SWITZERLAND Trends and Developments Contributed by: Marco Toni and Lara Pafumi, Loyens & Loeff
IP protection As discussed in the foregoing subsection on due diligence, IP rights are the primary reason for acquiring a technology company and thus require special attention. Specifically, the deter- mination of the scope and ownership of IP rights can be challenging. In addition, transferability must be ensured, considering the different types of IP rights. If the target company owns IP rights in different jurisdictions, the possible differences in the rules governing the transfer of IP rights must be taken into account. Identifying and listing the IP rights in scope requires an understanding of the types of rights and intangibles. Under Swiss law, a distinction must be made between registered and non- registered IP rights. Trade marks, patents and designs are common registered IP rights in Swit- zerland. Registration in the applicable registers entitles the owner to exclusive rights. Unregistered IP rights are more challenging to identify and inventorise. In this category, copy- rights are the most relevant rights. Copyrights are particularly valuable in relation to software. There is no register of copyrighted works in Switzerland. Instead, according to the so-called creator principle, the Swiss Copyright Act grants exclusive rights to the natural person who cre- ated the work. Unlike other jurisdictions, Swit- zerland does not have a general work-for-hire doctrine applicable to third-party contractors and employees, whereby the client or employer obtains the IP rights resulting from the perfor- mance of the contract. Exceptions apply to the creation of software by employees as described in the foregoing subsection on due diligence. In the case of copyrighted works other than soft- ware created by an employee, copyright usually vests in the employee who has created the work,
not in the employer. The latter obtains a licence to use the work generated by the employee, but only to the extent that this is required by the purpose of the employment; this does not include a transfer of ownership of the copyright- ed work. To avoid legal uncertainty, the employ- ment agreement should set out the extent of the rights transferred. Particular attention must also be paid if external contractors or other third parties are involved in the creation of work protected by copyright. It is essential to contractually clarify the scope of the rights the company needs in the work – ideally, full copyright. In order to ensure the transfer and continued use of key IP rights after a transaction and to protect the buyer from potential damages and liabilities, it is essential that the share or asset purchase agreement contains a detailed set of representations and warranties and indemnifi- cation mechanisms. The precise content of the representations and warranties will be based on several factors, including the results of the due diligence process. If uncertainty remains after the due diligence process as to the scope, ownership or transfer- ability of certain IP rights, IP liability insurance may be another risk mitigation tool. Such insur- ance can help companies cover the costs of litigation associated with enforcing or defending patents, trade marks or copyrights. It can also help protect policyholders against third-party infringement claims. Regulatory and Other Developments Data protection On 1 September 2023, the new Swiss Data Pro- tection Act (“revDPA”) came into force. The aim of the revDPA was, on the one hand, to modern-
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