Electronic Signatures – A Simple Solution for Concluding Ip Contracts in the Digital Age?

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If the current global pandemic had any positive impact on our daily lives, it is that we all have become more flexible: More people than before can work from wherever they like and be even more efficient by saving time and costs spent on travelling. Against the backdrop of these developments, it seems downright antiquated to continue signing letters, contracts, or other legal documents by hand. This is all the more the case as many companies now work completely paperless, not only for cost and efficiency reasons but also to promote sustainability. Therefore, it comes as no surprise that electronic signatures have become more and more popular recently.

While electronic signatures can prove helpful in business transactions and in the correspondence with authorities and courts, it is important that the user is aware that the legal effect of such signatures can vary depending on the type of signature, the type of document signed and in particular, the country where the signature is used. In this article we would like to give you an overview on the Swiss approach to electronic signatures, in particular with respect to the conclusion of some IP contracts. Before we dive into the particularities of Swiss Law, let’s see how electronic signatures are defined in a nutshell and learn about the different types of signatures.

Electronic signatures – Definition and types

According to the eIDAS regulation in the EU[1] as well as to the applicable Swiss Law, an electronic signature “means data in electronic form which is attached to or logically associated with other data in electronic form, and which is used by the signatory to sign”. With other words, an electronic signature is connected to other data, that allows to identify the signatory and to assess the integrity of the signature. The electronic signature thus technically fulfils the same function as a handwritten signature. There are different types of electronic signatures that differ in the level of security provided. The so-called “simple” electronic signature corresponds to the lowest level of security. A simple electronic signature can basically only ensure the integrity of a document, i.e., it confirms that the document has not been changed between signature and opening of the document. In particular, a simple electronic signature does not enable the reader of a document to identify the signatory. An example for a simple electronic signature is a signature that is drawn on a PDF document in Adobe Reader. An “advanced electronic signature” provides more security. The main difference compared to the simple electronic signature is that the advanced electronic signature allows the identification of the signatory. The certificate issued with the signature assigns the signature to one specific holder. This holder has sole control over the means that provide the signature. With other words, the identity of the person signing with an advanced electronic signature is verified by authentication via mobile number, for example. The “qualified electronic signature” has the highest security level of all electronic signatures. On top of the features of an advanced electronic signature, the qualified electronic signature is based on a certificate issued by an authorized signature provider. In contrast to the advanced electronic signature, a qualified electronic signature can only be issued for natural persons. The holder of the signature must identify himself/herself to the authorized signature provider by presenting a valid document of identification, for example a passport.

Legal Framework in Switzerland

In Switzerland, electronic signatures are regulated by the Federal Law on certification services in the field of electronic signatures and other applications of digital certificates (ZertES[2]). ZertES mainly contains provisions on the technical aspects of electronic signatures, but does not stipulate their legal effect. The effect of electronic signatures from a legal perspective is described in the Swiss Code of Obligations (CO[3]) in article 14 para. 2bis  and in Articles 143 and 177 of the Swiss Civil Procedure Code (CPC[4]). This statute (in particular Articles 143 and 177 CPC) qualifies electronic documents as well as electronically signed documents as admissible evidence in Swiss civil proceedings.

An important thing to notice with respect to the Swiss legal framework is that the EU regulation eIDAS is not applicable in Switzerland and that the two regulatory frameworks are currently not harmonized.

Effects of electronic signatures in Switzerland

Concerning the effect of electronic signatures, the abovementioned article 14 para. 2bis CO states the following:

The qualified electronic signature associated with a qualified time stamp in accordance with the Federal Act of 18 March 2016 on Electronic Signatures is equivalent to a handwritten signature. Deviating legal or contractual regulations remain reserved.

This means that according to the applicable Swiss Law, only qualified electronic signatures have the same effect as a handwritten signature. All other electronic signatures, such as simple electronic signatures or advanced electronic signatures are not considered equivalents to the handwritten signature in Switzerland. Furthermore, only qualified electronic signatures based on an authenticated digital certificate issued by a provider that has been accredited in Switzerland are covered by the provision cited above. The Swiss Accreditation Service (SAS) publishes a list of accredited providers of certification services. Currently, only the following four providers are listed: Swisscom (Schweiz) AG, QuoVadis Trustlink Schweiz AG, SwissSign AG and the Swiss Federal Office for Information Technology and Telecommunications. It is generally possible that foreign certificates could be accepted under Swiss Law if a respective international treaty was concluded. However, there are currently no such treaties in place.

Therefore, qualified electronic signatures that comply with the eIDAS regulation and are issued by renowned providers in the EU do not qualify as qualified electronic signatures that are equivalents to handwritten signatures under Swiss Law. If a company therefore wants to make sure that its qualified electronic signatures on documents or on contracts under Swiss Law are equivalent to handwritten signatures, it is recommended to obtain a qualified electronic signature issued by one of the Swiss providers listed above.

Practical Implications

At first glance, the Swiss regulation on electronic signatures seems to cause trouble for internationally active companies, as the system is not harmonized with the EU. However, it should be noted that a Swiss qualified electronic signature is only necessary in Switzerland whenever Swiss Law requires a handwritten signature for a contract to be valid. Swiss contract law is based on the principle of freedom of form (Art. 11 para. 1 CO). Exceptions apply in particular to ensure the protection of the weaker party to the contract, in the interest of third parties and for the safeguarding of evidence. Written form is also required in contact with the commercial register and the land register. Most contracts under Swiss Law, however, can be validly concluded without adhering to a specific form, i.e., orally or via email and do not require a handwritten (or qualified electronic) signature. For the valid conclusion of such contracts, simple electronic signatures, advanced electronic signatures as well as any other electronic signatures, for example according to the eIDAS regulation, are sufficient under Swiss Law if the agreements themselves do not require handwritten signatures.

There are a few exceptions from the form-free conclusion of contracts under Swiss Law, of which we would like to address some examples in the following:

First, it should be noted that the enforcement of a financial obligation deriving from a contract is also possible in Switzerland via the simpler debt enforcement proceedings instead of civil court proceedings. However, such enforcement requires a so-called “promissory note” as a basis, which must by law bear a handwritten signature by the debtor. Signed contracts that stipulate the respective financial obligation to be enforced qualify as promissory notes. However, if a contract shall be used as a basis for debt enforcement proceedings, it requires a handwritten signature or a qualified electronic signature that complies with Swiss Law.

Second, the transfer of ownership in registered intellectual property rights (trademarks, patents, designs) also requires written form i.e., a handwritten signature according to Swiss Law. Therefore, a qualified electronic signature in line with Swiss Law is also required for the valid conclusion of such contracts. If this form requirement is not observed, the transfer will be considered invalid and already paid remunerations for such transfer by one party would have to be reimbursed. However, most contracts under Swiss law in the IP field (such as for example research and development cooperation agreements, licensing agreements, agreements to transfer the right to a patent, coexistence agreements in trademark law, covenant not to sue declarations, etc.) do not have to be concluded in writing (i.e. do not need a handwritten signature) unless they contain a transfer of ownership mentioned above.

Third, Swiss Contract Law is based mainly on the concept of contractual freedom. Therefore, many provisions in the CO on specific contracts are only applicable, if the contractual parties have not agreed otherwise. Sometimes such agreements deviating from the default statutory regulation require written form and therefore a handwritten signature or qualified electronic signature in line with Swiss Law from the parties. If – for example – two parties are conducting settlement negotiations and they wish to prevent the limitation period for certain mutual contractual claims from continuing to run during such settlement discussions, they must agree to this in writing, i.e. by signing by hand or by qualified electronic signature. Also, a waiver of the statute of limitations by a party must be declared in writing and therefore by handwritten or qualified electronic signature. Written form (handwritten signature or qualified electronic signature) is also required by Swiss Law for the valid assignment of claims.

Fourth, in practice, many contracts contain a clause stipulating that “any amendments to the contract must be made in written form” or similar. It should be noted that “written form” according to the understanding of Swiss Law always means that the parties must sign any amendment by hand or – in case of electronic signatures – by a qualified electronic signature compliant with Swiss Law. This could lead to the situation, that while the actual contract could be validly concluded with any type of electronic signature because no specific form was required under Swiss Law, any amendment to this contract would require a signature in handwriting or a qualified electronic signature. If the parties therefore want to keep the option open to amend their contract in another form than by handwritten or qualified electronic signature, it should be clarified in the respective clause that the terms “in writing” or “written form” are understood to encompass signatures by hand and/or any available electronic signatures. With such wording, any type of signature should be considered sufficient.

Key take-away

The key conclusion is that electronic signatures are regulated differently in Switzerland than in the EU. Therefore, electronic signatures under the eIDAS regulation do not qualify as equivalents to a handwritten signature in Switzerland. Only qualified electronic signatures that have been issued by one of the currently four accepted providers are considered equivalents to a handwritten signature in Switzerland. This does not pose such a big problem, since most contracts under Swiss Law – and in particular, many IP contracts – can be concluded without adhering to any specific formal requirements. A qualified electronic signature in line with the Swiss regulation is only required if the law requires “written form” for a contract to be valid or if the respective agreement expressly requires written form itself. Before concluding a contract under Swiss Law by electronic signature, it is therefore always recommendable to make sure that the contract does not contain any clauses that require “written form” to be valid according to Swiss Law. If this is the case, a handwritten signature, or a qualified electronic signature in line with Swiss Law are necessary. Otherwise, the contract can be validly concluded with any electronic signature available.

[1] Regulation (EU) No. 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC.

[2] The text is available in German, French and Italian under the following link.

[3] The text is also available in English under the following link.

[4] The text is available in English under the following link.

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