Swiss Made

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"Swiss Made" label on a TAG Heuer chronograph

Swiss Made is a label used to indicate that a product was made in Switzerland.

[edit] Overview

Swiss Made is a label used to indicate that a product was made in Switzerland. The wording was formally adopted in the late 19th century^[1] and is unique in that most other countries use the phrase "Made in (Country Name)". The most obvious place where the label is found is on Swiss watches. The Swiss laws permit the use of the words «Suisse», «produit suisse», «fabriqué en Suisse», «qualité suisse» or the translations, "Swiss", "Swiss Made", or "Swiss Movement". On some older watches, for example, the word "Swiss" appears alone on the dial at the six o'clock position.

There are two discrete sections of the Swiss law that pertain to the use of the name Swiss made. The first law, which applies to all types of Swiss products, is the Loi sur la protection des marques,(LPM). The LPM at Article 50 provided the authority for the enactment of the second law, Ordonnance du 23 décembre 1971 réglant l’utilisation du nom «Suisse» pour les montres, relating specifically Swiss watches. The text of either law is available in French, German or Italian, since those are the official languages of Switzerland.

[edit] Swiss law

Currently the aforementioned Swiss legal standards permit watch brands or watchmakers to label watches Swiss Made under certain legally defined circumstances. These standards have changed over time and were not always codified in the national law, so older watches which bear the mark Swiss Made may not necessarily meet the current legal definition. On the other hand they might well exceed the current legal definition of Swiss made. Indeed, the current law of the applicability of Swiss made was codified on December 23, 1971.

[edit] The Use of the Name Swiss on Watches

The law "Ordonnance réglant l’utilisation du nom «Suisse» pour les montres" or Verordnung vom 23 Dezember 1971 über die Benützung des Schweizer Namens für Uhren first defines a "watch" (as opposed to a clock) by the dimensions of its movement. Thereafter, the law defines a Swiss watch, which definition is dependent on the definition and/or certain aspects of its movement. The law then goes on to define under what circumstances a watch movement may be considered Swiss made. The law then sets forth the conditions for the use of the name Swiss on watches, on watch cases, on watch movements, on watch dials and on replacement watch parts. The pertinent parts of the law are digested below.

[edit] A Swiss Watch

In sum, a watch is considered Swiss whose movement is Swiss, whose movement is encased in Switzerland and whose final control by the manufacturer takes place in Switzerland.

[edit] A Minimum Standard

When reading the standard for the use of the name Swiss made on a watch, the reader must bear in mind that the law does not so much define Swiss made as it pertains to wrist watches, but rather it sets a minimum standard of what is required for a watch to be considered Swiss made. Often the Swissness of a watch is largely dependent on the brand and its reputation and for this reason, among others, the watch industry is stratified over the definition of Swiss made. The Swiss Federal Council modified the ordinance regulating the use of the "Swiss" name for watches in 1995. This revision was explained in a press release entitled Des composants étrangers pour les montres.

[edit] Swiss Made Defined by Law

[edit] A watch is considered Swiss if

A watch is considered Swiss, according to the Swiss law:

when its movement is Swiss and,
when its movement is cased up in Switzerland and;
the manufacturer carries out the final inspection in Switzerland

[edit] A watch movement is considered Swiss if

A watch movement is considered Swiss

when the movement has been assembled in Switzerland and,
when the movement has been inspected by the manufacturer in Switzerland and;
the components of Swiss manufacture account for at least 50 percent of the total value, without taking into account the cost of assembly.

If a watch movement is intended for export and will not be cased-up in Switzerland, but it otherwise meets the criteria to be considered a Swiss movement, the watch may say "Swiss Movement" but it may not say Swiss Made on the watch case or dial.

[edit] The 50% Rule for Swiss Made Watches

Use of the Swiss Made label for watches is covered by an ordinance of the Federal Council dated 29 December 1971. The Swiss standard is often pejoratively referred to as the 50% Rule. However, it has its basis in real life economics. Again, the law merely sets forth a minimum standard. The famous or infamous Swiss Made Ordinance has, for a number of years, been subject to many criticisms, particularly inside the industry, because it is considered too lax, but also in legal circles, where the view is that it no longer fully meets the legal mandate specified in the companion law on trademarks (SR 232.11).

“It is not generally known that quite a few Swiss companies have watches assembled in China for export to North America, Asia and even Europe, where the brand name is more important that the “Swiss made” label. Such watches may consist of a Chinese case and a Chinese crystal, a Taiwan-made dial and metal bracelet and Japanese hands. If the movement is to be considered Swiss, 51% of its value must be Swiss and at least the last wheel must be added in Switzerland. Swiss watch brands without the “Swiss made” label are usually equipped with a Japanese movement. The “Swiss parts” label means that the movement is assembled in Asia using kits consisting at least partially of Swiss made components.”

Trueb Lucien, F. The World of Watches, Ebnar Publishing, 2005, at page 362, accord The Year of Living Dangerously (linked below).

From time to time namely in 2003 and more particularly in 2007, there are efforts made to strengthen the definition of "Swiss made." These efforts are normally spearheaded by the Fédération de l'industrie horlogère suisse (FHS) a trade organization.

[edit] A 1995 Amendment to the law

The Swiss federal Council modified the ordinance regulating the use of the "Swiss" name for watches in May 1995. The was said to bring the requirements of Swiss watchmaking industry a rubric like those of the European Union. In essence, the revision made it possible to affix indications of "Swiss made" on foreign watchcases and dials intended to equip Swiss watches. A watch is considered Swiss whose movement is Swiss, whose movement is encased in Switzerland and whose final control by the manufacturer takes place in Switzerland. Conversely, the Swiss manufacturers of parts destin for foreign watches from then on were authorized to visibly indicate that their products come from Switzerland. These innovations were intended to improve the transparency as regards the source of products. Consumers were expected to clearly recognize from what countries the various constituent parts of the watches came. However, the revisions were not intended to reduce the protection the name "Swiss made". Indeed, the high requirements which are imposed with a Swiss watch were said to remain unchanged. ^[2],^[3]

[edit] A Strengthening Effort in the Works

In 2007, the FHS plans to seek political action on a proposal which introduces a new aspect to the definition of Swiss made, in the form of a value criterion.

Accordingly, any mechanical watch in which at least 80% of the production cost is attributable to operations carried out in Switzerland would be considered as a mechanical Swiss watch. For other watches, particularly electronic watches, this rate would be 60%. Technical construction and prototype development would moreover need to be carried out in Switzerland. Raw materials, precious stones and the battery would be excluded from the production cost. The Swiss movement in the existing ordinance already has a value criterion, namely the rate of 50%. Considering that here, too, the definition needs reinforcing, the draft amends these value criteria. For mechanical movements therefore, the rate would be at least 80% of the value of all constituent parts. For other movements, particularly electronic movements, this rate would be 60%. Technical construction and prototype development in Switzerland would also be a requirement in this case. The draft also stipulates other provisions concerning the definition of Swiss constituent parts and assembly in Switzerland.

[edit] Real Life Economics

The minimum rate of 60 % was not chosen at random: it corresponds to the rate used in the free-trade agreement between Switzerland and the European Union. In addition, with a rate of 80%, the FH proposes to lay particular emphasis on the mechanical watch. With these proposals, objectives in terms of protecting the Swiss Made label should be attained. The proposed criteria also take into account the place of manufacture and the origin of components, thereby complying with the law on trademarks which serves as the legal basis of the Swiss Made Ordinance. However, it will be up to the FH General Meeting to reach a final decision on the matter.

The FHS effort to strengthen Swiss Made is supported by Compagnie Financière Richemont SA, Montres Rolex, and the Swatch Group, among others.

[edit] Other Products

Underside of HAG model locomotive marked "Swiss Made"

The most popular items by far to have the "Swiss Made" labels are Swiss watches. Almost all Swiss watchmakers, with the notable exception of Breitling, label their watches prominently on the faceplate. By convention, the words are fully capitalized, positioned on the bottom of the face, split by the half-hour indicator if available, curved along the bottom edge as necessary. Watches made in other countries typically indicate their country of origin on the back of the watch, except for very few well-known high-end manufacturers.

Besides watchmakers, Swiss software companies have recently started to mark their software with the Swiss Made Software^[4] label to declare the origin of their products and projects.

[edit] in principle

In principle, the name "Switzerland," as well as designations such as "Swiss," "Swiss quality," "Made in Switzerland," "Swiss Made" or others containing the Swiss name, can only be used for products manufactured in Switzerland. This also applies to the translation of any of these terms into any other language.

[edit] conditions for use

The conditions for using "Switzerland" or "Swiss" for products are defined very generally in the Trademark Law as follows: The origin of goods shall be determined by the place of manufacture or by the origin of the basic materials and components used. The Federal Council can specify such conditions if it is justified by general economic interests or by the interests of individual sectors.^[5]

[edit] protracted debate

Up until today, this has only been done – after a protracted debate concerning the highly controversial interests in the watch sector – with the “Swiss-made” ordinance for watches (the Watch Ordinance). Besides this regulation, only a sparse number of court opinion on the topic can be found; in particular, the decision of the Commercial Court of St. Gallen according to which the value of the Swiss portion of the manufacturing costs including raw materials, sub-assemblies, accessory parts, salaries, and general manufacturing costs but excluding operating expenses, must be at least 50% and the "essential manufacturing process" which must have taken place in Switzerland.^[6]

[edit] “essential manufacturing process”

Exactly how “essential manufacturing process” should be understood is illustrated by the following two examples:

[edit] Swiss scarves

For a woven scarf to be considered a product of Swiss origin because of a particular coating it has received in Switzerland which stiffened the fabric (although this clearly is an important characteristic of the quality) is insufficient. In the eyes of the customer, the quality of the woven fabric is such an important characteristic of the product that fabric can only be indicated as being of Swiss origin if it was actually woven in Switzerland. ^[7]

[edit] Swiss fountain pens

In fountain pens, the nib is an important element. But the quality of the fountain pen also primarily depends on the quality of the other parts. According to experience, more repairs are made on the holder than on the nibs for the fountain pens. For this reason, consumers pay attention not only to the quality of the nib but also to the quality of the holder (the feed system, the ink regulating system). That is why these parts of a fountain pen are not considered subsidiary parts. Thus, a fountain pen may not be marked as a Swiss product if only the nib has been manufactured in Switzerland.^[8]

[edit] Swiss Courts' Interpretations of "Swiss Made"

The current legislation contains only very generally formulated conditions which must be met for using a ‘made in Switzerland’ designation. With the exception of watches, no concrete criteria exist regarding when and by whom a 'made in Switzerland’ designation can be affixed to a product and when it cannot. Appropriate criteria have only been developed by individual cantonal courts up until now.^[9]

Products are, however, sold which are not 100% Swiss-manufactured. In such cases, the actual legal practice is based on the rules laid down in Article 48 of the Trademark Law and a 1968 ruling issued by the trade court of St. Gallen, reiterated in 1992 (Schweizerische Juristen-Zeitung 1972, p. 207, and St. Gallische Gerichts-u.Verwaltungspraxis 1992, No. 39). These court rulings outline the conditions for the legal use of the designation “Swiss Made” and similar designations, especially for goods not manufactured in Switzerland in their entirety. In pertinent part the case law holds:

“Products are considered Swiss products if they are fundamentally local products or if they have been completely manufactured in Switzerland. In the case of products that have been only partly manufactured in Switzerland, the rule applies that the Swiss portion of the production cost (including basic materials, semi-finished products, accessories, wages and production overhead excluding distribution costs) must be at least 50%. However, this 50% portion is not the sole criterion for determining the Swiss origin of a product. The origin of the essential components and the manufacturing process through which a product obtains its characteristic features, and – in borderline or doubtful cases – the origin of the intellectual property embodied in the product and the special circumstances in the respective industry must also be taken into due consideration.”

Accordingly, there are two conditions that must be fulfilled for goods to be legally labeled as being of Swiss origin: • The Swiss portion of the production cost must be at least 50%. • The most important part of the manufacturing process must have taken place in Switzerland. The “most important part of the manufacturing process” is that part of the process that results in a completely new product. The determining factor here is that the original characteristics of the goods are lost through the manufacturing process, and the possible application of the goods is different from that of the basic materials of foreign origin used in their manufacture. In addition, the origin of goods is determined by the place where they are produced, not by where the idea for producing these goods was conceived. A product manufactured in Switzerland under a foreign license will still be Swiss in origin, while a product manufactured abroad using Swiss recipes or Swiss methods will still be foreign in origin.

[edit] Final Analysis

This issue (the definition of Swiss made) has stratified the Swiss watch industry internally. There is a difference of opinion as to what it should mean among the different strata of Swiss watch brands. The key point that most people miss on this subject is that the current law, more than actually defining a Swiss watch, merely defines a minimum standard. [1] Annual Report of the FH 1967 at page 59. Often, the Swissness of a watch is largely dependent on the brand and its reputation and for this reason, among others, the watch industry is stratified over the definition of Swiss made.

[edit] References

^ http://www.swissinfo.org/fre/culture/detail/Aux_origines_du_Swiss_made_horloger.html?siteSect=201&sid=7998036&cKey=1184143089000 Aux origines du Swiss made horloger
^ 29 mars 1995 Département Fédéral de Justice et Police, Service d'information et de presse, Renseignements Supplémentaires.
^ http://www.admin.ch/cp/f/1995Mar30.181730.3998@idz.bfi.admin.ch.html Foreign components for "Swiss made" watches
^ swiss made software
^ Protecting "Made in Switzerland" Report of the Federal Council, November 15, 2006.
^ Protecting "Made in Switzerland" Report of the Federal Council, November 15, 2006.
^ Protecting "Made in Switzerland" Report of the Federal Council, November 15, 2006.
^ Protecting "Made in Switzerland" Report of the Federal Council, November 15, 2006.
^ Protecting "Made in Switzerland" Report of the Federal Council, November 15, 2006.