Bosshard Partners Intertrading AG c. Sunlight AG, Federal Court Reporter BGE 105 II 49 (1979).
Background
Intellectual property initially was a matter dealt with by Member States of the European Economic Community. Eventually, the European Court of Justice, operating under the distinction of right to property and right to use, integrated intellectual property into internal market law, which in turn led to the enactment of directives and regulations addressing harmonization of copyright, trademark and geographical indications and patents before the creation of proper and uniform EU wide systems of protection in these areas. Switzerland was not directly affected by these developments. The 1972 Free Trade Agreement did not address harmonization, mentioning intellectual property only in terms of possible exceptions to the free circulation of goods. Harmonization was subsequently undertaken in the negotiations of the European Economic Area, which erland rejected however in a referendum on December 6, 1992. Yet EU law significantly influenced the shaping of trademark and copyright legislation in the 1990s. As a member of the European Patent Organisation, Switzerland sought to join the emerging system of the Community patent, but the European Court of Justice denied the model of an independent European patent court in its advisory opinion 1/09 of March 8, 2011.
Overall, European intellectual property law has been adopted by way of what is called autonomous adoption, free of treaty-based obligations. On this, cf. the cluster of the Anthology on Europeanization. Interaction based on treaty law have been limited exclusively to assessing parallel importations, i.e. the commercialization of goods with intellectual property protection initially put on the market in a different country. The European Court of Justice developed the doctrine of regional integration, i.e. the free flow of such goods among Member States. At the same time, in the landmark 1982 decision on Polydor Ltd and RSO Records Inc. v. Harlequin Record Shops Ltd, Case 270/80, [1982] ECR 270 it ruled that the principle of parallel imports does not extend to the 1972 Free Trade Agreements with EFTA States. This ruling ran parallel to the Swiss Federal Supreme Court decision in the landmark OMO case in 1979, by which the normative implications of the Free Trade Agreement were minimized and direct effect denied at that time.. The ruling held free trade law at bay for many years and undercut its potential to integrate Switzerland into the emerging European Common Market. It contributed to a complex and difficult relationship which remains unresolved to this very day. The ruling was a missed opportunity that reflects the defensive attitudes of the judiciary at the time vis-à-vis European integration. Indeed, the Swiss Federal Supreme Court could have reached the same result taking into account the factual differences stated of products sold in line with EU law, equally recognizing the prohibition of parallel imports in case of consumer confusion. Subsequent rulings of the Federal Supreme Court Court, mainly in the area of free movement of persons, reversed the landscape as a judicial policy was adopted which granted direct effect to agreements and in which European law was taken into account even where no such obligation existed under treaties entered with the EU (cf cluster of this Anthology on the Swiss Federal Supreme Court and constitutional law in an international context). One may compare the ruling, for example, with the application of the Paris Convention in Suisa v. Redifusion in 1982, discussed in Section VIII. Eventually, Swiss legislation adopted the principle of regional exhaustion in trademark, copyright and patent law, except for products subject to regulatory approval, which remain under the doctrine of national exhaustion. Note that the EU still does not extend regional exhaustion to products exported from Switzerland under the 1972 Free Trade Agreement.
Summary
Sunlight AG Olten, sells washing powder and other products on the Swiss market under a registered trademark OMO. Bosshard Partners Intertrading AG Thalwil parallel-imported the same products from Sunlight AG Hamburg, Germany, a subsidiary company of Unilever Holland (to which also Sunlight AG Olten belongs), offering these at lower prices on the Swiss market. Sunlight AG sought an injunction on the basis of its trademark, stopping Bosshard Partners Intertrading from importing German washing powder under the trademark OMO. Based on domestic law, the Commercial Court of Zurich protected the claim. Upon appeal, the Swiss Federal Supreme Court recognized the principle of territoriality of trademark law, even among companies belonging to the same corporation, upholding the finding. The Court pointed out the fact that the washing powder, despite having the same trademark name, differs slightly in quality, thus requiring distinguishing of the consignments. Domestic trademark law thus corroborates national market segmentation and allows preventing and remedying parallel importation. The defendant invoked the 1972 Free Trade Agreement between Switzerland and the European Economic Communities, barring new quantitative restrictions between the parties in Article 13 and limiting exceptions in Article 20 of the agreement. The defendant also cited European Court of Justice rulings in which restrictions on parallel imports on the basis of parallel provisions in the EEC treaty were denied. The Swiss Supreme Court rejected these arguments, holding first that existing treaties prevail over the Free Trade Agreement. Secondly, the agreement was found to amount to a pure trade agreement without any relation to market integration and harmonization in a manner similar to the EEC Treaty. Intellectual property law was considered a lawful exception to Article 20, and Article 13 moreover only applies to government and parliament, and does not deploy direct effect in matters of civil law.