Ca… Oturma Grupları v Ac…Sağlık Hizmetleri A.Ş., Ankara 3rd Civil Court of Intellectual and Industrial Property Rights, Merit No 2022/183E., Decision No 2022/415K., dated 08 December 2022
The use of the coffee tables, which are deduced to be counterfeits of the plaintiff's registered design after the expert examination, in the waiting lounges of the hospitals must be regarded as commercial use, regardless of the defendant's field of activity. The stated action further needs to be considered an infringement of a design right.
The action was related to the infringement of a registered design right.
The basis for the action were the Article 59, in which the scope of design right and the associated limitations are regulated, and the Article 81/1-a, in which the acts such as “producing, putting on the market, selling, offering for contracting, importing, using the design for commercial purposes or stocking an identical or similar product in which the design is incorporated or to which it is applied without the consent of the right holder” are deemed as an infringement of a design right, of the Turkish Industrial Property Law no. 6769.
The acts considered as infringement in the relevant article are listed without restriction, and the presence of only one of these acts in the dispute is sufficient for the existence of an infringement.
The plaintiff is a company that appeals with well-known products and trademarks to a niche audience in the furniture sector. Whereas the defendant is in the health sector and its hospitals are preferred by potential patients from all over Turkey due to the quality of its staff, services, equipment, ambience, decoration, etc.
The plaintiff alleged that a few years prior to the current dispute, the defendant had another company make counterfeits of the plaintiff's registered designs/products and use the same in their hospitals. The plaintiff also alleged that after becoming aware of this situation, a warning letter concerning the requirement to terminate said use was sent, and immediately after the receipt of this warning, the defendant contacted the plaintiff, accepted the allegations, and purchased the plaintiff's original products. Regarding the current conflict, the plaintiff claimed that although the mutual commercial relationship between the parties continued for a while, the plaintiff was soon informed that the defendant had the counterfeits of the plaintiff's registered designs (in this instance, coffee table) made again and used in the hospital, as in the previous case.
Within the scope of these allegations and before filing the principal lawsuit, Plaintiff filed a declaratory action to ascertain whether the defendant's hospital had counterfeits of said registered designs/products. After the inspection, the expert concluded that there was a crucial similarity between the products found in the waiting lounges in various parts of the defendant's hospital, which were observed to be present in a number of 9 in total, and the registered designs of the plaintiff.
Following this report and by way of chronologically listing the course of events, the plaintiff filed the principal lawsuit on the determination of design infringement, and pecuniary and non-pecuniary damages, claiming that the defendant's actions either to produce or having someone else produce and use counterfeits of the plaintiff's registered designs have become chronic, that the defendant is aware of the plaintiff's company and products, this leading to the fact that these acts bear the stamp of a malicious intention, and that, in addition to the physical uses, using the images of the registered designs on the website of the defendant demonstrates that the design is used further in the promotional documents and for commercial purposes.
In the principal case, the defendant, especially with regard to the allegation of commercial use, defended as follows: The defendant operates solely in the field of the health sector; the defendant is not engaged in furniture production, design and sale activities; the activity scopes of the parties are different; the act of using the products subject to the case has no commercial purpose; the products in question are not produced but rather procured from the market; and the products were easily accessible.
The file was sent to a board for expert appraisal. In the report by the board of experts, the following points, which are believed to be very accurate regarding the commercial use of the design, were mentioned:
- Commercial activity means any private or other activity that is part of any plan made for commercial gain.
- Business activity has the nature of entirety. At this point, when evaluated together with all the components of the organization performing the transactions, although there is no need for the existence of the intention to make profit for the acceptance of commercial activity, it should have the potential to make profit and, this activity must exceed the scope and limits of personal needs. This being the case, delivering the vehicle to the hospital valet or interpreting the results to the patient, for instance, are the extensions of the services rendered by the hospitals and should be regarded as part of the income-oriented services.
- It is indisputable that the coffee tables, located in certain parts of the hospital and detected to be present in the waiting lounges, are very similar to the registered designs of the plaintiff. It is also clear that the defendant did not merchandise these products.
- Despite these facts, for the effectuation of the principal commercial activity of a hospital, the waiting lounges should be regarded as an essential and integral part of the hospital services/management. The waiting lounge in a hospital is created and furnished for qualified and effective marketing of the service in question. In addition to being essential in a hospital, a waiting lounge further enhances the perception of qualified services.
- In the current dispute, the products subject to the lawsuit are not being used for personal purposes (e.g., at home/personal office of one of hospital's executives), but in the public spaces of the hospital created for the holistic service of the commercial subject and being among the form and material elements of the commercial organization. At this point, the fact that the coffee tables subject to the current dispute are being used in the public spaces as an asset of the defendant, just like a hospital bed, leads one to the fact that the products in question are among the form and material elements of the commercial organization and produce sufficient basis to consider the use as commercial.
The Turkish Intellectual Property Court (the Court of First Instance – Ankara 3rd Civil Court of Intellectual and Industrial Property Rights) decided that the defendant's use was commercial by quoting the reasoning in the report by the board of experts summarized above and concluded that there was an infringement of the design right in the current dispute.
Since the stated decision of the court of the first instance is not definitive, the parties may file an appeal before the Turkish Regional Courts of Appeal (RCoA) and later before the Turkish Court of Cassation (CoC), this meaning that the decision has not yet been finalized.
Specific to the current dispute and as stated above, the basis for the action were the Article 59, in which the scope of design right and the associated limitations are regulated, and the Article 81/1-a, in which the acts such as “producing, putting on the market, selling, offering for contracting, importing, using the design for commercial purposes or stocking an identical or similar product in which the design is incorporated or to which it is applied without the consent of the right holder” is deemed as an infringement of a design right, of the Turkish Industrial Property Law no. 6769. The acts considered as infringement in the relevant article are listed without restriction, and the presence of only one of these acts in the dispute is sufficient for the existence of an infringement.
A substantial number of the cases regarding the infringement of a design right is related to the manufacturing of the product subject to the design (see 11th Civil Chamber of Turkish Court of Cassation, Merit No: 2020/6993 E., Decision No: 2022/1144 K., Decision Date: 2 February 2022; also 11th Civil Chamber of Turkish Court of Cassation, Merit No: 2021/4183 E., Decision No: 2021/6487 K., Decision Date: 13 November 2021; and also 11th Civil Chamber of Turkish Court of Cassation, Merit No: 2020/2111 E., Decision No: 2021/4398 K., Decision Date: 25 May 2021). Again, in some decisions of the Turkish Court of Cassation, albeit exceptionally, offering the products for sale and making an offer by placing price tags on the products is also regarded as an act of design infringement (see 11th Civil Chamber of Turkish Court of Cassation, Merit No: 2020/1211 E., Decision No: 2021/4183 K., Decision Date: 28 April 2021).
Hence, the decisions regarding the infringement of a design right on the sole ground of commercial use are exceptional.
In practice and in the rare decisions of the Turkish Intellectual Property Courts and Regional Courts of Appeal, one can observe that the use of the design for commercial purposes is interpreted very strictly in a way that eventually results against the interests of the design right holders (see 44th Civil Chamber of İstanbul Regional Court of Appeals, Merit No: 2020/286 E., Decision No: 2021/364 K., Decision Date: 1 April 2021). In this context, the criteria taken into account in the examinations and evaluations specific to commercial use focused either on 'the effective and actual manufacturing transactions of the defendants', 'the field of activity of the parties as per their trade registry,' or 'the affinity of the 'commercial activities of the parties.'
The phrase 'using the design for commercial purposes' referred to in Article 81/1-a of the Turkish Industrial Property Law is open-ended and ambiguous. Thus, an analytic evaluation is required to determine whether the design is used for commercial purposes and whether or not the infringement of a design right exists.
According to the general principle stipulated in the Turkish Procedural Law No. 6100, and as is also stated in almost all decisions of the Turkish Court of Cassation (see 11th Civil Chamber of Turkish Court of Cassation, Merit No: 2019/5187 E., Decision No: 2020/3833 K., Decision Date: 5 October 2020; also 11th Civil Chamber of Turkish Court of Cassation, Merit No: 2011/1562 E., Decision No: 2011/5464 K., Decision Date: 5 May 2011; and also The Grand Chamber of Civil Chambers of the Court of Cassation, Merit No: 2017/11-66 E., Decision No: 2019/480 K., Decision Date: 18 April 2019) and even of the Court of Justice of the European Union (CJEU), (Judgement of 11 June 2009, Chocoladenfabriken Lindt &Sprüngli, C-529/07, EU:C:2009:361, paragraph 53; and Judgement of 27 June 2013, Malaysia Dairy Industries, C-320/12, EU:C:2013:435, paragraph 36), each case must be evaluated within its particular circumstances. Thus, addressing each instance concurrently with its objective and subjective aspects rather than limiting infringement cases by classification is believed to be more adequate (see also, N Berkay Kirci, Malicious trade marks in the Turkish legal system: the villains of trade mark law, 16 Journal of Intellectual Property Law & Practice 1273, 1277 (2021), https://doi.org/10.1093/jiplp/jpab133 (last visited Dec 28, 2022).)
One of the most crucial general justifications for Turkish Industrial Property Law No. 6769, which entered into force on 10.01.2017 in Turkey, was ensuring the transition to a modern and operationally efficient industrial property regime. Achieving the determined objectives by merely making amendments or adaptations to the relevant laws is not possible. In this context, it is inevitable that the Courts, the most vital enforcement authority, must consider this objective and seriously evaluate the equilibrium of interests while making decisions within the framework of the relevant articles of the Turkish Industrial Property Law.
Therefore, it should be taken into consideration that the Legislator made amendments/adaptations in the Turkish Industrial Property Law no. 6769 in line with the primary objective stated above and that the commercial use of a design is regulated as an exceptional case of infringement and is kept separate from production, offering, and similar acts. Thus, the concept of commercial use of the design needs a broader assessment than the manufacturing activities, scope, and affinity of the parties.
At this very point, it is observed that a holistic and inclusive approach has been adopted in the decision that is the subject of the article.
Adopting such an approach will prevent possible and frequently observed attempts of the evasion of law regarding design protection in Turkey. It will further help to effectively protect the design and industrial property rights, which will eventually result in a contribution to the achievement of the primary objective of the Turkish Industrial Property Law No. 6769.
Within this framework, this decision is thought to set a precedent for the future lawsuits filed on the grounds of commercial use of a design, and in this sense, it will have a ground-breaking effect in Turkey.
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.