant to Art. 9 para. 3 UCA, the infringed party may sue for damages and satisfaction as well as for surrender of profits in accordance with the provisions on agency without authority.
In most cases the amount of damages will not be verifiable and the court will have to estimate the amount at its discretion (Art. 42 para. 2 CO; FSC 60 II 121). However, such estimate requires a sufficient substantiation basis that needs to be provided by the injured party, which, in many instances, will already be difficult to establish. In practice, obtaining damages for unjustified infringement allegations will be limited to scenarios in which a causal nexus between the allegation and a financial loss can be proven (e.g. customers’ cancelled or held back orders because of the infringement allegations).
b) Injunctions against such allegations?
Please answer YES or NO and add a brief explanation.
YES, injunctions are available under Art. 9 para. 1 UCA, if the undue behavior is still ongoing or there is reason to believe that more unjustified allegations will follow.
c) Declarations that such allegations are unjustified?
Please answer YES or NO and add a brief explanation.
YES. Declaratory judgments regarding unjustified allegations are available under Art. 9 para. 1 UCA, but the request for a declaratory judgment is subsidiary to the request for injunctive relief or remedial action (FPC O2018_004). An alleged infringer may also file a negative declaratory action regarding non-infringement (see, e.g., FSC 4A_516/2010), or regarding invalidity of the allegedly infringed IP right.
Declaratory judgments or remedial actions appear to be an appropriate form of relief, if infringement allegations were communicated to third parties. In this context, according to Art. 9 para. 2 UCA, anyone who, through unfair competition, is threatened or sustains damage to their clientele, credit or professional reputation, to their business operations or otherwise to their economic interests, may request that notice of any correction or the judgment be communicated to third parties or be published in newspapers or professional magazines.
As an alternative to a publication of the judgment, the unjustly warned party is entitled to demand that specific correction be sent to all addressees of such warning letters or e-mails (FSC 4A_265/2021; FPC O2018_004). The warning party is not obliged to inform any business partners, but only the addressees of warning letters that violate Art. 3 para. 1 lit. a UCA (FSC 4A_265/2021). Such clarification can usually only be made by the warning party, because only the warning party knows to whom it made the unjustified infringement allegations.
d) Fines or punitive damages?
Please answer YES or NO and add a brief explanation.
YES. Fines are available, but not punitive damages.
Anyone who intentionally engages in unfair competition as set down in Art. 3 UCA is liable to a custodial sentence of up to three years or a monetary penalty in accordance with Art. 23 para. 1 UCA (for example, fines of between CHF 300 (FSC 75 IV 21, 22), CHF 500 plus a 7-day suspended custodial sentence (OGer ZH, StrK.16.6/1996 in SJZ 1970) and CHF 30 000 (SJZ 1978 194) have been imposed for infringing statements). The penalty range of Art. 23 UCA makes violations of Art. 3 UCA a misdemeanour (Art. 10 para. 3 SCC).
In addition to the penalties mentioned in Art. 23 UCA, secondary penalties and other measures under the SCC may be imposed, which range from fines to imprisonment for up to five years.
e) Other remedies?
Please answer YES or NO and add a brief explanation.
YES. As mentioned under c) above, Swiss law allows to request remedial actions such as: (i) the publication of the judgment in newspapers or professional magazines, if under the specific circumstances this appears a suitable remedy to rectify the harm, or (ii) an order that the offender shall communicate the judgment to specific parties to whom the unjustified allegations had been previously addressed (FPC O2018_004 c. 133).
Please answer the questions of this Part II below. You may differentiate your answers based on different IP rights if appropriate and/or desirable in your view.
6. According to the opinion of your Group, is your current law regarding the boundaries for the legitimate exercise of an IP right holder’s rights adequate and/or sufficient?
Please answer YES or NO and please explain your chosen view briefly.
YES. The Swiss Group considers that the current Swiss legal framework allows to adequately address unjustified allegations of IP infringement. The Swiss approach may be considered rather liberal and flexible. It does not appear to be necessary to provide specific rules for unjustified assertion of IP rights, as there are also no such specific rules with respect to the assertion of rights other than IP rights.
7. According to the opinion of your Group, what is the policy rationale for restricting the making of unjustified allegations of infringement of IP rights?
Prohibiting unjustified allegations of IP rights prevents abuses of the IP system and limits the over-enforcement of such rights. These allegations lead to unnecessary defence costs for alleged infringers, unnecessary societal costs for courts and authorities, as well as, in case of settlements obtained under threats, market distortion through the extraction of undue royalties, or keeping legitimate competitors from the market.
8. Is there a policy conflict between such restrictions and the availability of effective methods of enforcing IP rights, including without the need to resort to costly litigation by issuing cease and desist letters and if so how is such a conflict resolved?
The Swiss Group does not believe there is a policy conflict. Swiss practice considers out-of-court settlements as a means of efficient resolution of potential IP disputes. The possibility to approach an alleged infringer with a cease-and-desist letter may foster such out-of-court settlements. While the Swiss legal framework punishes abusive uses of IP rights, the legal framework does not unduly limit the possibility for an IP owner to issue cease-and-desist letters or to initiate infringement proceedings if the owner seriously believes that there is infringement of a likely valid IP right.
9. Is it better, from a policy perspective, to judge whether an allegation was unjustified based on (a) an objective hindsight-based view on whether the IP right in question was valid and being infringed at the time notifications were made, or (b) the reasonable subjective belief of the IP right holder.
The reasonable subjective belief of the IP right holder (b) should determine the legality of an allegation. Nonetheless, there must be a duty of care under which the right holder must carefully assess the factual and legal situation (infringement and validity of the right in particular).
10. Are there any other policy considerations and/or proposals for improvement to your Group’s current law falling within the scope of this Study Question?
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Please answer the questions of this Part III below. You may differentiate your answers based on different IP rights if appropriate and/or desirable in your view.
11. Do you consider harmonisation regarding unjustified allegations of IP infringement and their consequences as desirable in general? Please answer YES or NO and add a brief explanation.
NO. While harmonisation of IP laws is desirable in principle, the Swiss Group is of the view that this particular topic should be legislated on a country-by-country basis. What constitutes an unjustified allegation is a fundamental question deeply intertwined with the cultural and litigation system of a country, ranging from business etiquette, to substantiation requirements and allocation of court costs. Harmonisation of both unjustified allegations in the pre-trial phase as well as in legal proceedings appears unrealistic without a harmonisation of entire litigation systems.
If your answer to question 11) was YES, please respond to the following questions without regard to your Group’s current law or practice. Even if you answered NO to question 11), please address the following questions to the extent your Group considers your Group’s current law or practice could be improved.
12. In what kind of circumstances should an allegation of IP infringement be considered as «unjustified» so as to be considered abusive? Please add a brief explanation.
The Swiss working group believes that the categories of unjustified infringement allegations described in Question (2) cover most situations of abusive allegations. Allegations made by NPEs have not been specifically addressed in Swiss case law so far. The qualification as abusive behaviour will depend on the wording chosen and the circumstances as a whole. Clearly meritless, completely unsubstantiated (mass)communications and behaviours not in accordance with good business practices (e.g. primarily aimed at harming a competitor) should be considered abusive.
13. As continuation to question 12) above, in more specific, should any of the following be categorically considered as unjustified (abusive) allegations:
a) Making an allegation of infringement which later is proved incorrect, e.g. because a court determines that the IP right in question was not infringed or was invalid, regardless of the knowledge of the parties?
NO. This is an inherent risk of the enforcement of IP rights.
b) Making an allegation of infringement while having actual knowledge of validity destroying circumstances? Please answer YES or NO and add a brief explanation.
YES. This should be considered abusive, as acknowledged by Swiss case law.
c) Making an allegation of infringement while the person making the allegation should have known (constructive knowledge) of validity-destroying circumstances?
Please answer YES or NO and add a brief explanation.
NO. In the view of the Swiss working group, this cannot be categorically considered as abusive, because it depends on what «validity-destroying circumstances» encompasses. The standards for pre-trial validity assessments should not be set too high, nor should the fact that third parties have invoked arguments against the validity in opposition proceedings or elsewhere prevent enforcement if the right holder has good reasons to consider his right to be likely valid.
However, as confirmed by Swiss case law, it is to be considered abusive if IP right infringements are alleged despite having knowledge or serious doubts regarding the validity of the invoked IP right. If communications to third parties are made, all circumstances seriously raising doubts as to the validity or infringement of the IP right should be disclosed (such as a negative technical opinion rendered in pending legal proceedings or findings of non-infringement in other jurisdictions).
d) Are there other situations in which alleging IP infringement when having concerns about the validity of the IP right in question should be considered unjustified so as to be abusive?
Please answer YES or NO and add a brief explanation.
NO. The Swiss working group believes that the Swiss legal framework and case law encompass all relevant situations.
e) Making an allegation of infringement before the IP right has been granted?
Please answer YES or NO and add a brief explanation.
NO. Swiss patent law explicitly allows to claim damages for infringements that occurred before the grant of a patent, which is also why allegations of patent infringement must be possible to avoid the accumulation of such damages (see Art. 73(3) of the Federal Patents Act).
f) Making an allegation of infringement while having actual knowledge of circumstances leading to non-infringement?
Please answer YES or NO and add a brief explanation.
YES. If it is clear that no infringement is given under the circumstances (but not if it is only arguable that no infringement could be given).
g) Making an allegation of infringement when one knew or should have known (actual or constructive knowledge) that the likelihood of the infringement claim succeeding is low?
Please answer YES or NO and add a brief explanation.
NO. Low chances of success do not per se mean that the allegation is unjustified. However, no infringement allegations should be made if the IP right holder knows or has serious reasons to believe that no infringement is given.
h) Making an allegation of infringement in public or commencing formal proceedings (e.g., seeking injunctions) when settlement negotiations or other resolution processes (e.g., license fee determinations) are on-going?
Please answer YES or NO and add a brief explanation.
NO. The fact that settlement negotiations are ongoing, does not mean that no infringement is likely given. Whether this should be allowed or considered as fair instead depends on the settlement negotiation conditions as defined by the parties and the specific bar rules.
i) Are there other specific scenarios or circumstances that in your Group’s view should categorically result in an allegation of infringement being considered unjustified?
Please answer YES or NO and add a brief explanation.
NO. The Swiss working group believes that the Swiss legal framework takes all relevant situations into consideration.
14. Should the (a) motivation or (b) knowledge of the alleging party play a role in assessing whether an allegation is unjustified so as to be considered abusive?
Please answer YES or NO and add a brief explanation.
YES. Both criteria are relevant for an assessment of whether an IP infringement allegation is abusive (see also Section I above).
15. What kind of communications should be considered as allegations of IP infringement:
a) Should only proceedings formally commenced before a court or other authority be considered as allegations of infringement? Please answer YES or NO and add a brief explanation.
NO. Pre-trial communications should also be measured against the relevant standards. Warnings sent prior to the commencement of litigation are an effective enforcement means as they can prevent costly litigation. However, because of the effects of such pre-trial communications, i.e. the potential withdrawal from the market, conclusion of licensing deals or other changes in behaviour of the alleged infringer, it is important to set limits with respect to the way in which such pre-trial infringement allegations are made.
b) If you answered NO to (a) above:
i. Apart from formal proceedings, should only communications with an express threat of formal proceedings be considered as allegations of infringement? Please answer YES or NO and add a brief explanation.
ii. If you answered NO to (i) above, what other kinds of communications should be considered as allegations of infringement?
NO. It is not necessary to expressly threaten the commencement of formal proceedings. An implicit threat – such as requesting licensing fees – can have the same impact on the alleged infringer.
16. Should only allegations of infringement by the IP right holder itself be considered?
Please answer YES or NO and add a brief explanation. In particular, if you answered NO, please specify whose allegations should be considered (e.g., allegations by a nonexclusive licensee, an exclusive licensee, group companies, attorneys and other advisors, third parties, etc.).
NO. The person who makes the infringement allegation is irrelevant, as long as the communication is capable of having an effect on competition. Infringement allegations made by third parties may, however, be assessed less strictly than allegations made by the IP right holders (see also Section I above).
17. If an allegation of infringement of IP right is determined to have been unjustified so as to be abusive, what should be the consequences of unjustified allegations of infringement of IP rights:
a) Should damages be available to the party having been alleged to infringe the IP right? Please answer YES or NO and add a brief explanation.
YES. There is no reason to exclude such situations from the right to claim damages. However, in line with general principles, damages need to be substantiated, which under Swiss legal standards presents a high burden.
b) Should declaratory judgements that such allegations are unjustified be available to the party having been alleged to infringe the IP right? Please answer YES or NO and add a brief explanation.
YES. Complementarily to injunctions, such declaratory judgments should be available, as they form an important basis to claim further relief, such as remedial actions or monetary relief (see also Section I above).
c) Should injunctions against such unjustified allegations be available to the party having been alleged to infringe the IP right? Please answer YES or NO and add a brief explanation.
YES. Injunctions are the correct means to stop the continuation of such unjustified allegations.
d) Should fines or punitive damages be ordered against the party making the allegation? Please answer YES or NO and add a brief explanation.
Punitive damages are not available in the Swiss legal system and should not be introduced here. Fines are available as an enforcement means if court orders are not respected or if the behaviour qualifies as a criminal act, which the Swiss working group considers a reasonable regulation for this form of relief.
e) Other than the consequences referred to in a-d above, should there be other types of consequences? Please answer YES or NO and add a brief explanation.
YES. Remedial actions, such as the publication of the judgment or the duty to specifically inform any third parties to whom unjustified infringement allegations were communicated.
18. Who should bear the burden of proof of the unjustified/justified nature of the allegation of infringement?
An unjustified allegation of infringement requires proving two layers of facts. First, it needs to be proven that the IP right was invalid or the infringement was non-existent. Second, it needs to be proven that the right holder knew or should have known of the invalidity or non-infringement at the time of making the allegation of infringement. The burden of proving these layers of facts does not necessarily rely on the same party.
Regarding the first layer, the right holder has to assert and prove infringement, while the alleged infringer has the burden of proving that the asserted IP right is invalid.
Regarding the second layer, the alleged infringer who raises a claim for an unjustified allegation of infringement has to prove that the right holder knew (had actual knowledge) or should have known (had constructive knowledge) of the lack of merit of the infringement claim in the first place.
Therefore, the burden of proving the relevant facts leading to a finding of unjustified allegation of infringement should be listed as follows:
– Invalidity of the alleged IP right: the alleged infringer should bear the burden of proof;
– Lack of infringement of the alleged IP right: the right holder should bear the burden of proof of infringement; if this fails, the acts of the alleged infringer must be considered non-infringing;
– Right holder’s knowledge of the invalidity/non-infringement: the alleged infringer should bear the burden of proof of either actual knowledge or of circumstances that show constructive knowledge.
19. Please comment on any additional issues concerning any aspect of equivalents that you consider relevant to this Study Question.
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20. Please indicate which industry sector views provided by in-house counsels are included in your Group’s answers to Part III.
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Der Bericht der Schweizer Gruppe legt die Grundprinzipien dar, die in der Schweiz im Zusammenhang mit ungerechtfertigten Vorwürfen von Immaterialgüterrechtsverletzungen gelten; der Fokus liegt auf der vorprozessualen Phase. Die Schweizer Gruppe ist der Ansicht, dass der schweizerische Rechtsrahmen, insbesondere das Gesetz gegen den unlauteren Wettbewerb, einen angemessenen Umgang mit solchen Tatbeständen ermöglicht; es besteht keine Notwendigkeit, besondere Bestimmungen in die Gesetze aufzunehmen. Dies gilt insbesondere für Abmahnungen, die entweder an den mutmasslichen Verletzer oder an Dritte gerichtet sind, wo die Rechtsprechung vernünftige Kriterien für die Beurteilung der Zulässigkeit solcher Klagen in verschiedenen Szenarien aufgestellt hat.
Eine internationale Harmonisierung erscheint in diesem Bereich nicht sinnvoll, da die Regeln für ungerechtfertigte Verletzungsvorwürfe an den weiteren Rahmen der geltenden Rechtssysteme angepasst werden müssen, die sich auf internationaler Ebene erheblich unterscheiden.
Résumé
Le rapport du groupe suisse expose les principes de base qui sont appliqués en Suisse dans le cadre des allégations injustifiées de violation de droits de propriété intellectuelle, et l’accent est mis sur la phase pré-procédurale de la procédure juridique. Le groupe suisse estime que le cadre juridique suisse, en particulier la loi fédérale contre la concurrence déloyale (LCD), permet de traiter de manière adéquate de tels faits, et qu’il n’y a pas lieu d’adopter des dispositions particulières dans la loi. Cela vaut en particulier pour les avertissements, qui sont adressés soit au contrevenant présumé, soit à des tiers, où la jurisprudence a établi des critères raisonnables pour évaluer la recevabilité de telles actions dans différents scénarios.
Une harmonisation internationale ne semble pas adéquate dans ce domaine, puisque les règles relatives aux allégations de violation injustifiées doivent être adaptées dans le cadre des systèmes juridiques en vigueur, qui diffèrent considérablement les uns des autres.
Summary
The report of the Swiss group sets out the basic principles applicable in Switzerland concerning unjustified IP infringement allegations, particularly in the pre-litigation phase. The Swiss group is of the view that the Swiss legal framework, in particular unfair competition law, allows to adequately address unjustified allegations of IP infringement; there is no need to introduce specific provisions in the laws. This applies in particular with respect to warnings sent either to the alleged infringer or third parties, where case law has established reasonable criteria to assess the admissibility of such actions in various scenarios.
International harmonisation does not appear to make sense in this field, as the rules with regard to unjustified infringement allegations need to be aligned with the wider framework of the applicable litigation systems, which differ considerably on an international level.