Case summary and analysis – Federal Supreme Court 4A_666/2024 of 22 April 2025

Background

The parties had collaborated since 1997 under a series of licensing agreements, the most recent of which dated from 2013.  Under these agreements – extended until mid-2019 – the licensee produced and sold textile products under the licensor’s brands.

The dispute arose when the licensor granted licences to third parties, which the licensee claimed violated the exclusivity provisions of their agreements. The licensee sought injunctive relief, disclosure of contractual and financial information, and damages. The licensor counterclaimed for unpaid royalties and sought access to the licensee’s books to verify royalty calculations.

Facts

The licensee, a producer of technical clothing, had maintained a business relationship with the licensor since 1997. The licensor, as the holder of trademarks and patents, granted licences to the licensee, which used them to produce and market branded products.

Two licence agreements were signed on 22 February 2013, extended until 30 May 2019. After their expiration, the business relationship continued on a tacit basis.

The licensee filed a lawsuit against the licensor, alleging that the latter unlawfully granted licences to third parties during and after the contract period, thereby breaching an alleged exclusive licensing agreement. The licensee claimed injunctive relief, disclosure of information, and damages. The licensor filed a counterclaim for unpaid licence fees between May 2018 and June 2019, amounting to over EUR 2 million, and requested access to the licensee’s business records.

The Zurich Commercial Court dismissed the injunctive and disclosure claims, but partially upheld the licensee’s damages claim, awarding EUR 358,539.45 for proven contractual breaches by the licensor related to unauthorised licensing activities. In these specific cases, the licensor violated the exclusivity terms of the licensing agreement, causing the licensee a loss of profit. In parallel, the court granted the licensor’s counterclaim for EUR 2,037,692.61 in unpaid licence fees, but rejected its request to access the licensee’s books.

The licensee appealed to the Federal Supreme Court, seeking the dismissal of the first instance judgment and requesting that the licensor be ordered to pay the full amount of the alleged damages and that its counterclaims be dismissed.

Legal considerations from the Federal Supreme Court

The Federal Supreme Court dismissed the appeal in full, finding that:

• No express agreement on absolute exclusivity could be established regarding the licence agreements, and that the licensor was prohibited from granting new third-party licences but was permitted to continue pre-existing ones.
• The continued collaboration after the expiration of the contracts concluded in 2013 was qualified as a tacitly renewed agreement. However, the court found that exclusivity was not part of the tacit agreement, based on the parties’ conduct and correspondence.
• The court rejected the notion that a tacit continuation of a contract implies full continuation of all former terms. It expressly declined analogies with other long-term contractual frameworks, such as leases or employment.

The licensee bore the burden of proving the scope of the exclusivity clause and failed to do so.

Legal analysis

This decision provides guidance on the legal framework applicable to licence agreements under Swiss contract law.

First, the Federal Supreme Court reaffirmed that exclusivity in licence agreements must be clearly and expressly stipulated. A party invoking exclusivity bears the burden of proving its existence and scope. In the absence of unambiguous contractual language or consistent conduct evidencing exclusivity, no such right can be presumed.

Second, the court clarified that tacit continuation of a licence agreement does not imply the automatic carryover of all prior terms. Only essential elements, such as the right to use the licensed IP, are presumed to persist. Clauses conferring exclusivity or other special rights must be expressly renewed or clearly evidenced by the parties’ conduct.

Third, the licensor’s attempt to enforce its audit rights by seeking access to the licensee’s accounting records was addressed by the Zurich Commercial Court. The licensor had requested judicial enforcement of its contractual right to inspect the licensee’s books to verify royalty payments. While the Federal Supreme Court did not rule on this issue, the Zurich Commercial Court examined the request in detail in its decision HE170290-O5 and declined to grant the relief, finding that the licensor’s request lacked the specificity required under Swiss procedural law. The court noted that the licensor had failed to clearly define the scope, timeframe, and categories of documents to be inspected. The ruling also rejected the licensor’s request to access the licensee’s books on the grounds that it failed to demonstrate a sufficient link between the requested documents and its  claims – nor did it establish that the documents would serve to prove a specific contractual breach or a quantifiable damage. As a result, the request did not meet the procedural threshold for enforceability. The court emphasised that, even where a substantive audit right exists, judicial enforcement requires that the relief must be precisely and narrowly framed, to avoid any risk of fishing expeditions.

This procedural dismissal underscores a key principle of Swiss civil procedure: vague or broadly framed requests are unlikely to succeed. A licensor seeking judicial enforcement of audit rights must:

• clearly identify the documents or categories of records to be inspected;
• specify the time period and scope of the inspection; and
• justify the relevance of the requested access in light of the contractual obligations.

Conclusion

This decision is interesting in the context of Swiss licensing law, where Supreme Court rulings on exclusivity and audit rights are rare. It confirms that exclusivity cannot be presumed and must be clearly established. It also highlights the procedural rigour required to enforce audit rights through the courts.

The Zurich Commercial Court’s approach serves as a reminder that even where audit rights exist in principle, their enforceability depends on the precision of the relief sought. Procedural clarity is essential, particularly in the context of interim or injunctive relief.