Is Settlement With The Administration Possible?

As is known, pursuant to Article 2/1(a) of the Administrative Procedure Law No. 2577, it is possible for persons whose interests have been violated to file an action for annulment against administrative acts on the grounds that such acts are unlawful in terms of authority, form, cause, subject matter, or purpose.

In such a relevant case the claimant alleges that the administrative act established by the defendant administration is contrary to the law and seeks its annulment. In response, the administration will argue that the administrative act it has established is appropriate and in compliance with the law.

As a matter of fact, in a similar manner, the administration may also file a lawsuit for the elimination of the violation and/or compensation of damages in the event that it incurs damage as a result of the legal acts and transactions it has engaged with third parties.

In certain situations, an administrative act may contain an obvious error of fact or be contrary to the law, or that the continuation of the dispute may create an unnecessary burden for both parties. In such case, will the administration, nevertheless, strongly defend its act, or is it possible for the administration to resolve the matter through alternative methods if it is not in agreement with the act at the stage when an action is brought against the administrative act?

In essence, the relevant regulation¹ grants the administration the authority, and also encourages entering into a settlement.

Indeed, when the matter is considered from the perspective of industrial property rights, pursuant to the relevant regulation², the decisions of the Re-Examination and Evaluation Board (“Higher Board”) of the Turkish Patent and Trademark Office (“the Office”) constitute the final decisions of the Office, and cancellation actions against such decisions may be filed before the Ankara IP Court within two months as of the date of notification of the decision. In parallel and pursuant to Article 156/2 of the Industrial Property Code No. 6769 (“IP Code”), Ankara IP Courts are the competent and authorized court in actions to be filed against the Office’s final decisions taken under the provisions of the IP Code, as well as actions against the Office to be brought by third parties who have incurred damage as a result of the Office’s decisions³. As is evident from both provisions, interested persons may file a cancellation action before Ankara IP Courts against the Higher Board’s final decision rendered under the IP Code by designating the Office as a party.

Although there is no explicit provision in the IP Code regarding the Office’s authority to enter into a settlement, the Office, as an administrative body, is included within the scope of the aforementioned regulation, and there is no need for an explicit provision in the IP Code in this regard.

Within this framework, particularly in cases such as obvious errors of fact, it is possible for the Office to contact the claimant/its attorney to propose a settlement instead of defending an obvious error, and even to accept the court action. Indeed, in a recent case filed against the Higher Board’s decision which clearly includes an error of fact, the Office adopted this approach and thereby created the opportunity for a settlement with our client, by contacting us as the attorney. Within this context, a settlement was reached with the Office, on behalf of our claimant client, in terms of the cancellation of the Higher Board decision, and the Office accepted the court action in terms of the cancellation of the Higher Board decision.

As stated above, in essence, the legislation grants the administration authority to enter a settlement in all disputes involving the administration. Within this framework, in disputes involving various institutions and bodies such as the General Directorate of Copyright, the Competition Authority, the Advertising Board, and even State Universities, it may be considered whether a settlement can be reached through mutual waivers by the parties. Indeed, a settlement to be achieved in similar cases would also be consistent with the principle of procedural economy, which shall be pursued by the parties.

However, it should be emphasized that it is very rare for the administration to accept a court action brought against it, there are certain conditions and specific circumstances arising from both its own interests and the public interest, as well as from statutory requirements that must be taken into consideration. In fact, in order to encourage the administration to enter into a settlement, proposals that also take public interest into account such as the claimant’s attorney waiving the legal attorney fee or the claimant agreeing to bear the litigation costs incurred may be considered. Given the extent to which proceedings may be shortened in the event of a settlement with the administration, the amounts waived are of limited significance when compared to the procedural and time-related efficiencies achieved.

Within this framework, in disputes involving the Office, in cases where the case file contains obvious error of fact or unlawfulness and does not require technical analysis – such as a comparison of goods/services –, a subjective assessment – such as the similarity of trademarks -, or legal assessment – such as vested rights, etc. – the parties should, with due regard to the public interest and without causing damage to the Treasury, may contact the Office and consider the possibility of a settlement.

Footnotes

1. Decree Law No. 659 on the Conduct of Legal Services in Public Administrations within the Scope of the General Budget and in Special Budget Administrations, Article 9(1) and (3):

“(1) As a principle, administrations shall invite the opposing party to enter into a settlement before filing a lawsuit before judicial courts or initiating enforcement proceedings. Administrations may also invite the opposing party to enter into a settlement where they become aware that a lawsuit will be filed or enforcement proceedings will be initiated against them …(3) In disputes that have been brought before the courts or referred to enforcement proceedings, the parties may likewise make a settlement offer.”

2. Law No. 5000 on Patent and Trademark Agency and Certain Regulations, Article 15/C titled “Presidency of the Re-Examination and Evaluation Board.”

3. Article 156/2 of the IP Code.

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.