Validity and Termination of a Trademark Delimitation Agreement

Facts

Swatch AG (the appellant) and X. SA (the respondent) concluded a trademark delimitation agreement for the "SWATCH" and "ICE-WATCH" marks in 2008. The respondent undertook to use and register the "ICE-WATCH" mark only in a certain graphic form. In return, the appellant consented to this use and the registrations.

In 2009, the appellant terminated the agreement without notice, as it had identified violations by the respondent of the agreed use of the "ICE-WATCH" mark. The respondent disputed the effectiveness of the termination.

Considerations

The Federal Supreme Court decided that trademark delimitation agreements are generally not terminable, as they serve the final resolution of a trademark conflict. Termination without notice is only possible for good cause that makes it unreasonable for the terminating party to continue the contract.

In the present case, the Federal Supreme Court examined whether the contract violations by the respondent, as established by the lower instance, constituted such good cause. It remanded the case to the lower…