Patent Litigation 2021

Last Updated February 15, 2021

Switzerland

Law and Practice

Authors



Pestalozzi is a multicultural Swiss business law firm that has focused on high-end work for domestic and international clients since 1911. Pestalozzi's lawyers are strong and empathic personalities, known for their truly independent approach to advising and representing their clients. The firm guides and supports its clients in their strategic business decisions, anticipates their future challenges and helps them solve their critical issues. Being fully integrated, Pestalozzi encounters no internal limits in shaping the most competent and efficient teams for clients’ needs. With over 100 professionals in Zurich and Geneva, the firm is at home in Switzerland’s two main commercial hubs – and has developed a wealth of experience in its key practice areas of banking, life sciences, commodity trading and insurance. While being locally embedded, Pestalozzi has also developed a sought-after expertise in dealing with multi-jurisdictional transactions and disputes.

In Switzerland, new inventions are primarily protected by patents. A patent can either be applied for and granted as a Swiss national patent under the Swiss Patents Act (PatA) or as a European patent under the European Patent Convention (EPC) with extended protection for Switzerland. According to the Patents Act and Swiss judicial practice, certain inventions are excluded from patentability, such as gene sequences, methods of medical treatment or computer implemented inventions.

Undisclosed inventions may also qualify as trade secrets and are then protected by law against unlawful acquisition, use and disclosure which may qualify as an act of unfair competition (Article 6, Act against Unfair Competition) or a criminal act (Article 162, Penal Code). The Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (trade secrets) is neither directly applicable nor has it been implemented in Switzerland. Overall, the Swiss provisions on trade secret protection are less detailed than the legal framework in the European Union.

Under current Swiss law, protection of an invention as a utility model is not yet available. In October 2020, the Federal Council (the Swiss government) proposed a partial revision of the Patents Act introducing, among other things, a new form of protection for inventions as utility models. The ten-year term of protection for utility models is proposed to be half of the maximum lifespan of a patent (20 years). By introducing protection through utility models, innovators shall be able to better tailor their IP strategy to their economic needs and resources. After the end of the consultation period, this proposal will be submitted to the Swiss Parliament for discussion.

A Swiss national patent is granted upon application by the Swiss Federal Institute of Intellectual Property (Institut Fédéral de la Propriété Intellectuelle, or IPI). European patent applications with protection for Switzerland may be filed with the European Patent Office (EPO) pursuant to the EPC.

European patent applications have the same effect in Switzerland as national patent applications filed with the IPI (Article 110, PatA) and are recorded in the Swiss register once granted by the EPO.

The IPI currently examines national patent applications for only a few legal requirements, such as whether the invention is contrary to public policy or morality. In contrast to the examination procedure of European patents by the EPO, the IPI does not examine the material requirements of novelty and non-obviousness before granting the patent (Article 59 paragraph 4, PatA). According to the revision of the Patents Act proposed by the Federal Council, the IPI shall, in future, examine national patent applications for all patentability requirements. Only the yet to be introduced utility model (see 1.1 Types of Intellectual Property Rights) shall be granted without a substantive examination of the invention.

Trade secret protection is granted by law, without any examination or registration by any authority, provided that the undisclosed invention meets the conditions for protection, such as confidentiality and an interest in its confidentiality.

Patent examination by the IPI for granting a national patent may last between one and two years or even longer, depending on whether the IPI is asked to provide a report on the state of the art or arrange an international-type search (Article 59 paragraph 5, PatA). Patent granting proceedings by the EPO usually take longer, as the novelty and obviousness requirements are examined. The European patent grant procedure takes about three to five years from the date the application is filed.

The average costs for the grant of a patent by the IPI amount to approximately EUR700 (without any fees for optional searches). To take a patent application through to the grant stage before the EPO, it currently costs on average around EUR8,000. These costs do not include the fees for consultancy services of a patent attorney.

Swiss residents do not need to be represented by a patent attorney before the IPI, but applicants (natural or legal persons) who have neither residence nor a place of business in Switzerland are obliged to be represented by a local professional representative. Similar rules apply for residents of non-contracting states in front of the EPO.

For both Swiss national patents and European patents with protection for Switzerland, the term of protection is 20 years from the filing date of the patent application (Article 14, PatA).

Inventions that qualify as trade secrets are protected by law as long as the invention meets the conditions for protection – ie, it must remain confidential and the inventor must have an interest in its confidentiality.

Obligations

In order to maintain both Swiss national patents and European patents with protection for Switzerland, once granted, the patent owner's primary obligation is to timely pay the registration and annual renewal fees. The amount of the renewal fees varies based on the years of protection.

Rights

Both Swiss national patents and European patents with protection for Switzerland, confer on their owners the right to prohibit others from commercially using the invention (Article 8, PatA). It is the responsibility of the patent owner to enforce his or her exclusivity rights. Possible civil legal actions include:

  • an action for permanent injunction or remedy of the unlawful situation (Article 72, PatA);
  • an action for damages (Article 73, PatA); and
  • an action for declaratory judgment on the existence or non-existence of a circumstance or right governed by the Patents Act (Article 74, PatA).

Actions for injunction or remedy can also be requested as preliminary measures (Article 77, PatA). Moreover, in order to establish infringements, patent owners may request as a preliminary measure that the court carries out a so-called precise description of the allegedly unlawful process or product (Article 77, PatA).

Besides the initiation of civil actions, the patent owner may file a complaint in order to start legal criminal proceedings against the infringer of its patent rights (Articles 81 et seq, PatA). The Patents Act also provides for custom measures (Articles 86a et seq, PatA). If the patent owner has clear indications that goods infringing his or her patent may imminently be imported into or exported out of Swiss customs territory, he or she may request the Customs Administration to refuse the release of the goods. The Customs Administration may withhold the goods for a maximum period of ten working days, so that the applicant may obtain preliminary measures.

Inventions which are only protected as trade secrets enjoy protection either under Swiss criminal law (Article 162, Penal Code) or under unfair competition law (Article 6, Act against Unfair Competition). Unfair competition law provides for civil injunctions, remedies and damages actions as well as for criminal sanctions.

Upon an application by the owner of a Swiss national patent or a European patent with protection for Switzerland, the IPI may grant a supplementary protection certificate (SPC) for the active ingredients or a combination of the active ingredients of medicinal products or plant protection products (Articles 140a et seq, PatA). An SPC can only be granted on the basis of a valid patent and a granted marketing authorisation for the medicinal product.

The period of protection for the SPC begins as soon as patent protection expires and is valid for a maximum period of five years. This term may be extended for a further six months if paediatric studies have been carried out and the results are reflected in the product information of the respective medicinal product (paediatric extension).

For situations where the patent owner is not able to apply for an ordinary SPC, which could be prolonged through a paediatric extension, the Patents Act also provides the possibility of a paediatric SPC that is directly linked to the patent and not the ordinary SPC.

Third parties do not have any right to participate in the grant proceedings for a Swiss national patent – eg, by filing third party observations. However, any person can file an opposition against a Swiss national patent once it is granted by the IPI.

In proceedings before the EPO, third parties can file observations concerning the patentability of the invention (third-party observations) in order to try to prevent a patent from being granted. However, third parties cannot take part in the grant proceedings as a formal party. Any person may file an opposition against a European patent once it is granted by the EPO.

Against a refusal to grant patent protection by the IPI, an appeal can be filed with the Swiss Federal Administrative Court and thereafter the Swiss Federal Supreme Court.

A patent registered in the Swiss patent register is cancelled (and the patent protection terminates with effect ex nunc) if the annual renewal fees are not paid on time.

Where the patent owner provides prima facie evidence of having been prevented, through no fault on his or her part, from observing a time limit, the IPI may grant, on request, the re-establishment of his or her rights (Article 47, PatA). Acceptance of the request has the effect of restoring the situation that would have resulted from carrying out the act in good time.

Due to the no-fault requirement, Article 47 of the Patents Act is often not applicable. Alternatively, the patent owner may file a request for further processing with the IPI (Article 46a, PatA). The request must be made within two months after receiving notification of the missed time limit or within six months after the time limit has expired. Within this time, the action that has been omitted must be executed. If the request for further processing is approved, the situation that would have resulted from executing the act on time will be restored.

Once the patent has been granted (and the opposition period has expired), the patent owner may file with the IPI a request for a declaration of partial surrender of a Swiss national patent or a European patent with protection for Switzerland in order to:

  • revoke a patent claim;
  • limit an independent claim by combining one or more patent claims, which are dependent on it; or
  • limit an independent claim in some other way – in such cases, the limited claim must refer to the same invention and define an embodiment that is included in the specification of the published patent and in the version of the patent application that determined the date of filing.

The partial surrender may not be used to file new patent claims or to make up for something else that was overlooked in the granting procedure.

On the occasion of registration of a partial surrender, the patent owner may, within a three-month period, file an application for the establishment of one or more new patents to cover the dropped patent claims; such new patents are given the filing date of the original patent.

Under Swiss law, civil legal actions include:

  • actions for injunction or remedy (which may also be requested as preliminary measures);
  • actions for damages; and
  • actions for declaratory judgment.

Moreover, the patent owner may also initiate penal proceedings or apply for customs measures.

Please see1.5 Rights and Obligations of Owners of Intellectual Property Rights for more detail.

Opposition

Within nine months of publication, any third party, without the need to demonstrate a proven interest, may file an opposition against a Swiss national patent granted by the IPI or against a European patent granted by the EPO.

Grounds for opposition against a Swiss national patent are rather limited. The opposing party may claim that the patent contains inventions which are excluded from patentability because:

  • the invention relates to the human body or its elements;
  • the invention relates to naturally occurring sequences or partial sequences of genes; or
  • the invention's exploitation is contrary to human dignity or disregards the integrity of living organisms, or is in any other way contrary to public policy or morality according to Article 2 of the Patents Act.

The EPC allows for more grounds for opposition. In addition to similar opposition grounds allowed under Swiss law, a third party may also claim that:

  • the invention is not new;
  • the invention does not involve an inventive step;
  • the invention is not susceptible to industrial application;
  • the invention is not disclosed clearly and completely enough for a person skilled in the art to carry it out; or
  • the patent's subject-matter extends beyond the content of the application as filed.

Civil Proceedings

Third parties, with proven interest, may also initiate civil proceedings in order to claim the invalidity or partial invalidity of a Swiss national or European patent with protection for Switzerland if the invention is excluded from patentability, is obvious, not novel or not disclosed in a way that a person skilled in the art could carry it out (Articles 26 et seq, PatA).

In addition, when the patent has been filed by an applicant who was not entitled to that patent, the entitled person may apply for assignment of the patent application or, if the patent has already been granted, the patent itself (Article 29, PatA).

Compulsory Licensing

Under Swiss law, third parties with a legitimate interest may, under certain conditions, also initiate actions for the grant of compulsory licences (Articles 36 et seq, PatA), if:

  • a patent cannot be used without infringing a prior patent, provided that the invention represents an important technical advance of considerable economic significance in relation to the invention that is the subject matter of the prior patent;
  • a patent is not sufficiently exploited in Switzerland, and where such a failure to exploit cannot be justified;
  • the public interest so requires;
  • a licence to patents in the field of semiconductor technology is required to remedy a practice held to be anti-competitive; or
  • a licence to use a patented biotechnological invention is required for research purposes.

Requests for the grant of compulsory licences are rare.

The Swiss Federal Patent Court rules on civil actions concerning patents at first instance. Pursuant to Article 26 of the Patent Court Act (PCA), it has exclusive jurisdiction over civil patent litigation concerning patent validity as well as patent infringement, compulsory licence actions, requests for preliminary measures and enforcement of judgments made under its jurisdiction.

The Federal Patent Court also has jurisdiction in other civil actions that have a connection to patents, in particular those concerning contractual rights to patents (ownership and licensing) or their assignment. In such cases, the jurisdiction of the Federal Patent Court does not preclude the jurisdiction of the cantonal courts. For such disputes, the claimant may choose whether to bring an action before the Federal Patent Court or the relevant cantonal court.

An appeal against the decision of the Federal Patent Court or of a cantonal court can only be lodged with the Federal Supreme Court directly as second instance. The decision of the Federal Supreme Court is final.

Besides the Federal Patent Court, which is a specialised court comprising legal and technically versed judges, arbitral tribunals may also be competent to resolve disputes related to patents. According to Swiss case law, all aspects of intellectual property disputes are arbitrable, including contractual issues related to patents as well as disputes over the validity of patents. Whereas arbitration proceedings related to mere validity disputes are rather rare, contractual disputes are often submitted to arbitral tribunals.

No other (non-statutory) specialised organisation exists in Switzerland to rule on patent disputes.

Civil actions relating to intellectual property rights can be filed with the competent court without any need to attempt conciliation in front of a conciliation authority. The issuance of warning letters is also not required, but highly recommended to consolidate the legitimate interest of the claimant and to support the attribution of the procedural costs to the defendant.

A licensee who is entitled to file an action (see 3.1 Necessary Parties to an Action for Patent Infringement) is not required to register the licence in the patent register.

Parties may decide, but do not have any obligation, to be represented by an attorney at law in intellectual property matters. If a party decides to be represented in front of a Swiss court, the representative must be a qualified attorney at law. In proceedings concerning the validity of a patent in front of the Federal Patent Court, the parties may also be represented by a qualified and admitted patent attorney (Article 29, PCA).

Under Swiss law, interim measures within civil proceedings are available. The applicant must provide prima facie evidence that:

  • the right to which he or she is entitled has been violated or a violation is imminent;
  • violation threatens to cause not easily reparable harm; and
  • the requested measure is urgent (Articles 261 et seq, Civil Procedure Code, CPC).

The applicant can request:

  • an injunction;
  • an order to remedy an unlawful situation;
  • an order to a registering authority or to a third party; or
  • performance in kind.

In cases of special urgency, and in particular where there is a risk that the enforcement of the measure will be frustrated, the court may order the interim measure immediately and without hearing the opposing party (ex parte interim measures) (Article 265, CPC). The ex parte interim measures must subsequently be confirmed in inter partes proceedings granting the opposing party its right to be heard.

Any person who has reason to believe that an ex parte interim measure will be applied against him or her, may set out his or her position in advance by filing a protective letter (Article 270, CPC).

Protective letters must be filed with the Federal Patent Court and/or the cantonal courts that are likely to have jurisdiction for ordering the ex parte interim measures in the case at hand. The other party will be served with the protective letter only if he or she actually initiates the respective proceedings. The protective letter becomes ineffective six months after it was filed.

Time-Barring

Monetary claims in patent infringement proceedings are time-barred after three years from the date on which the injured party became aware of the loss or damage and of the identity of the person liable for them, but in any event ten years after the date on which the loss or damage was caused. If the action for damages is derived from an offence for which criminal law envisages a longer limitation period, that longer period also applies to the civil claim.

Claims for injunctive and declaratory relief are in principle not time-barred, but rather remain available as long as there is a legitimate interest in obtaining such a relief.

Swiss Civil Code Good Faith Requirements

The enforcement of rights might be limited due to their forfeiture based on Article 2 of the Swiss Civil Code, which requires every person to act in good faith in the exercise of his or her rights. If a person waits too long before initiating enforcement proceedings, his or her rights may be forfeited if the court determines, taking into account all relevant circumstances, that the claimant acted against good faith. As an example, the right to apply for interim measures is considered forfeited 14 months after the patent owner actually learned, or should have learned, of the infringement unless there are special circumstances. Based on Swiss case law, urgent status will not be granted by the courts if the patent owner has waited so long.

Swiss procedural law does not provide any procedural mechanisms for far reaching US-style fishing expeditions in order to obtain all evidence from the opposing party that might be relevant. However, there exist certain mechanisms allowing a party to obtain specific evidence.

Swiss Patents Act

Based on the Swiss Patents Act, a patent owner with a legitimate interest – ie, providing prima facie evidence that his or her patent has been infringed or an infringement is suspected – may request that the Federal Patent Court order as an interim measure:

  • the securing of evidence; and/or
  • a precise description to be made of the allegedly unlawful processes used and/or of the allegedly unlawful products manufactured, as well as the means used to manufacture them (Article 77, PatA).

The procedure for making the description, with or without seizure, is typically carried out by a technically trained judge and a clerk at the location where the alleged infringement takes place. Upon the request of an opposing party, the court will take necessary measures to safeguard trade secrets and might exclude the applicant from taking part in the inspection. The court will draft a written report describing the product or process and before the applicant receives the report, the opposing party is given the opportunity to comment (Article 77, PatA).

Swiss Civil Procedure Code

The Swiss Civil Procedure Code also allows a more general right to ensure preliminary taking of evidence without any need to start civil litigation (Article 158, CPC). Similar evidence as during a pending litigation on the merits can be the subject of such a preliminary taking of evidence – ie, the party may request witness hearings, the production of specifically identified documents, the inspection of goods or places or the drafting of a court-appointed expert's report. The questioning of the parties, however, can only be part of the proceedings on the merits.

In general, the parties to the case, and third parties, have a duty to co-operate in the taking of evidence (Article 160, CPC). However, the court cannot enforce its order if a party to the proceedings does not produce the required evidence. But, the court will take this into account when assessing the evidence and the facts of the dispute.

Under Swiss procedural law, the statement of claim must contain:

  • the prayers for relief;
  • a statement of the value in dispute;
  • the allegations of fact;
  • a notice of the evidence offered for each allegation of fact; and
  • the date and signature.

It is not required by law to state the legal arguments (since the court must know the law), but it is common practice.

In general, each party is entitled to two submissions (or oral pleadings) during which it may provide new facts and evidence and amend its prayers for relief. After the second submission, new facts and new evidence are admissible only if presented immediately after they become known and (i) if they occurred after the second submission (proper nova), or (ii) if they existed before but could not have been submitted despite reasonable diligence (improper nova). In any case, new facts and new evidence are admitted only until the court begins its deliberations.

Changes to Pleading Procedure

These requirements apply to all civil proceedings and not only to intellectual property proceedings and are applied in a very strict manner. The Swiss Federal Supreme Court ruled in a recent decision that the former practice of the Federal Patent Court allowing the claimant to split its statement of reply in case the defendant raises a counterclaim asserting the invalidity of the patent violated these requirements. As a result of this decision, the Federal Patent Court had to change its practice. After the exchange of the first briefs (statement of claim and statement of defence), the parties are now directly summoned to an instruction hearing irrespective of whether or not a counterclaim was raised. During this hearing, the court will present a first preliminary assessment of the case and the parties may engage in settlement negotiations. If the dispute cannot be solved, the parties will exchange their second briefs.

Under Swiss law, no class actions or other collective actions are permitted. However, joinder of parties in civil proceedings is admissible.

Restrictions on the assertion of patent rights may apply from the law against unfair competition and antitrust law, in particular with respect to restrictions against parallel imports which are not justified (Article 9a, PatA and Article 5, Swiss Cartel Act) and unlawful practices by market dominant undertakings (Article 7, Swiss Cartel Act).

Furthermore, a patent owner might be restricted in the enforcement of his or her rights due to their forfeiture based on Article 2 of the Swiss Civil Code (acting in good faith), in particular if he or she were to wait too long before initiating enforcement proceedings (see 2.9 Special Limitation Provisions in Intellectual Property Matters).

Civil Actions

The patent owner who has his or her rights infringed, or is threatened with an infringement, may initiate a civil action. The exclusive licensee, irrespective of the registration of the licence in the patent register, may also bring an infringement action independently, provided this is not expressly excluded by the licence agreement (Article 75, PatA). Non-exclusive licensees, however, may only join the infringement proceedings filed by the patent owner or the exclusive licensee in order to claim their own losses or damages.

An infringement action can be raised against any person:

  • who uses a patented invention unlawfully;
  • who refuses to notify the authority concerned of the origin and quantity of products in their possession which are unlawfully manufactured or placed on the market, and to name the recipients and disclose the extent of any distribution to commercial and industrial customers;
  • who removes the patent mark from products or their packaging without authorisation from the proprietor of the patent or the licensees; and
  • who abets any of the said offences, participates in them, or aids or facilitates the performance of any of these acts (Article 66, PatA).

The claimant is not obliged to initiate the infringement action against all potential infringers if there are several.

Criminal Proceedings

Criminal proceedings can be initiated against the same persons provided that they wilfully committed the patent infringement, on complaint by the patent owner or ex officio if the infringer acts for commercial gain (Article 81, PatA).

Swiss law does not explicitly know a doctrine distinguishing between direct and indirect patent infringement. Whoever commits an infringement act as described in Article 66 of the Patents Act may be held liable under Swiss civil and criminal law.

However, the Patents Act implicitly distinguishes between direct infringement (Article 66 litterae a, b and c, PatA) and contributory infringement (Article 66 littera d, PatA), according to which any person who abets, participates in, aids or facilitates the performance of any (direct) infringement may also be held liable under civil and criminal law. According to case law of the Swiss Federal Supreme Court, a contributory infringement is accessory to a direct infringement, meaning that an unlawful principal act is required for a contributor infringement, whereby it is sufficient for a claim for injunctive relief against the contributory infringer that a direct infringement is imminent.

With regard to its application in an international context, the accessoriness has the effect that the contributory infringer acting in Switzerland but contributing to a direct infringement abroad cannot be held liable under Swiss law. On the other hand, if the direct infringement takes place in Switzerland, a contributory infringer contributing to that infringement may be liable irrespective of whether the contributory acts are performed in Switzerland or abroad.

Regarding the supply of (non-infringing) materials or parts to a customer who uses these parts or materials for the manufacture of goods infringing a patent, the Swiss Federal Supreme Court has clarified that the supplier is liable as contributory infringer if he or she knew or should have known that the means supplied were suitable for, and intended to be used by the customer for, use in the infringing goods.

The most important particularity of process patent infringement proceedings concerns the burden of proof. In general, the claimant carries the burden of proof in infringement proceedings. However, the burden of proof may be reversed if the patent in question is a process patent. If an invention concerns a process for the manufacture of a new product, every product of the same composition is presumed to have been made by the patented process until proof to the contrary has been provided (Article 67 paragraph 1, PatA). The same applies by analogy to a process for the manufacture of a known product if the patent owner provides prima facie evidence of an infringement of the patent (Article 67 paragraph 2, PatA).

Regarding the territorial scope of a process patent infringement, the general rules apply, meaning that a direct infringement must occur in Switzerland in order for Swiss law to apply. Accordingly, the Swiss Federal Supreme Court held in a case that if a device intended for carrying out a patented process is manufactured in Switzerland, but the process itself is only carried out abroad, the process patent is not infringed in Switzerland.

Literal Infringements

The patent claims determine the scope of protection of a patent (Article 51 paragraph 2, PatA). According to established practice, the patent claims must be interpreted from the viewpoint of a skilled person, starting with the claim language but also taking into account the description and the drawings. General technical knowledge is also accepted as a means of interpretation.

In a rather recent decision, the Swiss Federal Supreme Court held that the prosecution history of a patent is in general, not decisive for the interpretation of the patent claims. Waivers and limitations made by the patent applicant during prosecution are to be taken into account only to the extent that they are ultimately reflected in the patent claims and/or the description.

Equivalent Infringements

The Patents Act explicitly holds that an imitation is also deemed to constitute a use (Article 66 littera e, PatA) and, hence, not only literal infringements but also equivalent infringements are known under Swiss law. The Swiss Federal Supreme Court and the Federal Patent Court have elaborated in several decisions, taking into account other European courts' practice, a standard test for the assessment of an equivalent infringement based on three main steps.

  • Equal effect – the modified feature must objectively fulfil the same technical function as the corresponding feature of the patent claim.
  • Accessibility – the modified feature must be obvious to the skilled person in light of the teaching of the patent; the Federal Patent Court has clarified that the starting point for the assessment of accessibility is not the general prior art, but the patent at issue, as this step should not be confused with the assessment of the inventive step.
  • Equality – the skilled person must consider the modified feature as an equivalent solution taking into account the claim language and the description.

If all three requirements are fulfilled, an equivalent patent infringement exists according to Swiss practice.

Validity Defences

Within Swiss patent infringement proceedings, the defendant may attack the validity of the claimant's patent or raise non-infringement arguments.

The defendant may plead the invalidity of the patent as a defence in the form of an objection or as a formal counterclaim. If the defendant raises the invalidity as an objection and the court determines that the patent is in fact invalid, that decision has only a direct effect between the parties – ie, the infringement action is rejected but the patent is not revoked from the patent register. If the defendant decides to file a counterclaim, this has the same effect as a standalone invalidity action – ie, if the invalidity of the patent is confirmed by the court, the infringement action is rejected and the patent is also declared invalid and formally revoked.

Lawful Use Defences

Alternatively, or additionally, defendants may also claim to have lawfully used the allegedly infringed patent. Defendants may argue that:

  • they have been granted a valid licence right;
  • they can rely on a statutory exception as per Article 9 of the Patent Act, including the exceptions of private use for non-commercial purpose, use for research or experimental purposes (in order to obtain knowledge about the subject-matter of the invention), use for teaching purposes, use for obtaining marketing authorisation for a medicinal product, use by a medicinal professional for an individual person (medical prescription exemption) or use for a direct individual preparation of a medicinal product in a pharmacy (pharmacists' exemption);
  • the patent owner's rights were exhausted (Article 9a paragraph 1, PatA), whereas in general EEA-wide exhaustion applies but if the patent is of subordinate importance for the functional characteristics of the goods, global exhaustion applies, and if the price of the patented goods is fixed by the state, national exhaustion applies; or
  • they have a prior use right (ie, have commercially used the invention in good faith in Switzerland or have made special preparations for that purpose prior to the filing or priority date of the patent application (Article 35, PatA)) – in this case, the defendant might have to pay the patent owner appropriate compensation (Article 48, PatA).

As a general rule, the Federal Patent Court makes its decisions as a three-member body (panel), of whom at least one member must possess technical training. Where a technically trained judge possesses specific expertise, that judge will address this in a written opinion and the parties are given the opportunity to comment.

Additional technical know-how, at the request of a party or ex officio, may be obtained by an opinion from one or more external experts appointed ad hoc (Article 183, CPC). However, external expert opinions do basically not play a role in patent proceedings, since the Federal Patent Court has technically trained judges with expertise in all relevant fields of science.

The parties may submit written expert statements. However, these are considered as assertions of the parties only.

All arguments against the infringement of patent claims must be raised within the same proceedings. There is no separate procedure for construing patent claims.

There are several reasons for a revocation or cancellation of a patent.

Often, a patent registered in the Swiss patent register is cancelled because the renewal fees are not paid on time.

Swiss national patents or Swiss parts of European patents are also cancelled, and removed from the Swiss patent register, if an action for invalidity of the patent has been successful. The cancellation is done by the IPI upon the provision of full official copies of the final judgments. Any person with a proven interest may bring an invalidity action if the invention is excluded from patentability (eg, human body), is obvious, not novel or not disclosed in a way that a person skilled in the art could carry it out (Articles 26 et seq, PatA). The requirements for the interest to be demonstrated by the claimant are rather low. The only exception is an invalidity action based on the allegation that the patent owner has no right to the grant of the patent. This particular ground for invalidity can only be asserted by the person claiming to actually be entitled to the patent.

Rarely, an action for the cancellation of a patent is brought by a person with a demonstrated interest if the grant of licences does not suffice to meet the demand of the domestic market after a period of two years from the grant of the first compulsory licence (Article 38, PatA).

Finally, based on the prohibition against double patenting, a Swiss patent is revoked in favour of a European patent for one and the same invention with effect in Switzerland and granted to the same inventor or to his or her successor in title with the same filing or priority date (Article 125 paragraph 1, PatA).

Partial cancellation is possible if the successful invalidity actions relate to certain patent claims only (Article 27, PatA).

A patent owner may amend a patent by revoking a patent claim, limit an independent claim by combining one or more patent claims which are dependent on it or limit an independent claim in some other way (see above 1.10 Post-grant Proceedings Available to Owners of Intellectual Property Rights).

A patent may also be amended during invalidity or infringement proceedings. However, the patent owner is not able to rely on the amended patent at any stage of the proceedings. After the second pleading, new facts and new evidence are admissible only under very strict circumstances (see above 2.11 Initial Pleading Standards for Patent Disputes).

The Swiss Federal Supreme Court clarified in a recent decision that if the patent owner amends the patent through the IPI during pending infringement proceedings, this has an ex tunc effect and thus the original patent that is subject of the infringement proceedings no longer exists. If the introduction of new facts (ie, the amended patent) is no longer admissible at the stage of the proceedings in question, the infringement proceedings must be dismissed. If the patent owner wants to proceed against the alleged infringer based on the amended version of the patent, he or she must commence new infringement proceedings.

Where an invalidity claim is raised as a defence within patent infringement proceedings, that invalidity claim is heard at the same time and within the same proceedings.

The Swiss Federal Patent Court has exclusive jurisdiction in certain civil patent litigations. However, the proceedings before the Federal Patent Court are primarily based on the ordinary Swiss Civil Procedure Code, which applies to all civil proceedings. The Patent Court Act only contains a few provisions relating to the proceedings (eg, composition of the panel, jurisdiction and legal representatives).

The Federal Patent Court makes its decisions as a three-member (or very occasionally a five-member) body (panel), of whom at least one member must possess technical training.

In the rare proceedings that are ruled before civil cantonal courts (see 5.4 Effect of Other Court Proceedings on Cases), external technical experts may be appointed to submit an expert opinion ex officio or at the request of a party (Article 183, CPC). However, the final decision regarding technical questions remains with the judges.

Settlements may be agreed at any stage of civil proceedings. They may be discussed with the mediation of the court or upon separate negotiations among the parties only. Swiss courts often actively support the parties in order to find a settlement.

In front of the Swiss Federal Patent Court, the parties are summoned to an instruction hearing after the exchange of the first briefs. During this hearing, the court will present a first preliminary assessment of the case, which should serve as a basis for settlement discussions.

In respect of contractual rights related to patents, such as ownership and licence rights, legal actions may be filed both with the Federal Patent Court and also with the cantonal courts (Article 26 paragraph 2, PCA). Where the invalidity or infringement of a patent is to be adjudicated in such proceedings as a preliminary question or on a defence basis, the cantonal court grants the parties a reasonable period of time for filing the validity or infringement action before the Federal Patent Court, which has exclusive jurisdiction over this subject matter. The cantonal court must then stay the proceedings until a final decision has been made by the Federal Patent Court. However, considering that actions before cantonal courts with regard to patents have become very rare since the establishment of the Federal Patent Court, the influence of cantonal proceedings on the others are, in practice, very limited.

If proceedings before the Federal Patent Court relate to a European patent which is the subject of pending opposition proceedings before the EPO, the Federal Patent Court may stay its proceedings. In practice, however, this plays only a very limited role, since the Federal Patent Court emphasises that it only suspends its proceedings if a decision by the EPO can be expected in a short time.

Civil remedies for patent holders include injunction or reparatory remedy, damages (including legal costs), and declaratory judgments. See 1.5 Rights and Obligations of Owners of Intellectual Property Rights for further detail.

Swiss law does not provide for punitive or exemplary damages or the like. However, the patent owner may claim lost profits or, if the infringer acted in bad faith, the infringer's profit.

The court is bound by the available civil remedies and the parties' prayers for relief and has no discretion in ordering other remedies.

According to Swiss civil procedure law, the losing party must bear the court costs and has to reimburse the prevailing party for its legal costs. The compensation for legal costs is calculated based on tariffs depending on the value of the dispute. This compensation does often not cover all the attorneys’ fees and patent attorneys’ fees actually incurred.

If the defendant has incurred damages due to the proceedings, he or she may claim compensation for such damages. Within proceedings for interim measures, the court may make the interim measure conditional on the payment of security by the applicant, if it is anticipated that the measures may cause damage to the opposing party. An applicant for interim measures is liable for any damages caused by unjustified interim measures. If the applicant proves, however, that he or she applied for the measures in good faith, the court may reduce the damages or entirely release the applicant from liability (Article 264, CPC).

The same types of remedies are available for infringements relating to Swiss national patents and European patents with protection for Switzerland. Essentially, also the same types of remedies are available for civil proceedings involving inventions protected as trade secrets. See 1.5 Rights and Obligations of Owners of Intellectual Property Rights for further detail.

An appeal to the Swiss Federal Supreme Court does not have suspensive effect and, accordingly, injunctions granted at first instance are enforceable during the appeal proceedings. Upon request, the Federal Supreme Court may grant suspensive effect, but this is quite rare.

Appeals to the Swiss Federal Supreme Court against decisions of the Federal Patent Court or the civil cantonal courts as sole instance follow the same rules as appeals in civil matters. No additional or specific rules apply to intellectual property rights appellate proceedings.

The Swiss Federal Supreme Court has full discretion when reviewing final decisions of prior instances on the merits with regard to legal questions. In contrast, a review of the facts is only possible in a very limited manner by ascertaining an abuse of law by the prior instance in determining the facts (Article 97, Supreme Court Act, SCA).

With regard to decisions on interim measures, the discretion of the Swiss Federal Supreme Court is narrower and limited to a review of a violation of constitutional rights (Article 98, SCA).

Prior to filing a patent lawsuit, there may be significant costs associated with the technical evaluation of a patent's validity (as the defendant's usual defence will be to bring an invalidity action against the patent) and the evaluation of the potential infringement of said patent by the allegedly violating goods of the counterparty. Additional costs may arise for the issuance of warning letters or the preparation and filling of protective briefs.

Court costs are calculated based on tariffs depending on the value of the dispute.

Upon filing an action, the claimant is requested to advance part of the court costs. In proceedings before the Federal Patent Court, the advance payment is usually half of the expected court costs, which corresponds to the expected court costs up to and including the instruction hearing.

As a principle, the losing party must bear the court costs and has to reimburse the prevailing party for its legal costs. A proportionate allocation in relation to the outcome is also possible. Both, court costs and the compensation for legal costs, are calculated based on tariffs depending on the value of the dispute.

In Switzerland, alternative dispute resolution (ADR), or more specifically arbitration, is an important means of resolving intellectual property disputes, particularly in international cases where a single decision is advantageous.

ADR in Switzerland is attractive for patent disputes as Switzerland provides for arbitration experts in most fields of technology.

According to Swiss case law, all aspects of intellectual property disputes are arbitrable, including contractual issues related to patents as well as disputes over the validity of patents. Whereas arbitration proceedings related to mere validity disputes are rather rare, contractual disputes are often the subject of arbitration proceedings.

Under Swiss law, the assignment of intellectual property rights consists of the undertaking to assign the right and the actual disposition of the right. While the undertaking to assign the right is not required to fulfil specific formal requirements, the actual transfer of the patent or patent application rights must be made in writing (Article 33 paragraph 2bis, PatA).

In order to validly assign and transfer the patent or patent application rights neither the approval of the IPI nor its recording in the Swiss patent register is required. However, if the assignment is not recorded, it is invalid against persons who have acquired in good faith rights to the patent from the registered patent owner.

For the recording of the assignment of the patent or patent application rights, the IPI requests the written consent of both the assignor and the assignee.

See 10.1 Requirements or Restrictions for Assignment of Intellectual Property Rights.

Under Swiss law, there are no specific formal requirements for licence agreements. Licence agreements can even be concluded orally and no approval of the IPI is required. Where the patent application or the patent is owned by two or more persons, a licence may not be granted without the consent of all entitled persons.

Licences may be recorded in the Swiss patent register, but this is not required for their validity between the contractual parties. However, if the licence is not recorded, it is invalid against persons who have acquired the patent in good faith (Article 34 paragraph 4, PatA).

For the recording of the licence rights, the IPI requests the written consent of the licensor.

See 10.3 Requirements for Restrictions to License an Intellectual Property Right.

Pestalozzi

Loewenstrasse 1
8001 Zurich
Switzerland
Cours de Rive 13
1204 Geneva
Switzerland

+41 44 217 91 11

+41 44 217 92 17

zrh@pestalozzilaw.com www.pestalozzilaw.com
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Trends and Developments


Authors



Meyerlustenberger Lachenal AG (MLL) has an IP team that unites Switzerland’s leading consultants and representatives for patent law. Led by Simon Holzer, MLL's patent team includes five partners and nine associates. The firm handles an impressive amount of litigation in the Swiss life sciences and hi-tech spaces and it is many global pharmaceutical originators’ first choice. The team covers a wide range of industries, including pharmaceuticals, medical devices, software and telecommunications. It has also taken centre stage in Switzerland's first FRAND battle. MLL's patent team has particular expertise in the field of supplementary protection certificates. Recently, it achieved two landmark Swiss Federal Supreme Court decisions on behalf of Gilead Sciences Inc. (Gilead v Mepha Pharma AG), which affirmed the validity and infringement of Gilead's SPC for the combination product Truvada.

An eventful and exhausting year comes to its end and it is time to review the course taken by patent litigation in Switzerland of 2020. We would like to invite the reader to enjoy a four-course menu of selected decisions from the patent-related Swiss case law of 2020.

The total number of patent cases filed with the Swiss Federal Patent Court in 2019 decreased slightly, compared to previous years. As a consequence, fewer decisions were issued in 2020. Nevertheless, important rulings that will have a great impact on procedural and substantive law in Switzerland were rendered in 2020, and the first case concerning blockchain technology was litigated.

A few judgments from 2020 are highlighted below, although the selection was made subjectively by the authors and is not exhaustive in any way.

We hope that you are hungry for the newest Swiss case law and enjoy our varied four-course menu with the most delicious judgments exclusively selected for you.

The Hors d'Oeuvre: A Breeze of Technicality

Decision of the Swiss Federal Supreme Court 4A_609/2019 of 16 July 2020

The technical character is a sine qua non condition for an invention within the meaning of the Swiss Patent Act. In order to be patentable, the subject matter claimed must therefore have a "technical character", or, in other words, it must involve a "technical teaching" – ie, an instruction addressed to a skilled person as to how to solve a particular technical problem using particular technical means.

In the decision 4A_609/2019 of 16 July 2020, the Federal Supreme Court dealt for the first time with the question of whether and under what conditions graphical user interfaces can be regarded as technical and whether the display of information can be regarded as a technical feature establishing an inventive step.

The Federal Supreme Court’s decision 4A_609/2019 of 16 July 2020 goes back to the first instance decision O2017_007 of 1 November 2019 where the Federal Patent Court found the Swiss part of EP 1 984 805 B1, owned by Hamilton Medical AG, to be valid and infringed by certain ventilating machines of imtmedical AG (IMT, subsequently acquired by Vyaire Medical).

IMT filed an appeal with the Federal Supreme Court, arguing, inter alia, that the EP 1 984 805 B1 claims non-patentable subject matter because the graphical features mentioned in the relevant claims were non-technical and could, therefore, not contribute to an inventive step. The Federal Supreme Court in 4A_609/2019 of 16 July 2020, applying the principles of established case law of the European Patent Office, dismissed the appeal and confirmed the Federal Patent Court’s decision.

Hamilton’s patent EP 1 984 805 B1 concerns medical machines called ventilators that physically move breathable air in and out of a patient’s lung to deliver oxygen when the patient is unable to breathe by themselves. Similar devices are now used for COVID-19 treatment.

The core of the dispute was the question of the technicality of the claimed invention and, in particular, whether the distinguishing features – the animated display of the change in volume of the ventilated lung with each breath by means of a change in the size of the displayed lung shape – contribute to the technical solution of a technical problem and can therefore be taken into account in the assessment of inventive step.

The Federal Supreme Court emphasised that the question of exclusion from patenting according to Article 52 of the European Patent Convention (EPC) must be separated from the question of inventive step.

The Federal Supreme Court once more confirmed the applicability of the case law of the European Patent Office in Switzerland, confirming that a single technical feature suffices to render an invention containing a combination of technical and non-technical features, a so-called "mixed“ invention, patentable (see T 641/00). The Federal Supreme Court made it clear that whether or not the patent is an improvement over the prior art is irrelevant for examining the invention’s technical nature. In the present case, it was held that features that are undisputedly technical, such as the machine’s display, clearly made the invention as a whole technical and, in principle, patentable.

Comvik approach

Furthermore, relying on the Comvik approach, as applied in T 641/00, the Federal Supreme Court held that the presentation of information can be technical if it meets the following three requirements: (i) through a continuous and guided human-machine interaction, (ii) the user is credibly assisted in, (iii) performing a technical task.

The Comvik approach is a conventional application of the problem-solution approach, where the differences with respect to the closest prior art are determined and only those that contribute to the technical character are considered for inventive step. Comvik sets out an approach to ensure that non-technical issues do not influence the decision on inventive step. The Federal Supreme Court concluded that Hamilton Medical’s patented device meets these requirements.

The Federal Supreme Court found that the volume changes illustrated by the animated lung for each breath of the patient reflect the breath volume and breath frequency set at the ventilator. Hence, this information illustrates the settings (ie, the technical state) of the machine. A technical task is therefore performed. Thus requirement (iii) is met.

Regarding whether the assistance offered to the user was "credible“, the Federal Supreme Court held that the credible assistance was evident because the animated lung was useful for the medical personnel to set the machine’s operating parameters according to the patient’s needs. Thus, requirement (ii) is also met.

The Federal Supreme Court also affirmed requirement (i) – ie, that the animation of the lung provided for a continued and guided human-machine interaction. Specifically, the Federal Supreme Court seems to have interpreted this element as information that guides the user, and that changes in response to the user’s action. In other words, the element has to be interpreted as a feedback loop in which the user’s actions feed back into the information display, thus providing the required continuous user guidance.

The Federal Supreme Court supported its finding by referring to T 1802/13 where the Board of Appeal held that merely displaying the information in a way that is easier to understand does not suffice if there is no guided interaction that is causally supporting the user. Similarly, referring to T 336/14, the display of static data is not sufficient because again the element of continuous interaction between human and machine is lacking. Furthermore, the Federal Supreme Court referred to the depiction of the orientation of a medical ball joint implant during surgery as an example where the surgeon is credibly assisted in correctly positioning the implant (Guidelines for Examination in the EPO, Part G, Chapter II, Section 3.7).

Consequently, the Federal Supreme Court affirmed the first instance decision of the Federal Patent Court holding that the animated lung on the ventilator machine’s display was a technical feature and found that Hamilton Medical’s patent in suit was inventive. The Federal Supreme Court also upheld a finding of infringement and confirmed the injunction against IMT.

The Main Course: A Limiting Composition of Procedural Conditions

Decision of the Federal Supreme Court 4A_583/2019 of 19 August 2020

The decision of the Federal Supreme Court 4A_583/2019 is particularly noteworthy because it clarifies the procedural law and requirements that must be observed in any infringement proceedings and is important for patent litigation strategy in Switzerland.

In Switzerland, unlike in Germany for example, the patent litigation system is not bifurcated. Therefore, the alleged infringer may present nullity arguments against the validity of the patent in suit as mere defence arguments during infringement proceedings. According to Swiss case law on the Federal Code of Civil Procedure, each party to a civil litigation has two opportunities to present unlimited arguments and supporting evidence on the relevant facts. The exchange of briefs in patent infringement proceedings usually comprises the patentee’s complaint, the defendant’s answer to the complaint, the patentee’s reply and the defendant’s rejoinder.

After completion of this double exchange of briefs, both parties are only allowed to submit new factual allegations if they relate either to newly emerged facts or new factual allegations that were prompted by the last submission of the other party and, therefore, could not have been presented earlier. The term "factual allegations" includes not only, for example, new grounds for invalidity or new evidence (such as new prior art documents), but also limitations of the patent in suit (even in the sense of an auxiliary request).

In last year's Patent Litigation Guide we reported on the first instance decision of the Swiss Federal Patent Court O2016_012 of 28 October 2019, dealing with the question of up to which procedural step the patentee can still limit its patent in infringement proceedings. This time we would like to present the eagerly awaited appeal decision of the Swiss Federal Supreme Court in the same case.

Federal Patent Court ruling

During these infringement proceedings between the plaintiff and proprietor of the Swiss/Liechtenstein part of EP 1 411 869 B1, Stemcup Medical Products AG, and two companies of the ImplanTec group acting as defendants, the Judge Rapporteur of the Federal Patent Court had issued a written preliminary opinion concluding that the patent in suit, although new, inventive and infringed, was invalid due to added subject-matter – ie, a violation of Article 123(2) of the EPC. This preliminary opinion was issued after completion of the double exchange of briefs described above. Therefore, due to Swiss procedural law, the patentee could not simply amend its patent in the proceedings before the Federal Patent Court to overcome the obstacle posed by Article 123(2) of the EPC. In a clever move, the patentee amended the patent in suit in limitation proceedings before the Swiss Institute of Intellectual Property, resulting effectively in an amendment ex tunc.

The ruling of the Swiss Federal Patent Court O2016_012 of 28 October 2019 included a dissenting opinion and was the first ever split decision in Switzerland. Three of the five judges were of the opinion that the respective infringement proceedings should continue with the newly limited patent as the limitation by the Swiss Institute of Intellectual Property was a new fact that had arisen only recently and, therefore, could not have been introduced into the proceedings earlier. The newly limited patent would have been valid and infringed. In contrast, two of the five judges were of the opinion that the infringement claim must be dismissed (without prejudice) because the complaint was based on a patent that no longer existed and the newly limited patent could not be taken into account since it was introduced into the proceedings too late.

The defendants, the ImplanTec group, filed an appeal against the decision (of the majority of the judges) of the Federal Patent Court with the Federal Supreme Court.

Supreme Court ruling

The Federal Supreme Court in 4A_583/2019 of 19 August 2020 overturned the judgment of the Federal Patent Court clarifying that a limited patent is a new fact, regardless of whether the limitation was introduced as a mere defence in infringement proceedings or was requested before the Swiss Institute of Intellectual Property. Such new facts can only be introduced into proceedings after the completion of the double exchange of briefs if this introduction was not possible beforehand with all due diligence.

The Federal Supreme Court concluded that the Federal Code of Civil Procedure prohibited the patentee from invoking the limited patent for procedural reasons. If the limitation of the patent had been caused by arguments in the rejoinder, the patent should have been limited immediately and could have been introduced into the proceedings right away. However, introducing the limited version of the patent only after the Judge Rapporteur’s written preliminary opinion was too late.

The Federal Supreme Court further considered that the patent as granted no longer existed and proceedings could therefore no longer continue based on this version. As it was too late to introduce the newly limited version into the proceedings the Federal Supreme Court concluded that there was no (further) legal interest in issuing a ruling on a subject matter that no longer existed. Therefore, the Supreme Court lifted the decision of the Federal Patent Court and dismissed the case without prejudice.

Outlook

So far so good, but new procedural challenges to be solved in this context are already on the (Swiss) horizon.

In the infringement proceedings O2018_004, currently pending before the Federal Patent Court, the patentee also limited its patent through the Swiss Institute of Intellectual Property after the completion of the double exchange of briefs – ie, too late to be introduced into the proceedings by the patentee. Therefore, the complaint must surely be dismissed (without prejudice) in view of the Supreme Court Decision 4A_583/2019 discussed above? No, the chef has added another spicy ingredient to give the course a new twist. In proceedings O2018_004, the defendant and not the plaintiff introduced the newly limited patent as a new fact and wanted to proceed with the limited version. The defendant took the position that from his perspective the limitation of the patent did represent a proper novum according to the Federal Code of Civil Procedure, which could not have been introduced earlier. The judgment of the Federal Patent Court in this matter is eagerly awaited and expected in early 2021.

The Intermediate Course: Chef's Seasonal Variation of Shifting Data Blocks

Decision of the Federal Patent Court O2019_004 of 6 October 2020

The first infringement case concerning blockchain technology litigated in Switzerland attracted considerable attention in 2020.

The plaintiff, Sunshine Software Development GmbH, sued FRIENDZ SA for the alleged infringement of the Swiss part of EP 1 151 591 B1. The patent in suit has subsequently lapsed as the 20-year patent term ended in January 2020.

The patent in suit relates to the storage of – and the access to – data in distributed and networked computer structures. In contrast to typical distributed and networked computer structures, in which data is made available by a central computer system with one or more servers, the patent in suit relates to a decentralised networked system for data management, which does not require centralised control, since the data is stored and managed in a non-centralised manner by the participants in the system (so-called peer-to-peer protocol). The invention of the patent in suit is intended to enable data to be supplied as quickly as possible, while additionally ensuring that its transmissions is carried out in as fault-tolerant a way as possible and to ensure the operability of the distributed, networked computer system even in the event of a failure of data-providing devices and of individual network areas.

Ethereum

The plaintiff argued, in its complaint, that the patent in suit could be interpreted to apply to blockchain technology, specifically the so-called Ethereum Blockchain. Ethereum is an open source, globally decentralised software that executes programmes called "smart contracts". It uses a blockchain to synchronise and store the system's state changes, along with a cryptocurrency called Ether to measure and allocate the cost of execution resources. Unlike the well-known Bitcoin blockchain, Ethereum's purpose is not primarily to be a cryptocurrency payment network. While the cryptocurrency Ether is both integral and necessary to the operation of Ethereum, Ether is intended as a utility currency to pay for the use of the Ethereum platform. The network management in Ethereum is divided into three main components: (i) the so-called peer discovery; (ii) the peer management; and (iii) based on this, the Ethereum protocol. The interaction of the individual components of network management determines the amount of active communication connections a node maintains.

In general, a network node's view of the entire network is incomplete. The goal of peer discovery is to find suitable nodes for potential overlay connections. Each network node includes a table of nodes known to it. The rows of the table are called "buckets". Each bucket contains a maximum of 16 neighbours of a certain logical distance to its own node. Each bucket is preceded by a so-called replacement list, in which a maximum of ten nodes are stored in a ring buffer. If a new node is to be added to an already filled bucket, all existing entries are moved back by one position and the last entry is removed.

There are several mechanisms by which a network node can learn about other neighbours, which are not explained further here. What is important in the present context is that a two-step process must be executed before a neighbour is stored in the local table. This process consists of a bonding and, if necessary, so-called revalidation.

Friendz App

The defendant sells an application for mobile platforms called Friendz App, which allows users to share digital content. For the creation of (successful) digital content and the interaction with such content, users receive "Z-Credits", which can be exchanged for "Friendz Tokens". The Friendz Token is a token (a unit transferable on the blockchain) based on the "Ethereum Request for Comments 20" (ERC20) standard. The ERC20 standard defines which functions a smart contract must have in order to be considered an ERC20 token.

In March 2018, FRIENDZ conducted an initial coin offering – ie, interested third parties could acquire Friendz Tokens in exchange for the cryptocurrency Ether. According to FRIENDZ, a total of 392 million Friendz tokens were sold and 22,868 units of Ether were received, which corresponded to an equivalent value of USD10–20 million in March 2018 (as the Ether price fluctuated significantly during the period, it is not possible to provide a precise figure).

The plaintiff, Sunshine Software Development GmbH, argued that transactions with Friendz Tokens (such as sending to external recipients), which can be executed with the defendant's Friendz App, result in ERC 20 tokens or corresponding transactions of smart contracts being mapped in the Ethereum blockchain. Since the Ethereum software in certain constellations infringes the asserted claims of the patent in suit, the distribution (among other acts) of the Friendz App is a patent-infringing act attributable to the defendant.

Shift of data

In particular, the claims invoked by the plaintiff contain the feature that "the data storage means (C) shift data redundantly stored in the system independent of an access of the computer unit (CL) as a function of the determined parameters of data transmissions between the data storage means (C)“ and the essential question in this case concerned the interpretation of the term "shift of data".

In the end, the Federal Patent Court denied infringement of EP 591, primarily due to a particular construction given to the term "shift of data“.

According to the consensus understanding of the parties, a "shift of data“ in a general sense necessarily involves two sub-steps, namely copying the data to another location and deleting or invalidating it at the first location. A difference in the parties' interpretation of the term "shift of data" was only revealed by a concrete example, set out below.

If one data storage unit (X), in a system of both already connected and potentially connected units, were to fail (ie, it was no longer responding (in time) to queries from one of the other data storage units (Y)), then unit Y will attempt to establish a connection with a third unit (Z) in the system, one to which it was not previously connected. If, after this connection has been established, unit Y finds that unit Z does not currently contain all the data that was stored in failed unit X, then unit Y will copy the data, which is also redundantly stored at Y, to unit Z. Thus, Y and Z have the same data and Z therefore has the same data as the failed unit X.

For the plaintiff, this constitutes a "shift of data": The data previously stored at X would no longer be accessible there (for Y), and would be copied to Z. This would invalidate and copy data – ie, shift it in the sense of the claim.

However, the Federal Patent Court disagreed. According to the Federal Patent Court’s construction of the term "shift of data", a shift includes both copying and deleting or invalidating the copied data at the original storage location as mandatory sub-steps, with deletion and copying being sub-steps in the sense that they are both performed as part of a single operation triggered by the computer system. This is not the case with the example introduced by the plaintiff. The copying of the data from Y to Z is triggered by the failure of node X, which locally causes insufficient redundancy of the data. The failure of node X, on the other hand, is caused by arbitrary reasons. The failure of node X is thus not part of a triggered move operation and is also not triggered by a computer system and executed as a sub-step within the triggered move operation. According to the Federal Patent Court, this also distinguishes the scenario asserted by the plaintiff from the failure of a cluster mentioned in the patent in suit, which makes a move operation necessary. There, the failure of the cluster is the trigger of both the deletion/invalidation and the copying. Why the data was originally copied from the meanwhile failed node X to node Y is not known. In any case, this copying process cannot have been triggered by the failure of node X, because after its failure the data stored can no longer be copied.

In other words, the failure of node X triggers the copying of block 1 from node Y to node Z, but is independent of this copying in the sense that the failure is not executed as a sub-step and due to a triggered move operation, but has an unknown other reason or trigger independent of it. Since neither the transfer of the block 1 from node X to node Y nor its transfer from node Y to node Z corresponds to a "shift of data" and since the failure of node X and the accompanying loss of the redundant copy of block 1 at node X is not part of the thereby triggered copying of block 1 from node Y to node Z, there is no "shift of data" according to the Federal Patent Court.

Accordingly, the Federal Patent Court held that no data was shifted in the Ethereum blockchain in the sense of the claims of the patent in suit. As a consequence, the complaint was dismissed.

Plaintiff has meanwhile filed an appeal against this decision O2019_004 of the Federal Patent Court. The appeal decision of the Federal Supreme Court can be expected in early summer 2021. 

The Dessert "an Eye-Opening Experience – but Only with Your permission"

Decision of the Federal Supreme Court 4A_180/2020 of 6 July 2020

Given the ongoing disruption caused by the spread of COVID-19, measures to reduce face-to-face meetings to a minimal level have been considered around the world. For example, the European Patent Office (EPO) has decided, with effect as of 4 January 2021, to hold oral proceedings in oppositions by videoconference (VICO) in accordance with Article 2 of the Decision of the President of the EPO dated 10 November 2020. Other rules apply to the Boards of Appeal, where oral proceedings can now also be conducted via VICO, but only with the consent of the parties involved – and this is exactly what applies to civil proceedings in Switzerland. More specifically, in its decision 4A_180/2020 of 6 July 2020, the Federal Supreme Court dealt with the conduct of a main hearing in civil proceedings by VICO and ruled that under existing law there is no legal basis on which to order a main hearing to be held by VICO without the parties’ consent.

In the case underlying the Federal Supreme Court's decision 4A_180/2020, the Commercial Court of Zurich summoned the parties to the main hearing scheduled for April 2020. The Vice-President of the Commercial Court informed the parties that the main hearing would be held by VICO using the free app "ZOOM Cloud Meetings", to be used via the parties’ mobile phones. The parties were requested to provide the Court with their mobile phone numbers in advance and were informed that, if they failed to do so, the Court would assume default with regard to the main hearing.

The defendant filed a motion to postpone the hearing because it did not agree with the oral hearing held by VICO. The Court rejected this request and held the main hearing by VICO without the defendant’s participation. Beyond that, the Court granted the plaintiff’s action in its judgment of the same day. Defendant appealed against the judgment and, in particular, objected to the conduct of the main hearing by means of VICO without its consent.

The Federal Supreme Court agreed with the defendant/appellant and affirmed the appeal. In particular, the Federal Supreme Court emphasised that there was no legal basis in the Federal Code of Civil Procedure for conducting a main hearing by VICO without the consent of both parties. Unfortunately, further legal and practical questions raised in this context – with regard, for example, to the guarantee of publicity of the proceedings, the safeguarding of the personal rights of the parties involved, the compliance with data protection and data security regulations, the effects of the failure to attend the main hearing, the relation to the right to equal and fair treatment, and the "principle of immediacy" – remained unexamined in this decision.

The Federal Supreme Court noted that the Federal Council Ordinance of 16 April 2020 on measures in the field of justice and procedural law relating to the coronavirus (COVID-19 Ordinance on Justice and Procedural Law; SR 272.81) provided for the possibility of hearings by VICO. However, this provision was not yet effective when the oral hearing took place before the Commercial Court of Zurich on 7 April 2020. In fact, it was not until 16 April 2020 that the Federal Council issued the COVID-19 Ordinance, which specifically states that court hearings may be conducted by VICO. According to Article 2 paragraph 2 of this COVID-19 Ordinance, holding the main hearing by VICO is allowed if the parties agree or if there are important reasons – including urgency – to do so. Thus, if the Commercial Court had been required to decide the same issue under the COVID-19 Ordinance, the question would have been whether there were important reasons to conduct the hearing by VICO against the consent of one of the parties.

The applicability of the COVID-19 Ordinance has meanwhile been extended until 31 December 2021 and so this will probably not be the last case in Switzerland where the question of whether or not a hearing can be conducted by VICO becomes a matter of dispute.

Meyerlustenberger Lachenal AG

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+41 44 396 91 91

+41 44 396 91 92

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Law and Practice

Authors



Pestalozzi is a multicultural Swiss business law firm that has focused on high-end work for domestic and international clients since 1911. Pestalozzi's lawyers are strong and empathic personalities, known for their truly independent approach to advising and representing their clients. The firm guides and supports its clients in their strategic business decisions, anticipates their future challenges and helps them solve their critical issues. Being fully integrated, Pestalozzi encounters no internal limits in shaping the most competent and efficient teams for clients’ needs. With over 100 professionals in Zurich and Geneva, the firm is at home in Switzerland’s two main commercial hubs – and has developed a wealth of experience in its key practice areas of banking, life sciences, commodity trading and insurance. While being locally embedded, Pestalozzi has also developed a sought-after expertise in dealing with multi-jurisdictional transactions and disputes.

Trends and Development

Authors



Meyerlustenberger Lachenal AG (MLL) has an IP team that unites Switzerland’s leading consultants and representatives for patent law. Led by Simon Holzer, MLL's patent team includes five partners and nine associates. The firm handles an impressive amount of litigation in the Swiss life sciences and hi-tech spaces and it is many global pharmaceutical originators’ first choice. The team covers a wide range of industries, including pharmaceuticals, medical devices, software and telecommunications. It has also taken centre stage in Switzerland's first FRAND battle. MLL's patent team has particular expertise in the field of supplementary protection certificates. Recently, it achieved two landmark Swiss Federal Supreme Court decisions on behalf of Gilead Sciences Inc. (Gilead v Mepha Pharma AG), which affirmed the validity and infringement of Gilead's SPC for the combination product Truvada.

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