The Licence Agreement in Swiss Law
A licence agreement is a contract by which the owner of an intellectual property right (patent, trademark, copyright, know-how) grants another person (the licensee) the right to exploit that right under defined conditions, in exchange for remuneration (royalties). Swiss law does not specifically regulate intellectual property licences, which are governed by the principle of freedom of contract (art. 1 CO) combined with the specific IP laws (Patents Act, Trademark Protection Act, Copyright Act). PBM Avocats advises technology companies and IP right holders in Geneva and Lausanne.
Types of Licence Agreements
| Type | Description | Scope |
|---|---|---|
| Patent licence | Right to exploit a patented invention | Manufacture, use, sale of patented product |
| Trademark licence | Right to use a registered trademark | Products/services designated by the mark |
| Know-how licence | Transfer of technical knowledge | Manufacturing processes, technical secrets |
| Software licence | Right to use computer software | End-user licence, OEM, SaaS |
| Copyright licence | Right to exploit a protected work | Reproduction, distribution, public communication |
Essential Clauses of a Licence Agreement
- Precise definition of licensed rights: which patents, trademarks, know-how, with registration numbers
- Scope of the licence: territory, field of use, duration
- Exclusivity: exclusive, non-exclusive, or sole licence
- Royalties: calculation (% of net sales, fixed amounts), payment terms, auditing rights
- Quality standards: particularly important for trademark licences
- Sub-licensing: authorised or prohibited
- Improvements: who owns improvements made by the licensee?
- Infringement: who defends against third-party infringement?
- Termination: conditions, consequences, return of know-how
- Applicable law and dispute resolution: often Swiss law with ICC arbitration
Technology Transfer Agreements
Technology transfer agreements go further than simple licences: they involve the transfer of know-how, technical assistance, training and often co-development. They are particularly frequent in:
- Research and development agreements (R&D)
- Joint ventures between companies
- University-industry collaborations
- Mergers and acquisitions involving IP assets
Switzerland's Patent Box and Tax Incentives
Switzerland offers a particularly attractive tax regime for intellectual property income through the patent box at cantonal level, which allows a deduction of up to 90% on income from patents and similar rights for R&D carried out in Switzerland. Combined with federal and cantonal tax incentives for R&D expenditure, Switzerland is one of the most favourable jurisdictions for locating intellectual property holding companies.
What is the difference between an exclusive and a non-exclusive licence?
An exclusive licence grants the licensee the exclusive right to exploit the intellectual property right for the agreed territory and uses, to the exclusion of all others including the licensor. A non-exclusive licence (or simple licence) allows the licensor to grant the same rights to several licensees simultaneously. An exclusive licensee generally has more extensive obligations but also stronger protection against infringement.
Can a licence agreement be terminated before its term?
For fixed-term licence agreements, early termination is only possible for just cause (persistent material breach, insolvency of the other party). For indefinite agreements, termination is possible with reasonable notice. The licensor may typically terminate for non-payment of royalties, violation of quality standards or excessive sub-licensing. The licensee may terminate for defective exploitation rights (third-party infringement not prosecuted by the licensor).
What are the tax consequences of a licence agreement in Switzerland?
Royalties received by a Swiss company are subject to Swiss income tax. The withholding tax (anticipatory tax) may apply to royalties paid to foreign persons, subject to double taxation treaties. Switzerland has a beneficial 'patent box' regime that allows a deduction of up to 90% on income from qualifying IP rights (R&D performed in Switzerland). This tax incentive makes Switzerland an attractive location for intellectual property holdings.
How are technology transfer agreements regulated in Switzerland?
Switzerland does not have specific technology transfer legislation. These agreements are governed by the principle of contractual freedom (art. 1 CO). However, competition law (CartA) may impose restrictions on certain anti-competitive clauses (price-fixing, absolute territorial restrictions). Internationally, the EU Technology Transfer Block Exemption Regulation (TTBER) does not directly apply in Switzerland but may be relevant for agreements with EU effects.