Swiss patent law has recently been subject to significant changes. On 1 July 2009, the principle of regional exhaustion for patent-protected products was introduced in relation to the member States of the European Economic Area. Expected by early 2011, the Federal Patent Court will begin operations. At the same time, the title of patent attorney will become protected by the new Patent Attorney Act.

1 New Exhaustion Regime in Patent Law

1.1 The Concept of Exhaustion

The holder of an intellectual property right (e.g., of a patent or a trademark) generally has the exclusive right to put a product protected by an intellectual property right on the market. However, once such a product has been first sold by the holder of the intellectual property right or with his consent, the purchaser of this product may freely resell it. The holder of the intellectual property right can no longer forbid a resale of such product. The intellectual property rights regarding the product sold (and only regarding this product) are exhausted after the first sale.

1.2 National, Regional or International Exhaustion

From a territorial perspective, the question arises as to whether the Swiss intellectual property rights existing in Switzerland are only exhausted if the product at issue was first sold in Switzerland (national exhaustion) or whether such exhaustion may also take place if the first sale took place abroad (international exhaustion).

The term regional exhaustion means that exhaustion occurs only when the product is first sold in a particular region (such as the European Economic Area).

1.3 Present Exhaustion Regime in Swiss Intellectual Property Law

Until now, the exhaustion regime in Swiss copyright, trademark, and patent law was solely determined by case law. The Swiss Federal Court ruled that, under Swiss law, the principle of international exhaustion applies to copyrights (BGE 124 III 321, Nintendo) and to trademark rights (BGE 122 III 469, Chanel). However, patent rights were subject to national exhaustion (BGE 126 III 129, Kodak). No relevant Swiss Federal Court decision exists as yet concerning design rights.

Under the concept of national exhaustion, patent rights could be asserted to prevent parallel imports to Switzerland of patent-protected products first sold abroad, provided that the patent owner did not engage in a restriction of trade amounting to a violation of competition law. Since the Kodak judgment, the national exhaustion of patent rights has been the subject of much controversy.

On one hand it was argued, inter alia, that national exhaustion enables the patent holder to charge different prices in different countries depending on the demand. This allows further financing of research and development activities. A move away from the system of national exhaustion would harm Switzerland as a place for research. Similarly, with a transition to international exhaustion, there would be a danger that developing countries might no longer be supplied with drugs or other patent-protected products because of the fear that products sold in those countries at a lower price would then be re-imported to Switzerland.

On the other hand, it was broadly criticized that the restriction of intra-brand competition that follows from a system of national exhaustion is one of the main reasons that prices in Switzerland for some products are higher than in neighboring countries.

1.4 Regional Exhaustion in Patent Law since 1 July 2009

After a highly publicized political debate, the Swiss Parliament decided to amend the Patent Act (PatA) by introducing the regional exhaustion concept in relation to the contracting States of the European Economic Area. This patent law revision went into effect on 1 July 2009. This means that patented products first put on the market in the European Economic Area with the consent of the patent holder may now be imported into Switzerland without the patent holder's consent (Art. 9a PatA).

If a patented product is first put on the market outside the European Economic Area, the patent holder continues to be able to defend against possible parallel imports into Switzerland. The patent holder may not prevent the importation, however, where the patent in question does not pertain to the main function of the product (e.g., a perfume) to be imported, but is instead only of secondary importance (e.g., a patented closure on a perfume bottle, Art. 9a para 4 PatA).

It is noteworthy that the concept of national exhaustion continues to apply for patented goods with government-administered prices (particularly pharmaceuticals) in Switzerland or in the country of sale (Art. 9a para 5 PatA). This exception (introduced as a result of the efforts of the strongly-represented Swiss pharmaceutical industry) is of great practical relevance. First, patent protection is of fundamental importance to the pharmaceutical industry. Second, the price of pharmaceuticals differs greatly among European countries due to national regulations.

It should finally be noted that, exceptionally, international (not just regional) exhaustion applies to agricultural means of production and investment goods.

1.5 Simplified Approval of Parallel-Imported Drugs

The Swiss Therapeutic Products Act provides for a simplified marketing authorization procedure for parallel-imported drugs that are already approved in Switzerland. Previously, simplified approval was not possible as long as the already-approved therapeutic product (i.e., the original preparation) was still patent-protected. The first applicant was allowed to assert its patent rights during the marketing authorization procedure for the parallel-imported drug before the Swiss Agency for Therapeutic Products (Swissmedic).

With the revision of patent law effective 1 July 2009, the Therapeutic Products Act was also amended. It is no longer possible to claim patent protection in the administrative marketing authorization procedure for a parallel-imported drug. This results in a shortening and simplification of the marketing authorization procedure for parallel-imported drugs.

In the future, the owner of the original preparation will only be able to assert its patent rights against a parallel importer in civil court proceedings.

2 Patent Court Act

2.1 Present Regulation of Jurisdiction in Patent Disputes

Currently, each of the 26 Swiss cantons has one court having jurisdiction, as a first instance, in patent disputes. A large portion of all patent litigation is handled by one of the four commercial courts in Aarau, Bern, St. Gallen, or Zurich. Nevertheless, with only approximately 30 patent proceedings in Switzerland each year, the problem exists