Virgin considers move to Switzerland for its IP licensing business

The Mail Online reported earlier this week that Sir Richard Branson's Virgin Enterprises, which owns the trade marks and other intellectual property rights to the Virgin brand, is considering relocating to Switzerland. According to a company spokesman,

"Virgin Group has become increasingly focused on the development of the Virgin brand internationally and especially in emerging markets. To reflect this, we are considering moving our licensing entity to Switzerland in the near future to co-ordinate our international growth and brand management". 

This is the sort of thing that every government dreads. Taxation of corporate trade is a vital ingredient of any national budget and it's worth offering a lower rate of tax on the basis that you'll attract more taxpayers into the jurisdiction -- but this in turn invites a race to the bottom as national tax rates are forced to drop in order to retain existing corporate tax-payers. Looks a bit like competition, doesn't it?

Swiss book price-fixing: can it work?

Where old business models prove inadequate on account of new technologies and old IP laws, the usual answer these days is to call for new business models (whatever, and however effective they may or may not be).  There is however another solution, though admittedly one which may be of limited and diminishing applicability, depending on the technology -- state control of the market.

In March of this year the Swiss Parliament adopted new legislation to fix book prices. This law, which also applies to online book sales, requires the publisher or importer to set the final retail price of books that it publishes in, or imports into, Switzerland, compelling retailers to resell the books at the fixed price.

Following the passage of this law the Swiss Competition Commission decided to suspend its investigation of whether distributors and marketers of French-language books in Switzerland held a dominant position and, if so, whether they had set their prices at an excessively high level (Secretariat of the Competition Commission opened a preliminary investigation in 2007 into the French-language book market in Switzerland to see whether the retail price differences observed between books sold in Switzerland and those sold in France (between 25% and 35% at that time) were caused by anticompetitive activity).

On March 13 2008 the commission decided to open an investigation into distributors of French-language books operating in Switzerland. Distributors obtain exclusive rights to publishers' books and therefore any given book can be purchased only from its respective distributor or marketer in Switzerland. In view of this exclusivity, the commission considered that there were indications that the distributors of French-language books might hold, on an individual basis, a dominant position on the Swiss market, and that the level of prices charged for distribution services might be regarded as abusive pursuant to Article 7(2) of the cartel act. Subsequently, the commission widened its investigation to include Swiss recommended public prices set by distributors, in order to examine whether such practices (as well as the juxtaposition of vertical agreements between distributors and booksellers) could be regarded as illegal within the meaning of Article 5 of the cartel act.

The purpose of the new law is to promote the variety and quality of books, which are considered as cultural assets. Accordingly the publisher or importer has the right to determine the final retail price of the books that it publishes or imports. While booksellers are compelled to sell books at the final retail price they can still offer a general discount of up to 5% on the final retail price, as well as dropping prices for sales to public libraries, bulk sales and sales by book clubs. The law applies to the sale of books on the Internet (but not to digital books).

It will be curious to see how the controlled market for books fares in the era of e-books, downward-spiralling copyright protection and the accelerated closure of traditional book shops. If it works and keeps prices up, I suspect that this will make it more profitable for people to seek to circumvent it.  If it doesn't work and prices fall anyway, it may as well not have been implemented in the first place. Another interesting issue is the impact of this law on current and future contracts struck by authors with their Swiss publishers. But let's wait and see ...

Source: "New legislation introduced to allow publishers to fix book prices" by Silvio Venturi or Pascal Favre (Tavernier Tschanz), International Law Office, 5 May 2011

Switzerland: World-Class Chocolates, Watches, and IP Tax Benefits

I don’t have much of a sweet tooth but, when I reach for chocolate, I want it to be Swiss. Yum! But Switzerland is not only home to great chocolate, reliable watches, defenders of the Vatican and, arguably, the world’s best tennis player; it’s also home to highly beneficial tax rates for IP owners.

The applicable tax rate for Swiss-registered IP owners or Swiss subsidiaries of foreign IP owners varies, but may often be reduced below 8% based on corporate structuring. Ask your tax professional for advice on your entity's structure! In addition, because Switzerland has double taxation treaties with numerous countries, a company can benefit from a reduced withholding tax on foreign-generated royalties – in many cases to 0%.

The Swiss Federal Institute of Intellectual Property houses registrations of patents, trade marks, copyrights and designs – a true one-stop-shop! It is headquartered in Bern. Brush up on your German before arrival, bitte, because German is the official language in this fourth most-populous city in Switzerland. Though less populous than Zurich or Geneva, Bern is also Switzerland’s capital and home to its Parliament. Bern can also boast being the home of Albert Einstein at a time when he began working on his most famous scientific breakthroughs. One of his former Bern residences has since become a museum.

On arrival, make a beeline for the Kursaal Bern. Just as you can satisfy all your IP needs within the Swiss Federal Institute of Intellectal Property, you can satisfy all of your accommodation, nourishment and entertainment needs at the Kursaal Bern. It houses the Hotel Allegro, a gambling casino, conference center, several restaurants, a rooftop beer garden, and a cigar lounge operated in cooperation with Davidoff, as well as a Toblerone chocolate historical exhibit in the Kursaal Tower section of the property. Of course, Toblerone is available for purchase in the open-round-the-clock hotel gift shop!

Bears are a symbol of the city. Live bears had been kept here in bear pits for public amusement since the city’s founding in 1191, but today can be visited in BärenPark Bern, which opened in 2009. In fact, legend has it that Bern got its name from the hunting of bears here at the time of the city’s founding (from the German word for bears, bären).

Finally, UNESCO recognizes Bern’s medieval city center as a World Heritage Site, so be sure to save time to explore the Old City and to see the Zytglogge, the “Time Bell” medieval clock tower. You can also walk along the shopping arcades that stretch for six kilometers through the city – among the longest covered shopping areas in Europe.