Protection of Trade Secrets and Know-How in Switzerland
A trade secret (also referred to as a business secret or manufacturing secret) is confidential information held by a company that gives it a competitive advantage and that it strives to keep secret. In Switzerland, the protection of trade secrets rests on several complementary legal bases: unfair competition law (UCA), criminal law (SCC) and contract law (CO). PBM Avocats protects your informational assets in Geneva and Lausanne.
Legal Bases for Trade Secret Protection
| Legal Basis | Protection Offered | Sanction |
|---|---|---|
| Art. 6 UCA | Against unfair exploitation of trade secrets | Civil + criminal (art. 23 UCA) |
| Art. 162 SCC | Violation of manufacturing or trade secrets | Up to 3 years' imprisonment |
| Art. 321a CO | Employee's confidentiality obligation | Civil (damages) |
| Contractual NDA | Extended and personalised contractual protection | Contractual penalty + damages |
| Art. 143/143bis SCC | Unauthorised access to computer systems | Up to 3 years' imprisonment |
What Constitutes a Protectable Trade Secret?
To be protected as a trade secret, information must generally meet three criteria:
- Confidentiality: the information is not known to the public or competitors, or is accessible only to a restricted circle of persons bound by a confidentiality obligation
- Commercial value: the information confers a competitive advantage on its holder precisely because of its secret nature
- Reasonable protection measures: the holder takes concrete measures to maintain secrecy (restricted access, NDA, secured computer systems)
Typical examples of trade secrets:
- Product formulas and recipes (pharmaceutical, agri-food)
- Source code and computer algorithms
- Customer lists with detailed commercial data
- Commercial strategies and development plans
- Confidential financial data
- Manufacturing processes and production methods
Contractual Protection: NDAs
The Non-Disclosure Agreement (NDA) or confidentiality agreement is the main contractual tool for protecting trade secrets. A well-drafted NDA should include:
- Precise definition of the confidential information (or categories of information) covered
- Obligations of the parties: prohibition on disclosing, reproducing, using for other purposes
- Exceptions: information already public, already known to the recipient, disclosure required by law
- Duration of the obligation: during and after the contractual relationship (often 3-5 years or indefinite for trade secrets)
- Contractual penalty: lump-sum amount in the event of breach (simplifies proof of damage)
- Return obligation: return or destruction of confidential documents at the end of the relationship
- Applicable law and jurisdiction: Swiss law, jurisdiction in Geneva or Lausanne
Protection in Relationships with Employees
Art. 321a CO imposes on every employee a duty of diligence and loyalty which includes maintaining secrecy over the employer's confidential matters. This obligation:
- Applies during and after the end of the employment relationship
- Covers information that remains confidential after the end of employment
- Is distinct from the non-competition clause (which prohibits an activity, not disclosure)
- Can be reinforced by a specific contractual confidentiality clause with penalty
How is a trade secret protected under Swiss law?
Trade secrets are protected by several legal provisions: art. 6 UCA (unfair competition through violation of secrets), art. 162 SCC (violation of manufacturing or trade secrets, criminally punishable), and by contractual confidentiality clauses (NDA). Unlike the United States (Defend Trade Secrets Act) or the EU (Trade Secrets Directive), Switzerland does not have a specific law on trade secrets.
What is an NDA and is it valid under Swiss law?
An NDA (Non-Disclosure Agreement) or confidentiality agreement is a contract by which the parties undertake not to disclose the confidential information exchanged. It is perfectly valid under Swiss law, governed by the general principles of contract law (CO). It may provide for unilateral or bilateral confidentiality obligations, variable durations, contractual penalties in the event of breach and procedures for the return of information.
Can a former employee use the trade secrets of their former employer?
No. Art. 321a CO requires the employee to maintain secrecy over the employer's confidential matters during and after the termination of the employment relationship. This post-contractual confidentiality obligation applies to information that remains confidential. It differs from the non-competition clause (art. 340 CO) which prohibits a competing activity, whereas confidentiality prohibits the disclosure of secrets.
How can a breach of trade secret be proved?
Proving a breach of trade secret is often difficult. It may rest on: computer forensic analyses (access to systems, file copying), testimonies, demonstrating that the competitor possesses information they could only have obtained through espionage, examination of contracts and emails. Urgent interim measures (seizure of data, injunction) may be sought from the court without delay.
Is economic espionage criminally punishable in Switzerland?
Yes. Art. 162 SCC punishes violation of manufacturing or trade secrets. Art. 6 UCA allows criminal prosecution for exploitation of secrets obtained by unfair means (espionage, bribery). Art. 143 SCC (unauthorised access to a computer system) and art. 143bis SCC (violation of telecommunications secrecy) supplement this system. Penalties may reach up to 3 years' imprisonment.