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Trademark Infringement Claims’ Risk on Companies

16 December, 2019

While investing heavily in establishment of a legal entity, are the founders conscious of the importance of trademark notion which may actually risk the whole investment? Due to poor analysis of the trademark database, it is not hard to find a company being at risk of erasure of its company name even though the company is established duly under Turkish laws. To get the heart of the problem causing the risk and the barriers which may be built against, the concepts of “trademark” and “company name” will be clarified hereinafter.

Shedding Light on the Concepts

Conceptually, trademark, mostly seen as a product name or a company name, may relate to many things and be understood in a number of ways. According to the Turkish Patent and Trademark Office’s (“TPMK”) own definition;
The trademark is regarded as any type of mark including words, figures, letters, numbers, form or packaging of goods which are distinguishable among their class from others. On the other hand, company name is the legal name of a company, by which a formally organized or incorporated firm is a legal entity. Company name showing on the company’s certificate of incorporation or trade registry records, is comprising of a word or group of words basically and is defined as an echo of the trademark. In this respect, one can say that both company name and trademark are intended to distinguish a company from the others particularly in the market.

Where is the Gap

Under Turkish Commercial Code numbered 6102(“TCC”) dated  February 14, 2011 a duly established company is not required register its company name as a trademark .[1] Rather than TCC, trademark related matters, from the application and registration processes to the steps to be taken in case of infringement, are solely regulated under Turkish Industrial Property Law numbered 6769(“IP Law”) dated January 10, 2017.. Therefore, the non-requirement of trademark database analysis under TCC and not having an associated structure with IP Law lead to future risks faced by the companies, even after establishment, and by the trademark holders as the injured party from the breach of its rights.

What Constitutes an Infringement?

The courts ascertain infringement based on various facts addressing a likelihood of confusion among consumers, the degree of similarity between the marks at issue, whether the parties' goods and/or services are sufficiently related, the parties' goods or services are advertised, marketed, and sold; the purchasing conditions, the defendant's intent in adopting its mark; and the strength of the plaintiff's mark. Being not cognizant of a trademark is not an excuse for the company founders to violate a trademark holder’s rights. Even in cases where both parties are merchants,[2]  the Courts assume that the breaching party would have known the trademark thus, cannot assert that while using it as the company name, he was not cognizant of such trademark is registered on another company’s behalf.

Steps to Take

Trademark holder may claim its allegations before both civil and criminal courts under Turkish Law at its own discretion. To conduct a criminal procedure, it is a requirement to have a registered trademark moreover, to make a complaint which must be filed within six months[3] starting from the date of awareness of the infringement by the trademark holder.[4]  As a result of such criminal procedure, the trademark holder could claim judicial penalties and also imprisonment of the breaching party as the company name holder.

Apart from the criminal process, what is more common to take is civil court actions by the trademark owners.[5] To do so, trademark holders are entitled to claim; I) the determination of the infringement; ii) preliminary injunction (which could be claimed at any stage of the proceedings), iii) material and moral damages (subject to intentional infringements),iv) prevention and abolishment of the infringement (erasure of the company name from trade registry records),[6] v) publication of the final court resolution on Turkish Trade Gazette. Under Turkish Law, the trademark holders may claim ;  i) the profit which could have been made by the trademark holder in the absence of the infringement; or; ii) the net profit made by the infringer owing to use the registered mark. In case of an infringement detected by the competent courts, the Courts are likely to resolve to abolishment of any labels, products and/or any components including domain names involving the violated trademark.[7]

Considering that the infringer may end up paying high amount of compensation and also may lose its registered company name, potential infringement claim constitutes high risk for the companies.

How to Guard Against Erasure?

A company founder as the breaching party may argue the following on a case by case basis in order to prevent the erasure of the company name; I) trademark use is due to fair or prior use; ii) this use is of a secondary or generic element within a trademark; iii)decorative or non-trademark use; iv)becoming a generic mark of an earlier trademark. However, none of those would grant a company with a certain release from the allegations; since, a registration of a trademark is considered as an absolute right to its owners and makes it hard to compete against.[8]

 

To conclude, trademark infringement claims may risk the companies even if they are duly established. Therefore, to conduct a trademark database analysis prior to establishment of a company would be a real belt and braces set up to avoid future risks as for the companies.

 

[1] Turkish Commercial Code numbered 6102, Art. 55,14.02.2017

[2] Court of Cassation, E.2015/11138, K.2016/5911, dated 30.05.2016

[3] In case the breaching party is in bad faith, the lapse of time shall not be considered by the competent court.

[4] In the case trademark is in application process, the court will likely to consider the application as a prejudicial question to the case.

[5] Turkish Intellectual Property Law numbered 6769, Art. 29, Art. 30, 10.1.2017

[6] General Assembly of Civil Chambers, E. 2007/965, K.2007/961 dated 12.12.2007; Court of Cassation, E.2014/5183, K.2014/8786 dated 08.05.2014

[7] Court of Cassation, E. 2018/844, K. 2018/844 dated 16.09.2019

[8] Yrd. Doç. Dr. Cafer Eminoğlu, “Marka Sahibinin Tekliği İlkesi Ve Bu İlkenin Markanin Devri Bağlaminda İncelenmesi”, 2016, 233.

 

Author: Ezgi Aysima Kır

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