International Patent Litigation in Switzerland

Switzerland is an attractive venue for patent litigation, particularly in the pharmaceutical field. In 2012, jurisdiction for patent litigation was centralised in the Federal Patent Court (FPC), which has exclusive jurisdiction over all patent disputes, including nullity actions, in Switzerland. As a result, experience in handling patent disputes is concentrated in a single court. The FPC is composed of a full-time president with legal training, a second full-time judge with technical training, and additional part-time judges who are appointed in on a case-by-case basis according to their technical or legal expertise.

The FPC receives between 20 and 30 new cases per year (2022: 24; 2021: 27). About a third of these are summary proceedings (2022: 11; 2021: 9). In the past, the majority of cases were settled (2012: 16/18 cases¸ settlement rate of 89%). In recent years, the number of cases settled by agreement has decreased significantly (2022: 5/15 cases; 2021: 7/17 cases; 2020: 2/14 cases). About half of the judgments are appealed to the Federal Supreme Court (2022: 3/6; 2021: 5/17; 2020: 7/14). Only a small proportion of appeals to the Federal Supreme Court are successful (2022: 1/4; 2021: 0/5; 2020: 2/11). This is not least due to the fact that the Federal Supreme Court does not have judges with technical training or who are particularly involved in patent litigation.

The fact that the parties can choose English as the language of the proceedings contributes to the attractiveness of Switzerland for international patent litigation. Only the judgement has to be delivered in one of the national languages (German more than 80%).

The FPC takes foreign judgments into account in its decision, but reserves the right to make an independent decision. Time and again, the FPC refuses to follow the decisions of foreign courts or even the European Patent Office, but gives detailed reasons for its divergent decision, cf. decision S2018_002 of 7 June 2018 re inventive step and expectation of success (valsartan amlodipine combination preparation); decision O2013_008 of 25 August 2015.

The procedure is essentially a written procedure. The oral hearing is limited to the presentation of facts already in the file. No new facts may be introduced at the oral hearing unless the strict requirements of the law on novelty are met.

Because of these procedural peculiarities and the short deadlines, careful and circumventing planning is essential. Evidence must be obtained at an early stage. It is recommended to anticipate possible counterarguments before the start of the proceedings in order to be prepared for them in the next submission. Apart from the recommended careful preparation, there are no mandatory procedural steps to be taken in order to commence patent litigation in Switzerland. In particular, Swiss law does not require a warning letter to be sent to the counterparty before commencing proceedings.

The patent owner, co-owner and exclusive licensee have the right to sue for patent infringement, unless this is expressly excluded in the licence agreement. The same applies to an exclusive distributor. A non-exclusive licensee or distributor has no legal right to sue for patent infringement.

Anyone who infringes or threatens to infringe a patent, either himself or through his agents, can be held liable and sued for patent infringement. The same applies to anyone who abets, participates in, aids, or facilitates patent infringement. This includes supplying or offering to supply materials or parts suitable and intended for carrying out the invention. Directors of a company are generally not liable simply because their company was involved in infringing activities, unless they personally committed or directed the infringing activities.

Anyone who supplies or offers to supply materials or parts suitable and intended for carrying out the invention can be held liable and sued for patent infringement. A finding of contributory infringement requires that a direct patent infringement takes place in Switzerland. Therefore, a foreign supplier of materials or parts that are imported into Switzerland can also be sued for contributory patent infringement. Conversely, a Swiss supplier of materials or parts brought into Switzerland does not contribute to the infringement of a patent in Switzerland, but may contribute to the infringement of a foreign counterpart of that patent. The same applies to other third parties who cause or contribute to patent infringement.

The patent owner is estopped from enforcing an otherwise valid and infringed patent by having allowed a substantial time to elapse. However, this defence is limited to rare cases where the patent owner's conduct has led the alleged infringer to believe that it would not bring an infringement claim. Mere inactivity on the part of the patent owner, even over a long period of time, is generally not sufficient.

It is permissible to assert infringement of more than one patent in a single lawsuit. However, there is no actual legal obligation to do so. If at a later date a second action is brought against the same person on the same facts but based on a different patent, the court and party costs of the new action must be borne. This provision concerns only the bearing of costs. Its application presupposes that the second patent cannot already be invoked in the first action. The plaintiff is therefore free to bring a second action against the same person if the second patent is granted at a later date. As far as can be seen, there is no case law on this provision. The lack of relevance of this provision is due to the fact that its scope is very narrow and limited to the same or similar act of infringement.

The FPC has exclusive jurisdiction over all patent infringement and invalidity actions. There is no separate court for invalidity proceedings. The FPC determines whether the patent is valid and whether it has been infringed in the same proceedings. There is no bifurcation of proceedings and invalidity is decided in the same proceedings regardless of whether it is raised as a defence or as a counterclaim to an infringement action.

Switzerland is not a member of the EU. It therefore, cannot take part in the UPC. The fact that Switzerland does not participate in the UPC does not exclude the possibility that Swiss patent owners are entitled to enforce their patent rights with the UPC. Vice versa, it is also permissible to bring actions against Swiss parties before the UPC.

In Switzerland, an alleged infringer may institute legal proceedings to obtain a declaration that its activities do not infringe the patent rights of a third party, provided that the plaintiff has a legitimate interest in obtaining such a declaration.

An alleged infringer is generally precluded from seeking a declaration of non-infringement if the patent owner has not yet objected to the activities in question. Rather, a declaration of non-infringement requires proof that:

• the alleged infringer has received a cease and desist letter; or, alternatively,
• the patent owner has otherwise asserted that such activities infringe its patent rights.

The threshold for an alleged infringer to bring an invalidity action is generally lower. It is sufficient to show that the parties are in competition and that the patent's scope of protection extends to the plaintiff's field of activity.

In Switzerland, the first hearing is the instruction hearing. Depending on whether the defendant has filed a counterclaim for invalidity, the instruction hearing takes place 4-7 months after the plaintiff has initiated legal proceedings.

The instruction hearing consists of two parts:

• In the first (official) part, the instructing judge and the lead technical judge will ask the parties questions in order to clarify issues and provide guidance where further substantiation is required. This first part will be recorded.
• During the second (informal) part, the instructing judge and the lead technical judge give their preliminary views on the dispute and the parties usually engage in mediated settlement negotiations. This second part is not recorded. If the dispute cannot be resolved, the proceedings continue.

In principle, the FPC aims to conclude patent infringement cases within 12 to 24 months, depending on whether or not the defendant has filed a counterclaim for invalidity. To achieve this goal, the FPC generally sets mandatory time limits of 4 or 6 weeks, which can be extended by 2 weeks. Further extensions are generally only possible with the consent of the other party.

The panel of the FPC consists of at least one judge with a legal background and one judge with a technical background. The technical judges are usually patent attorneys or patent agents in private practice.

In order to be elected, each judge of the FPC must have proven knowledge of patent law. Parties to proceedings before the FPC can therefore expect a high level of legal expertise as well as a sound technical understanding from the court.

Where opposition or appeal proceedings are pending before the EPO, the defendant may request the FPC to stay the proceedings. However, the FPC will not normally stay proceedings, unless a final decision of the EPO is expected shortly or both parties agree to a stay.

The FPC has exclusive jurisdiction over the validity of patents and there is no bifurcation of the proceedings. Invalidity may be raised as a defence or as a counterclaim to an infringement action. However, invalidity may also be raised a as separate claim by way of a revocation action, provided that the plaintiff has a legitimate interest.

There is currently no case law on FRAND licensing and/or standard essential patents (SEPs). If such cases arise, the courts are likely to look to the case law developed by other European courts, in particular the German courts.

The FPC has not yet considered these issues.

In general, witnesses play a minor role in Swiss patent litigation. Witnesses have rarely been used and heard in patent infringement or validity cases in Switzerland. Witnesses have played an important role only in the context of ownership disputes or invalidity based on prior public use.

Private expert opinions are sometimes used to support specific claims, such as infringement and validity issues or calculation of damages. The evidentiary value of private expert opinions is relatively low, as courts consider them to be mere assertions of the parties rather than actual evidence. However, private expert opinions can still be important in providing guidance to the technical judges. It is also permissible to hear experts appointed by the parties during the oral hearing of a preliminary injunction.

US-style pre-trial discovery is not permitted in Switzerland.

Although parties are not obliged to disclose documents to their opponent, there are ways to obtain access to documents prior to the commencement of patent litigation in Switzerland:

• Description: as a preliminary measure, the court may order the description or seizure of the allegedly infringing products or processes if there is a risk of actual or imminent infringement. Evidence obtained in this way may be used in subsequent infringement proceedings. It is not necessary to show irreparable harm or any other legitimate interest. A member of the Federal Patent Court carries out the order, if necessary with the assistance of a court-appointed expert or local authorities such as the police.
   
• Provisional seizure of evidence: As an alternative to the description procedure, a party may request the court to order the provisional seizure of evidence if it is prima facie established that (i) such evidence is likely to be destroyed; or (ii) there is another legitimate interest in the seizure, such as the assessment of the chances of success.
   
• Lack of evidence: During the proceedings, the court may order a party to produce certain documents in its custody if the party requesting the production can demonstrate its relevance to the outcome of the case. Fishing expeditions are not allowed. Failure to comply with a court order may be taken into account by the court in weighing the evidence. The court may also compel third parties to produce certain documents relevant to the outcome of the case. For example, the defendant's accounting records to enable the plaintiff to quantify its financial claims (damages and disgorgement of profits).

Decisions of the FPC may be appealed to the Federal Supreme Court. The right of appeal is limited to the losing party.

In an ordinary proceeding on the merits, the right of appeal is limited to review of questions of law - as opposed to questions of fact. Thus, the appellant must show that the FPC misapplied or misinterpreted federal law, including patent law or procedural law. Findings of fact and evaluation of evidence can only be reviewed if they are clearly wrong or arbitrary.

In patent cases, the appeal proceedings before the Federal Supreme Court generally take about 6 to 8 months.

Depending on the nature of the decision under appeal, an appeal to the Federal Supreme Court automatically has suspensive effect. This applies in particular to invalidity. In the case of infringement, the court may grant suspensive effect on request. To be successful, the appellant must show that he is likely to suffer an irreparable.

In Switzerland, there are three types of costs associated with patent litigation proceedings:

• Court costs;
• Attorney's fees
• Patent attorney's fees.

Court costs depend on the value of the litigation. Both, attorneys' and patent attorneys' fees are charged on a time basis, but are adjusted to take into account other factors such as the complexity of the dispute and the value of the litigation. Patent attorneys' fees are considered disbursements and are therefore, in principle, fully recoverable. However, the Federal Patent Court often reduces the reimbursement of patent attorneys' costs to the amount of the attorneys' fees awarded under the applicable tariff, unless an exceptionally complex technology justifies a higher amount.

On average, a party should expect to spend between CHF 70,000 and CHF 230,000 for a first instance decision.

For an appeal before the Federal Supreme Court, the same principles apply as for the first instance decision. A party should expect costs between CHF 20,000 and CHF 50,000.

As a general rule, the losing party must pay the court costs and reimburse at least part of the prevailing party's legal costs and disbursements. Experience shows that about 30% to 50% of the total legal costs and disbursements can be recovered. In exceptional cases, the court may refuse to award costs to the winning party if it has abused the court proceedings or otherwise contributed to an unreasonable delay in the proceedings.

ADR methods such as mediation are available in Switzerland. However, these methods are not widely used. They may be chosen as a first step in the resolution of disputes under licensing agreements where such an obligation is contractually required.

Alternatively, arbitration is available to resolve patent disputes if the parties to the dispute have agreed on the jurisdiction of an arbitral tribunal. In Switzerland, arbitration is available for both patent infringement and patent invalidity disputes. However, arbitration is rarely used to resolve pure patent infringement and invalidity disputes. It is more common for parties to enter into an arbitration agreement in patent licence agreements, which also empowers the arbitral tribunal to decide underlying patent infringement and validity issues.

In the course of litigation, the FPC usually requires the parties to enter into court-mediated settlement negotiations after the first exchange of pleadings. These settlement negotiations take place during the second, informal part of the instruction hearing (see answer to question 9).

In Switzerland, it is up to the plaintiff to determine the remedies to be awarded by the court. The remedies for patent infringement include a permanent injunction, monetary remedies, recall and destruction of infringing products, and the publication of the decision at the defendant's expense.

If the patent is infringed and the plaintiff seeks a permanent injunction, the court has no discretion to refuse to grant the injunction. There are no exceptions for certain subject matter or for certain defendants, such as non-practicing entities. Public policy considerations are not taken into account in determining whether a permanent injunction can be granted.

If the plaintiff is entitled to damages as a result of patent infringement, the plaintiff may claim either

• Compensation for the financial loss suffered as a result of the infringement (damages).
• Surrender of the profits made by the infringer from the sale of the infringing products (accounting of profits).
• Restitution of any unjust enrichment of the infringer as a result of the infringing activities (in particular a reasonable royalty).

In general, the monetary remedies are determined in a separate proceeding that takes place after the decision on the infringement has become final. Provisional enforcement of monetary remedies is not possible. The court awards interest on damages at the statutory rate (currently set at 5% per annum). Punitive damages are not available in Switzerland, and foreign awards of punitive damages are generally unenforceable in Switzerland.

In general, the amount of monetary remedies is a separate consideration that the FPC deals with in a separate proceeding, after the judgement on liability has become final and enforceable.

If a patent is deliberately infringed, additional remedies are available, in particular criminal sanctions. The criminal sanctions for patent infringement are either a fine or imprisonment for up to five years if the accused has acted for commercial gain.

In its case law, the FPC regularly orders the recall of infringing products, although the Swiss Patent Act does not explicitly provide for such requests.

Preliminary injunctions are available where the following conditions are met:

• There is a prima facie case of infringement and validity (the burden of proving invalidity is on the defendant).
• The applicant will suffer harm that is not readily reparable if the injunction is not granted.
• The relief sought is proportionate to the harm caused by the alleged infringement.

Urgency is not a condition for the grant of a preliminary injunction. However, if the applicant has waited too long, a preliminary injunction will no longer be available.

In cases of particular urgency and provided that the applicant has initiated the legal proceedings without undue delay, the FPC may grant an interim injunction immediately and without hearing the opposing party (ex parte injunction). The urgency must be such that a prior hearing is not possible. Only in rare cases will the FPC consider that an interim injunction without a prior hearing is justified.

Preliminary injunction proceedings are a summary procedure with shorter deadlines and a lower standard of proof (prima facie standard). They are normally concluded within six months, but may take four to ten months depending on whether the defendant has asserted the invalidity of the patent, the technical judge has delivered his expert opinion and an oral hearing has taken place.

In preliminary proceedings, an appeal is only available if the appellant can show that it is suffering irreparable harm of a legal nature. The appellant must show that the FPC has misapplied or misinterpreted constitutional law, including a manifestly erroneous or arbitrary application of the law or assessment of evidence.

The FPC may require the plaintiff to provide a bond or guarantee to ensure payment of compensation in the event of an unjustified interim injunction. The amount of the bond will be determined by the court. The bond/guarantee is released as soon as it is clear that no damages will be claimed. The Federal Patent Court may set a time limit for the defendant to file an action for damages.

The FPC may require the plaintiff to provide a security such as a bond or a guarantee to ensure payment of damages in the event of an unjustified preliminary injunction. The amount of the security will be determined by the court which may also set a time limit for the defendant to file a claim for damages. If the defendant does not met the deadline, the security will be released.

Are further proceedings on the merits required in order for the court to grant a final injunction?

Permanent injunctions are granted if the plaintiff proves actual or impending patent infringement. No further requirement must be shown (eg, irreparable harm). The grant of permanent injunction is highly dependent on the substantial assessment of the patent infringement case at hand, but it is usually granted, if the court finds a patent infringed.

N/A.

In principle, Swiss courts can issue cross-border or extraterritorial injunctions provided that the defendant in the infringement proceedings is domiciled in Switzerland.

However, if the defendant contests the validity of the foreign counterpart, the FPC will stay the infringement proceedings and order the defendant to initiate invalidity proceedings in the relevant jurisdiction. If the defendant fails to initiate invalidity proceedings, the court will treat the invalidity issue as a preliminary question to the infringement action.

Swiss law does not contain any specific provisions on anti-suit injunctions. In a leading case, the Swiss Federal Supreme Court held that anti-suit injunctions are inadmissible before Swiss courts to the extent that the dispute is governed by the Lugano Convention (SFSC decision of 5 April 2012, published as 138 III 304, cons. 5.3.1 regarding the judgment of the European Court of Justice in the matter of Allianz SpA v. West Tankers Inc, Case C-185/07 of 10 February 2009). For the same reason, anti-suit injunctions cannot be enforced by state courts in Switzerland.