Switzerland: Swiss Unfair Competition Law Without "Unclean Hands" Objection

By Dr. Markus R. Frick, LL.M., Esq.

The Swiss Federal Supreme Court has issued a decision specifically addressing – for the first time – the common law doctrine of "unclean hands", in a case involving comparative advertising for eyewear.

A Swiss consumer magazine published an article about the price policy of suppliers of eyewear. The study compared the prices for branded glasses, lenses and sunglasses offered by the parties to the lawsuit and other suppliers. The article illustrated its conclusions in a chart comparing the different prices. Subsequently, Visilab, the defendant in the proceedings, claimed in its advertisements to be the market leader in Switzerland with the cheapest prices and relied for that purpose on the chart of the consumer magazine. The lower court dismissed the competitors claim, Fielmann, that such conduct constituted unfair competition. The lower court based its dismissal of the unfair competition claim mainly on Visilab’s assertion that Fielmann itself had acted unfairly in its recent advertising campaigns.

The Supreme Court reversed the lower court’s decision and granted Fielmann’s appeal. The court restated the basic principle that comparative advertising was permitted in Switzerland if it was accurate, comprehensive and based on objective criteria. In the case at hand, however, these standards of admissible comparative advertising were not met. Already the original chart published by the consumer magazine did not accurately mirror the effective prices subject to comparison. This could lead to confusion among the consumers addressed by the price comparison. Visilab should not simply have relied on the misleading chart. To make it worse, Visilab tampered the consumer magazine’s chart. Along with other statements, the court found such conduct to constitute unfair competition.

Furthermore, the Supreme Court took the opportunity to voice its opinion on the Anglo-American doctrine of "unclean hands". The "unclean hands" objection means that someone who does not respect the law (thus, comes with "unclean hands" to the court) is, as a consequence, refused the protection of the law in the very same transaction. The court reminded that it had already in the past refused to state a general rule that only those respecting the law themselves can demand the respect of the same law by others. Hence, the court objected the consequence that unfair competition law would not apply if two enterprises competed unfairly with each other. The court reminded that the Swiss Unfair Competition Act does not only protect competitors, but also the consumers as well as the marketplace in general. In the case at hand, a victim of unfair competition like Fielmann could still file suit based on unfair competition law, even if it had acted unfairly in the past itself. Accordingly, Swiss law does not recognize the "unclean hands" objection.