The government wants to give better protection to the designation "Swiss" and to the white cross on a red background, in the interests of the Swiss economy.
It is planning to revise current legislation to prevent abuse both at home and abroad.
Justice Minister Christoph Blocher, who presented a government report on Wednesday in Bern, said that for consumers the Swiss cross was a symbol of quality.
He noted that Swiss enterprises had increasingly understood its importance but abuses had been on the rise over the past two years.
Blocher cited the cases of the Juvena company, which had added the words "of Switzerland" on a cosmetics line produced in Germany, and Sigg, which had sold saucepans made in China with a Swiss cross on them.
And he criticised Asian products with no connection to Switzerland that were sporting the Swiss colours.
In theory, a company has no legal right to put a Swiss cross on a product to indicate that it is made in Switzerland.
But in practice, firms such as the Emmi dairy concern and knife maker Victorinox do this.
There are also problems because the criteria for using the "Swiss" label are too general, except in the watch sector, and abuses are not followed up seriously enough.
As a first measure, the government intends to change the law on the protection of public coats of arms so that the Swiss cross may be used for commercial purposes, but only on products that have been made in Switzerland.
The law might be abolished altogether but if this happens there has to be enough protection for official labels and thought given to the special case of the Red Cross movement, it says.
A project should be ready for consultation in the second half of 2007 and a motion sent to parliament a year later.
The government believes it is up to professional associations to come up with ideas and agree on common conditions for the use of the "Swiss" label.
Blocher said that these criteria did not have to be the same for every sector. It was up to each branch to define the percentage of "Swiss content" necessary.
The government has called on the Federal Institute of Intellectual Property to be more active against abuses both in Switzerland and abroad.
In case of serious misuse abroad, the institute - in cooperation with Swiss embassies - will write to the companies concerned demanding they stop the practice.
It will also study the possibility of registering brands in some countries or strengthening protection in bilateral agreements.
The government report feels that a wide surveillance of every use of the "Swiss" label and Swiss cross is neither realistic nor appropriate.
It adds that Switzerland should not launch into court cases because the costs would be too high and the chances of success minimal.
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Under current legislation the Swiss cross may not be registered as a brand nor put on products that are sold commercially.
The use of "Swiss" and "Swiss made" is not clearly defined. Up till now, the government has only made rules for the watch industry.
Reality shows that there is frequent abuse of the present system, in particular because the "Switzerland" brand does not exist in the legal sense.
For both Swiss and foreign consumers, "Swissness" brings to mind "a healthy, well-ordered, efficient world", according to the government report.
It also has connotations of "precision, meticulousness, reliability and thoroughness".
"Swissness" is also a synonym for innovation, exclusive products and excellent services. It refers to a country that is "rich in various cultures, cosmopolitan and open to the world".
In short, it is a term that is positive and can be used to promote business. Half of companies distributing Swiss products say add the "Swiss" label to their own brand.