This client alert outlines the key developments in Swiss sanctions law — particularly the sanctions against Russia and Belarus — as they relate to IP. It also explains the practical implications of these developments for Swiss businesses.

Implementation of international sanctions in Switzerland

In Switzerland, the law provides for the possibility to implement sanctions that have been imposed by the United Nations (UN), the Organization for Security and Co-operation in Europe (OSCE) or Switzerland's most significant trading partners (Article 1, paragraph 1 of the Embargo Act of 22 March 2002 (EmbA)). The Federal Council implements these international sanctions in the form of executive ordinances (Article 2, paragraph 1 of the EmbA).

Therefore, Switzerland does not unilaterally impose its own sanctions, but implements UN sanctions or aligns with sanctions imposed by the EU, as its most significant trading partner. The fact that the specific norms are laid down in an executive ordinance allows for quick alignment with international developments in a fast-evolving legal landscape.

Currently, 28 different sanctions regimes are in force. These concern countries such as Zimbabwe, the People's Republic of Korea and Venezuela, as well as specific actors such as ISIL (Da'esh) and Al-Qaida. In the wake of Russia's invasion of Ukraine in February 2022, Switzerland decided to implement its most comprehensive sanctions measures to date. The Russia sanctions were soon followed by accompanying sanctions against Belarus and are, to date, generally congruent with the EU's sanctions regime against these countries.

IP in the Ukraine Ordinance

The sanctions against Russia are implemented in the "Ordinance on measures in relation to the situation in Ukraine" of 4 March 2022 ("Ukraine Ordinance"), as amended. Switzerland closely follows the developments in the EU and amends its legal framework with each new EU sanctions package, albeit after a certain delay. Basically, the Ukraine Ordinance addresses IP rights in three different ways which are listed below. Similar restrictions can be found in the "Ordinance on measures against Belarus."

Combination of trade restrictions with the corresponding IP rights

The Ukraine Ordinance contains a variety of trade restrictions. Among other things, these concern defense goods (Article 2a), dual-use goods (Article 4), goods for military and technological strengthening or for the development of the defense and security sector (Article 5), goods for the aerospace industry (Article 9) and many more. Restrictions are generally aimed at the sale, delivery, export, transit and transportation of these goods to and for use in Russia. With each trade restriction comes a corresponding IP right restriction in relation to these goods: Accordingly, it is prohibited to sell IP rights or trade secrets, grant licenses for these rights and secrets, otherwise transfer these rights and secrets, or grant access rights or the right to reuse IP-protected materials or information.

"No Russia IP" clause

On 26 December 2024, a new obligation to contractually prohibit the onward transfer of IP rights and trade secrets was added to the Ukraine Ordinance. According to Article 14g, paragraph 1 of the Ukraine Ordinance, any sale, license or other transfer of IP rights or trade secrets related to "high-priority items" (as listed in Annex 31 of the Ukraine Ordinance) must include a contractual clause prohibiting their use for the sale, supply, export, transport or transit to, or use in, Russia by the counterparty. The counterparty must also be contractually required to impose the same restriction on any sublicensees or third-party users. Furthermore, the contracts with the counterparty must provide for appropriate remedial measures in the event of a breach. High-priority items, as listed in Annex 31, are restricted goods that are used in or are significant for the development of Russian weapons systems. If these restrictions are violated, the State Secretariat for Economic Affairs (SECO) must be notified immediately.

Software

Besides goods, services, payments and capital transfers, the Ukraine Ordinance also specifically restricts transactions that involve software. Article 28e, paragraph 1quater of the Ukraine Ordinance prohibits the sale, supply, export and provision of software for business management or industrial design and manufacturing, as listed in Annex 32 of the Ukraine Ordinance, to the Russian government or to legal persons, companies or organizations established in Russia.

The Ukraine Ordinance in contrast to EU sanctions

In contrast to Switzerland, the EU has also imposed restrictions on accepting applications for registering certain IP rights (trademarks, patents, etc.) from Russian nationals and companies. This is because the Russian government and courts have taken measures to illegitimately deprive EU IP rights holders of their protection in Russia. The situation for Swiss companies is different, as Russia has not committed any IP rights violations against Swiss companies according to Swiss authorities. Therefore, the Federal Council has so far decided not to adopt this measure to protect Swiss companies; however, it will continue to monitor the situation.

Practical implications for businesses

The inclusion of IP in Swiss sanctions law has several important consequences for companies that operate internationally, particularly those engaged in technology, manufacturing or licensing activities. These consequences are as follows:

Contractual due diligence

Businesses must ensure that their IP-related contracts (especially those involving high-priority items) include clauses that explicitly prohibit the onward transfer or use of IP rights in or for Russia. This includes sublicensing and third-party use. Furthermore, companies should review existing licensing agreements to identify any agreements that may involve either sanctioned persons or entities (a consolidated list of all Swiss designated persons can be found here) or the transfer of this IP to Russia or for use in Russia. New agreements should be carefully structured to comply with restrictions on the sale, licensing or transfer of IP rights related to restricted goods or software.

Software compliance

Special attention should be paid to software exports. According to Annex 32 of the Ukraine Ordinance, the restrictions apply to two main categories of software: (i) business management software, and (ii) design and manufacturing software. Business management software includes systems that digitally manage and control enterprise processes, such as customer relationship management, supply chain management or product life cycle management, along with related components like accounting, fleet management, logistics and HR software. Design and manufacturing software covers tools used in architecture, engineering, construction, manufacturing, media, education and entertainment, such as computer-aided manufacturing or design. For a comprehensive list of all currently restricted software programs, please refer to Annex 32 of the Ukraine Ordinance (available here). These types of software must not be sold or provided to Russian government entities or companies established in Russia.

Notification obligations

In certain cases, such as violations of the "No Russia IP" clause, companies must notify SECO immediately. Businesses should have procedures in place to detect and respond to these incidents promptly.

Consequences of non-compliance

Violations of the provisions stipulated in the Ukraine Ordinance may result in considerable penal consequences. For intentional violations, the law foresees a custodial sentence of up to one year or a monetary penalty. In serious cases, the custodial sentence can be up to five years. If violations are committed through negligence, a fine of up to CHF 100,000 may be imposed (Article 9 of the EmbA). Independent of a possible criminal liability, assets subject to the Ukraine Ordinance may be forfeited if their continued lawful use is not guaranteed (Article 13 of the EmbA).

In addition to potential criminal penalties, companies may also face significant contractual risks in connection with sanctions compliance. For instance, failing to include a "No Russia IP" clause in sublicensing agreements, breaching such a clause or, more generally, being unable to fulfill existing contractual obligations due to sanctions-related restrictions could result in contractual penalties, liability for damages or other civil claims. Moreover, counterparties may seek remedies for non-performance or breach, including termination rights or indemnification.

Beyond legal and financial exposure, companies should also be mindful of the reputational risks associated with non-compliance. Allegations or findings of sanctions violations can damage business relationships, erode stakeholder trust and attract negative media attention.