The Industrial Property Code No. 6769 ("the IP Code") which came into force on 10 January 2017 has been widely welcomed by brand owners as their rights have now been sealed through the introduction of this new Code.
The primary reason for the enactment of the new Code was the cancellation of various articles of the former Decree-laws on IP rights by the Constitutional Court on the grounds of Article 91 of the Constitution, which prohibits regulation of the property rights by a decree-law.
While most of the rules of the former decree-laws are similar, there are various new rules introduced by the IP Code and stakeholders are clearly interested in receiving further information about their actual implementation.
This paper summarises and analyses the key changes introduced by the IP Code in relation to trademarks and discusses the issues regarding their current implementation together with some predictions for the future.
Having contributed to the formation of the new legislation at various stages, we have closely observed its formulation and gained an insight into the context of the new rules. However, as trademark law is very dynamic, a close look at the implementation of the legislation in the last fifteen months shows that some have caused unforeseen problems in practice while others require further interpretation and setting of precedents by the Court of Appeals to provide a solid foundation for uniform implementation.
We hope you find this useful and informative and please do not hesitate to contact us if you have any questions or require clarification on any points!
Eight developments and predictions for the trademark law practice in Turkey:
- Letter of Consent
- 3D Marks and Colour Marks
- Exhaustion Principle
- Criminal Offenses
- Bad Faith Registrations
- Time Limits for the Cancellation of Actions
- Non-use as a Defence in Opposition Proceedings
- Non-use as a Defence in Litigation Proceedings
Letter of Consent
A rule has been in place for a long time in Turkish trademark law where a senior trademark registration or application identical or indistinguishably similar to a junior trademark application could be raised as an absolute ground of refusal by the Trademark Office if the goods/services are also identical or of the same type. Accordingly, a letter of consent has become a new tool in overcoming senior identical or indistinguishably similar trademark registrations/applications as a legal means of refusal during the examination of a trademark application on absolute grounds. However, in practice, a letter of consent has been used as a tool for owners of unused trademarks to obtain unreasonable amounts of money from those who have a genuine interest in seeking certain trademark registrations.
The only alternative for putting pressure on the owners of unused trademarks while seeking a letter of consent is filing a revocation action on the grounds of non-use before the IP Courts. However, this does not necessarily meet the needs of businesses wishing to a obtain trademark registration quickly and hassle free as court actions are usually lengthy and expensive. Under Articles 26 and 192, TÜRKPATENT shall have the authority to process applications demanding revocation of unused trademarks starting from January 2024.
When this comes into effect, revocation actions for non-use should take much shorter than court actions, as the applications process for other matters dealt with by the Office has proven to be much faster.
We, therefore, predict that the real impact of this new provision shall be much clearer once the Office actually starts handling proceeding regarding revocation of trademarks due to non-use.
For more detailed analysis please see: gun.av.tr/analysing-turkeys-evolving-trade-mark-landscape/
3D Marks and Colour Marks
The graphical representation criteria for signs has changed to "signs capable of being represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor". This new provision enables three-dimensional trademark samples to be prepared with more than one representation from different angles, thus providing protection of a trademark in 3D form. In addition, "colours" and "sounds" are explicitly stated under "signs" that can be qualified as a "trademark" for the first time and their representation criteria are separately regulated.
Trademarks in 3D form shall provide better protection in infringement proceedings as lack of clarity had been an issue when it came to protection of the actual shape for example, under the former Decree-law.
We do not expect serious issues when registering genuine trademarks, however, we are of the opinion that registration of colour trademarks shall continue to be a difficult issue until precedent decisions rendered by the Court of Appeals.
We are of the opinion that registration of sole colour trademarks will continue to be burdensome and will require concrete proof of their acquired distinctivenss.
Indeed, decisions rendered by the Court of Appeals under the former decree-law ruled that the trademark right of a colour should not be given to a single person to constitute a monopoly, as they are limited in number. We predict that the Courts shall also interpret the scope of protection for colour trademarks narrowly.
The new Code changed the exhaustion principal from a national to an international one. As a result, products sold by brand owners anywhere in the world could easily be imported and sold in Turkey by parallel importers.
This change in legislation has clearly widened the scope of business for parallel importers and is expected to increase the number of consumer legal issues.
It could even cause major problems for images used in some brands because parallel importers are not likely to appropriately handle warranty, maintenance and spare part supply services etc. in the same way that dedicated brand owners would. As this change may also significantly reduce their profit margins, some brand owners may be reluctant to enter the Turkish market and those who already have made entries in the country, may consider exiting. If the national exhaustion principle is maintained in the new draft law amending the existing Copyright Law, we may also expect a change back to national exhaustion principle under the IP Code in the near future.
The major changes introduced by the Code are very favourable to trademark owners in cases of criminal offenses. The definition of criminal offenses has been widened, whereas the former Trademark Decree-Law did not refer to several acts – mainly "importing or exporting, buying, keeping, shipping or stocking them for commercial purposes" – as criminal offenses. While the majority of criminal courts acknowledged those as punishable acts – several courts issued decisions to the contrary. The new Code has resolved the inconsistent practices.
Under the former law, a major issue for trademark owners involved storage costs following the criminal action.
The new Code has introduced the "Fast Destruction Process" to Turkish trademark law, which entitles the trademark owner to request the destruction of the seized counterfeits, without waiting for the completion of court proceedings, if certain conditions are met.
Fast Destruction is strictly regulated to spare the brand owner and the state from possible demands from the accused.
With these amendments to the criminal IP law, we expect criminal actions to become more common and even more favourable. Brand owners no longer need be concerned that some acts have been overlooked by the Turkish Criminal IP Law and are not listed as criminal offenses. They will in fact be free to take criminal action against counterfeiters. The costs of criminal actions are to be even further decreased by courtesy of the Fast Destruction Process, which we expect to be applied more often by the local courts.
For detailed analysis, please see: gun.av.tr/anti-counterfeiting-a-global-guide-2017-turkey-chapter/
Bad Faith Registrations
The new Code introduced a ground-breaking change to the effects of registered trademarks against infringement claims. One of the major problems that trademark owners faced during infringement proceedings was the registered IP rights obtained by the infringers. It was established case-law from the Court of Appeals that if there is a registered right, the use of the registered sign could not be prevented until its cancellation was obtained which resulted in a de facto immunity for the infringers. This was a highly debated issue amongst practitioners in Turkish trademark law, which has now changed. The new Code introduced an explicit rule stating that the registered rights cannot be used as a defence in infringement proceedings where the plaintiff has an earlier registration.
This change has been much welcomed due to the problems faced in the past stemming from bad faith registrations. In March 2018, The District Court of Istanbul decided that preliminary injunctions can also be used against the use of registered trademarks, which shows that the new rule will indeed help trademark owners in their battle against bad faith registrations.
However, the change introduced in the new Code rule also means that the risk for an infringement claim exists even for trademarks that registered in good faith. In other words, an entity which, acting in good faith, registered a trademark may also be faced with an infringement claim even if the trademark was not objected to during the registration process.
Therefore, while the new rule ended long-lasting debates to counter bad faith registrations, it started a new debate as to when a trademark owner can safely use a registered trademark.
Some practitioners argue that the change introduced by the new IP Code must be limited to registrations obtained in bad faith; however, case law shall guide practice. This change also puts pressure on trademark owners to diligently search for new trademarks and carry out a thorough risk analysis before deciding on using their trademarks in case senior trademarks already exist.
Time Limits for the Cancellation of Action
The new IP Code introduced a new rule concerning the time limits for filing a cancellation action. The former Trademark Decree Law ambiguously made reference to a five-year term for filing an invalidation action from the date of registration, which was backed up by Court of Appeals precedents and became a settled rule. The new Code adopted the principle of "loss of right due to acquiescence", which is the same in EU Trademark Law.
According to this new rule, there is no time limit for filing an application for a cancellation, but if the owner of an earlier right acquiesces in the use of a later trade mark for a period of five successive years, the senior trademark owner will no longer be entitled to file a cancellation action, except in cases where the later trade mark was filed in bad faith.
The main principles introduced by the new rule can be summarised as follows:
- The right to file a cancellation action against a trademark registered in good faith would lapse in five years from the date the owner of the senior mark remained silent to its use, not its registration.
- There is no deadline for filing an invalidation action where the relevant registration is in bad-faith.
- While assessing if there is"acquiescence", the rules state that if the owner of the senior trademark remained silent although it knew about the use or it "should have known". The criteria for "should have known the use", we expect that the courts would consider the "prudent businessman" rule in the Turkish Commercial Court and decide whether or not it can be expected from the owner of the senior trademark to have clear knowledge of a certain use in Turkey depending on the circumstances of each case.
This new rule is greatly welcomed. It is, however, not yet certain how the new rule will be applied if the owner of the senior trademark has remained silent well beyond the 5-year period despite the clear bad faith of the later trademark. According to established case-law of the Courts of Appeals, even if the later trademark was in bad faith, remaining silent for a period beyond 5 years – which would be enough for the later trademark to reasonably rely on the registration and invest in the trademark – would lead to a loss of rights. The new rule, on the other hand, makes it clear that if the later trademark was in bad faith, there is no deadline for filing the cancellation action. In this respect, questions loom as to whether the new rule will change established case law of the Court of Appeals or if the case law will affect the application.
Non-use as a Defence in Opposition Proceedings
With the new Code, one of the major changes in relation to Trademark Law is the non-use defence/proof of use at the opposition phase if presented on the grounds there may have been a likelihood of some confusion (Article 6/1). According to Article 19 of the new Code, if a trademark on which the opposition relied upon is registered for more than five years from the application date (or priority date) of the opposed application, upon request by the owner of the application, the Office is obliged to ask the opposing party to prove the effective use of the trademark on the relevant goods and/or services in Turkey. As per Article 29 of the Regulation, the Office shall grant a period of one month to the opponent to submit evidence for the genuine use of its trademark in Turkey.
Therefore, when an opponent decides to file an opposition claim against a trademark application in Turkey, they should not lose sight of the fact that they can encounter the non-use use defence and should be ready to submit evidence showing effective and serious use of the earlier trademark(s) in Turkey.
As this procedure is entirely new in Turkey, the evaluation of the evidence submitted has not yet been sufficiently established, and there are some discrepancies particularly regarding the issue as to whether the non-use request has been filed in accordance with the legal provisions. The precedents of the Court of Appeals regarding non-use revocation actions rendered while the Decree Law numbered 556 was in force may be taken into consideration by the Office to provide further clarity on the criteria and implementation of the non-use defence.
Non-use as a Defence in Litigation Proceedings
Article 25/7 of the IP Code regulates invalidation actions and Article 29/2 regulates infringement actions regarding trademarks. Both articles refer in their last paragraphs to Article 19 foreseeing the procedures for the non-use defence. Accordingly, the mechanism of a non-use defence will be applicable for invalidation and infringement actions.
With an invalidation action based on confusing similarity, the plaintiff must prove its use in two respects. Firstly, it must prove the use of the trademark that the court action relied upon retrospectively within five years, starting from the filing date of the court action. If the trademark that a court action relied upon is registered earlier than five years from the contested trademark's filing date or its priority date, the plaintiff must also prove the use of its trademark since the filing or priority date of the trademark subject to the action, retrospectively within five years.
Secondly, Article 29/2 of the IPC asserts the applicability of non-use defence in terms of infringement actions. If requested by the defendant, the plaintiff must prove the use of its trademark retrospectively within five years from the filing date of the court action.
A trademark owner should think twice before initiating an action against a third party and ensure they make use of their registered rights to be able to use them as basis for legal action.
The most important documents for proving use of the trademark will particularly be invoices and documents showing production and sale of the products bearing the trademark. Foreign rights owners should particularly be well prepared to collect and submit these documents. These provisions of the new Code reinforce the principle that trademarks should be effectively put in use and the scope of protection of a registered trademark, which is not in use, will not be as strong as it was in the past.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.