Compulsory licensing in Switzerland

Compulsory licensing refers to the mechanism that a competent court (in case of patents the Swiss Federal Patent Court) may grant in certain circumstances a compulsory licence to use certain or patent/copyright-protected inventions.

• Swiss Federal Patents Act ("PatA", cf. question 5 below);
• Swiss Federal Copyright Act ("CopA", cf. question 5 below);
• Swiss Federal Act on Cartels and other Restraints of Competition ("CartA") provides for the possibility of compulsory licences in the event of a dominant position in the market and abusive practices or in the framework of merger controls. Though, the relationship to the above-mentioned sources of law with regard to compulsory licences ("PatA" and "CopA") is unclear. Compulsory licences based on the CarA should be viewed as separate remedies than core-IP-based remedies in the PatA and/or CopA.

The provisions of the PatA are either linked to a certain circumstance (e.g. lack of exploitation or prevailing public interest) or to certain products (e.g. research tools, pharmaceutical products or semi-conductor products). For more detail see answer to question 5 below.

3.1 Has any compulsory licence ever been issued in your jurisdiction? If yes, on what type of technology? 

Compulsory licences are only of limited practical relevance in Switzerland. Up to now, Swiss courts have never granted a compulsory licence in the field of pharmaceutical products. Cases may have occurred on a settlement basis between parties, but such settlements are not accessible to the public.

• Any entity or individual that is qualified to exploit a patent can apply for a compulsory licence.
• Swiss patent law and practice does not provide for any restriction to Swiss entities or organisations. However, the compulsory licence under article 23 CopA (cf. question 5 below) is limited to Swiss entities. The Federal Council, however, may waive the requirement of a commercial establishment in Switzerland in the case of nationals of countries granting reciprocity.

The following article in the PatA and the CopA provide for compulsory licences:

• article 36 and 36a (in case of dependent inventions and dependent plant variety rights);
• article 37 (in case of insufficient exploitation);
• article 40 (in case of public interest);
• article 40a (in the field of semi-conductor technology to remedy a practice held to be anti-competitive)
• article 40b (in case of use of a patented biotechnological invention as an instrument or means for research);
• article 40c (in case of inventions concerning a diagnostic product or procedure for humans to remedy a practice held to be anti-competitive);
• article 40d (for the manufacture of patent-protected pharmaceutical products and for their export to a country that has insufficient or no production capacity of its own in the pharmaceutical sector and which requires these products to combat public health problems);
• article 40e (common provisions for Articles 36–40d);
• article 23 CopA (for the manufacture of phonograms if a musical work, with or without lyrics, has been fixed on a phonogram in Switzerland or abroad and has been offered, transferred or otherwise distributed in this form with the permission of the author);
• Article 21 CopA (which provides for access rights to software interface data necessary to establish interoperability);
• WTO/TRIPS Agreement;
• Article 5 para 2 Paris Convention (PVÜ).

6.1 Any negotiation required between the applicant and the right holder before applying for a compulsory licence? 

A compulsory licence is granted only if efforts by the applicant to obtain a contractual licence on appropriate terms within a reasonable period of time have been unsuccessful; in the case of a licence in accordance with Article 40d (export of pharmaceutical products to combat public health problems in foreign countries), a period of 30 working days is considered reasonable. Such efforts are not required in situations of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. (article 40e para 1 PatA).

6.2 Any urgent situation required in order to grant a compulsory licence?

In general, an urgent situation is not required, but see question 11 below.

6.3 Any minimum number of years required for the patent to be granted and/or implemented in order to be subject to compulsory licensing?

Not in general, but in the case of a request for a compulsory licence under article 37 PatA (lack of exploitation), three years from the date of the grant of the patent, or at the earliest four years after filing the patent application, any person with a legitimate interest may apply to the court for the grant of a non-exclusive licence to use the invention if the proprietor of the patent has not sufficiently exploited it in Switzerland by the time of the action and cannot justify such a failure. Importing is also considered. domestic exploitation.

No, Swiss law does not provide for a statutory limitation on the number of compulsory licensees. However, if there are multiple compulsory licensees (enabling them to market knowledge or sub-licence), there may no longer be a need for patent holder to grant compulsory licences.

• The scope and term of a compulsory licence are limited to the purpose for which it has been granted and the licence may only be transferred with that part of the enterprise, which uses the licence. This also applies to sub-licences (article 40e para 2 and 3 PatA).
• In addition, the licence is primarily granted for supplying the domestic market (article 40e para 4 PatA). Compulsory licences for the export of pharmaceutical products remain reserved. However, such licences may be limited to the production of the pharmaceutical product in the quantity that meets the requirements of the beneficiary country; the total quantity must be exported to the beneficiary country (article 40d para 3 PatA). 

The Swiss Federal Patent Court is the competent authority to grant compulsory licences under the PatA (with the exception of administrative antitrust-proceedings where a claim is based on anti-competitive behaviour). The compulsory licences under the CopA are granted by the competent, local Commercial Court dealing with a copyright dispute.

Compulsory licences are granted in Switzerland by the competent courts or administrative body (cf. question 9 above) based on a respective civil lawsuit.

10.1 What materials need to be submitted to the competent authority?

Evidence that the preconditions set out in the respective laws are met (e.g. that efforts by the applicant to obtain a contractual licence on appropriate market terms within a reasonable period of time have been unsuccessful).

10.2 How long will it take to get a compulsory licence?

Depending on the circumstances of the case, it may take between a few weeks (if such licence is granted) and several months to obtain a compulsory licence (if such licence must be enforced via court proceedings).

No, but in the case of article 37 PatA (lack of exploitation) at the request of the plaintiff, the court may grant a licence immediately after the action has been filed without prejudice to the final judgment providing that, the plaintiff provides prima facie evidence that he has an interest in the immediate use of the invention and that he provides adequate security to the defendant; however, the defendant is given the opportunity to be heard beforehand.

The court may revoke an entitled person’s licence on request.

12.1 What are the conditions for the revocation/termination of a compulsory licence? 

A compulsory licence may be revoked if the circumstances that led to its issuance no longer applies and it is not expected that they will arise again. Appropriate protection of the legal interests of the entitled person remains reserved (article 40e para 6 PatA).

12.2 How should products made under a compulsory licence be treated if the compulsory licence is terminated/revoked?

Swiss law does not provide for any specific provision on the question how products made under a compulsory licence should be treated if the compulsory licence is terminated/revoked. However, Art. 40e para 6 PatA provides that legal interests of the entitled person remain reserved, which should provide room to craft temporary solutions for products affected. 

Yes. The proprietor of the patent has a right to appropriate remuneration.

13.1 If the compulsory licensee is required to pay a royalty, how is the amount of royalty determined and who will decide the amount of the royalty?

In assessing the remuneration, the circumstances of the individual case and the economic value of the licence are taken into account. In the case of a licence under Article 40d PatA (compulsory licences for the export of pharmaceutical products), the remuneration is determined by taking into account the economic value of the licence in the importing country, its level of development and the urgency in public health and humanitarian terms.

13.2 Is there any remuneration available for the right holders other than royalty?

No.

Yes, decision of the Swiss Federal Patent Court and of Swiss Commercial Courts may be appealed to the Swiss Federal Supreme Court. However, the appeal grounds are limited.

No. Swiss law does not provide for any explicit duty of the right holder to support the licensee with his know-how or with training. In principle, the patent claims and descriptions must be self-explanatory to meet the requirements of a patent (patents are only granted for new inventions "applicable in industry"; Art. 1 para. 1 PatA). However, such a duty could arise under competition law considerations, if critical know-how was withheld in the sphere of a market-dominant player;

15.1 Will this provision of know-how and support be compensated and how is the amount of such compensation determined?

There are no statutory provisions or case law available on this subject. Nevertheless, such a provision should be compensated as any use of knowledge provided under a compulsory licence is also compensated (both under patent and competition law considerations).

No. Swiss law does not provide for statutory confidentiality obligations. However, a compulsory licence granted still remains a contract inter partes and as such can be considered confidential information of each party. Thus, each party may stipulate or invoke that the contract remains confidential.

16.1 If the compulsory licensee discloses the confidential information in violation of its obligation, does the right holder have a basis of claim against the compulsory licensee? 

Yes, depending on the circumstances, breach of confidentiality obligations of a contract may constitute a breach of contract and unlawful behaviour under the Swiss Federal Act against Unfair Competition ("FAUC").

The compulsory licence granted under article 23 CopA is limited to the Swiss market.

The compulsory licence granted under article 40e para 4 PatA is primarily granted for supplying the domestic Swiss market. However, article 40d PatA remains reserved, which provides for a compulsory licence for the export of pharmaceutical products to a country that has insufficient or no production capacity of its own in the pharmaceutical sector and which requires these products to combat public health problems, in particular those related to HIV/AIDS, tuberculosis, malaria and other epidemics (beneficiary country).

17.1 If the compulsory licensee is permitted to export products under the compulsory licence, are there any requirements and limitations on the export of such products?

A licence under article 40d PatA is limited to the production of the pharmaceutical product in the quantity that meets the requirements of the beneficiary country; the total quantity must be exported to the beneficiary country. In addition, the owner of the licence, as well as any manufacturer that produces products under the licence, must ensure that they are clearly identified as products that have been produced under a respective licence and that the products are distinguished by their packaging or by their special colouring or shape from patent-protected products, provided this does not have a significant impact on the price of the products in the beneficiary country.

No. There is no respective precedence.

Yes, a third party could in theory invoke article 40 PatA stating that where public interest so dictates, the person to whom the proprietor of the patent has, without sufficient reason, refused to grant the licence requested, may apply to the court for the grant of a licence to use the invention. To our knowledge, there is no such patented knowledge available yet on combatting COVID-19.

No. In fact, Switzerland officially supports initiatives that provide for the licensing of patents for the battle against COVID-19 on a voluntary basis, but fears that opening the door to automatic compulsory licences in this pandemic might weaken the institute of patent protection and be counterproductive.

According to article 40e para 3 PatA, the licence may only be transferred with that part of the enterprise using the licence. This also applies to sub-licences.

Swiss law does not provide for statutory provisions on such impact. Indeed, the question arises whether the new compulsory licence would replace an previously agreed-upon licence or only complement it (which must be reviewed under each individual case).

According to article 40d para 4 PatA, the owner of the licence for the export of pharmaceutical products to fight public health problems, as well as any manufacturer that produces products under licence, must ensure that they are clearly identified as products that have been produced under the compulsory licence and that the products are distinguished by their packaging or by their special colouring or shape from patent-protected products, provided this does not have a significant impact on the price of the products in the beneficiary country.

No, Swiss law does not provide for special distribution channels, but in the event of compulsory licences for the export to beneficiary countries of pharmaceutical products to fight public health problems in these countries, the licensee has to take care that the total quantity is exported to the beneficiary country (article 40d para 4 PatA).

No, not to our knowledge. Generally, price fixation of end selling products is considered critical under competition law-statutes and should not be triggered by a compulsory licence. A compulsory licence must remain compliant with the rest of the law.