In order to allow parallel imports of complex products, even if insignificant elements of these products are subject to patent protection, the Swiss Patent Act provides for international exhaustion of patent rights in relation to such products. According to a recent decision of the Federal Patent Court, high requirements are set to avoid international exhaustion.

Until July 1, 2009, the principle of national exhaustion applied in patent law in Switzerland. This means that patent rights to specific products in relation to Swiss Patents were only exhausted (and therefore could not be asserted again in relation to these products) if these products were placed on the market in Switzerland. Holders of a Swiss patent could therefore prevent parallel imports of patented goods based on their patent rights.

As this simplifies the price differentiation of patented products and products were often sold at significantly higher prices in Switzerland than in the surrounding countries, Parliament decided for economic reasons to switch to so-called “regional exhaustion”, i.e. patent rights relating to a specific product are exhausted if it has been placed on the market within the European Economic Area (EEA) by the patent holder or with their consent. If the patent protection is only of secondary importance for the functional nature of the product, international exhaustion even applies, i.e. the patent holder can no longer take action on the basis of his patent rights against products that he has placed on the market somewhere or which have been placed on the market somewhere with his consent.

These principles have been in force since July 1, 2009, but there have been no court rulings to date. This changed with the decision in proceedings S 2016_006 of the Federal Patent Court of Switzerland on July 14, 2016.

On July 12, 2016, the plaintiff, a car manufacturer, filed its Lawsuit with the Federal Patent Court based on a European patent with protective effect in Switzerland. It was directed against an unofficial car importer who, among other things, imported the plaintiff’s cars that were brought onto the market in other countries. The plaintiff requested that the defendant be prohibited from selling and re-exporting a certain vehicle (identified by the vehicle identification number) as well as the parallel import of cars of certain types from outside the EEA, their sale and re-export.

The court did not grant the second legal claim because the type designation was not sufficient to designate the vehicles concerned – there was a lack of information as to the specific technical features by which the patent in dispute was used in these vehicle types.

With regard to both applications, the court considers the infringement of the plaintiff’s patent to be unsubstantiated. The infringement is substantiated by the plaintiff through the submission of an expert opinion by a Patent Attorney. The expert opinion is only referred to in general terms in the petition; essentially the result of the expert opinion is recapitulated. The court does not consider this to be a substantiated allegation of patent infringement. The decisive factor is what is set out in the legal document itself. A global reference to a party opinion is inadmissible.

In this respect, it is interesting that the plaintiff is ultimately the manufacturer of the vehicles in question, while the defendant is an (unofficial) importer. However, in the opinion of the court, it was not sufficient for the plaintiff to claim that it had used the goods itself. In this case, too, the infringement must be substantiated.

Although the single judge rejects all legal claims for the above reasons or does not rule on them, he makes additional statements on the question of exhaustion. Because, according to the first legal request, the specific vehicle was initially delivered to Macedonia, which is not a member of the EEA, regional exhaustion is ruled out. However, it must be examined whether the patent protection for the product in question is only of secondary importance.

This subordinate importance is presumed if the patent proprietor does not credibly demonstrate the contrary. In the present case, the plaintiff asserts that the device for circulating coolant in a turbocharger claimed in the patent in suit is an important and inseparable component of the cooling system for the turbocharger. Without this device, there is a risk of increased noise pollution, a loss of engine performance, damage to the components due to overheating and a significant loss of safety.

The court consults the description of the patent in dispute, according to which the device for circulating coolant avoids the development of noise due to the coolant flowing into the turbocharger when idling, after restarting the car. There is no mention of loss of engine power, damage to components, etc. Thus, the device was “nice to have”, but the patent protection was only of secondary importance for the functional nature of the product. Thus, international exhaustion had occurred with regard to the type 1 car, so that patent protection could not be claimed – even irrespective of the lack of substantiation of the infringement.

According to the comments on exhaustion, high requirements appear to be placed on the significance of a patented element in the context of a (complex) device so that international exhaustion is not assumed. The content of the description of a Patents can apparently be decisive for the question of significance in the overall context. It may be useful to take this into account when drafting future Patents. It may also be useful to provide comprehensive evidence of the significance of the patented subject matter to the overall product in Lawsuits or applications relating to parallel imported products.

The judgment is not yet legally binding. Even if it is contested, there is no guarantee that the issue of significance in connection with exhaustion will be clarified further at this stage due to the other grounds for dismissal or non-intervention.

Left: https://www.bundespatentgericht.ch/fileadmin/entscheide/S2016_006_Urteil_2016-07-14.pdf