What's changed?

In a recent judgement (C-669/2016), the Swiss Federal Administrative Court has ruled that a fertility app designed to determine the fertility of a woman qualifies as a medical device. As a consequence, such an app must successfully undergo a so-called conformity test showing that the app complies with certain safety regulations before being marketed and sold in Switzerland.

What it means for you

Under Swiss law (and equally so under EU law), products including software qualify as medical device if they are intended or advertised for medical use. In its judgement, the Federal Administrative Court noted that a fertility app allowing its users to control their own contraception or efforts to conceive, respectively, is intended to serve a medical purpose.

The app provider had argued that the app should not be classified as a medical device but rather as an educational tool, such as a book or a standard accounting program. This argument – commonly brought forward by software developers against the qualification of their software as medical device – did not convince the court. In contrast to the mere provision of knowledge, e.g. in a paper-bound or electronic book, any form of influencing or interpreting health data indicates a medical purpose. This was the case here: The respective app analyzes the health data of each user in order to determine the fertility or infertility periods of the woman's menstrual cycle, and hence analyzes data in order to provide information about a particular patient.

The judgement shows that the intended purpose and not the description of the developer of an app is the central criterion when determining whether it qualifies as medical device. Explanations such as a note in the App Store "This is not a medical device" do not circumvent the qualification as medical device.

This judgement also should offer thought-provoking impulses to developers who are active outside the health industry. In fact, the judgement further shows that the purpose of an app may lead to it having an impact on areas, which are regulated – even if the app was designed to merely serve ancillary needs or purposes. Financial services are another highly regulated part of business. Numerous apps today offer insights into financial markets, from stock prices over charting tools to more advanced analytics and portfolio tools. Certainly, most of these apps will be far-off from being real robo-advisors, which are likely to be reserved for another clientele. Still, some of them may come close to offering investment advice. But offering investment advice will soon be regulated in Switzerland, with the coming into force of the new Financial Services Act (FinSA), Switzerland’s own interpretation of MiFID, which is expected to come into force in 2020. Providers will have to keep an eye on the boundaries between (regulated) investment advice and mere advertisement for investment products.

Other apps may just support e-commerce. An app helping to identify customers online may again roam into regulated business areas. Know-your-customer (KYC) procedures for banks are of course regulated. If KYC is done online, specific requirements must be met. Selling devices with an eSIM also requires verification of the customer’s identity, albeit at different standards.

Actions to take

Do not let regulations surprise you. When planning the roll-out of your new app, consider the following at an early stage in your development process:

  • Keep an eye on your business activities close to regulated areas.
  • Mind the rules for protecting personal data.
  • Develop terms of use that are user-friendly and appropriate to the purpose.

 

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