A new adventure for the intellectual property system in Turkey: IP Code No 6769

The Industrial Property Code No 6769 (the ‘IP Code’), which was prepared by the Turkish Patent and Trademark Office (the ‘Office’), and abolished previous intellectual property (IP)-related decree laws was accepted by Parliament on 22 December 2016 and entered into force on 10 January 2017 following its publication in the Official Gazette.
In the 1990s, Turkey conducted official negotiations with the European Union (EU) in order to become a member of the Customs Union. Within this framework, Turkey had to adapt its national IP law according to daily EU legislation. In order to fulfil this liability, in 1995, Turkey quickly implemented decree laws relating to IP rights, such as patents, trademarks, industrial designs and geographical indications. The legislator preferred decree laws because, not only are fewer procedures required, so they can be put into force rapidly, but they also have the power of law. Even though they should have been transformed into laws when the urgency passed, they remained in force as decree laws until the entry into force of the IP Code. It is stated in the general preamble of the IP code that it aims to harmonise national IP law with international agreements, as well as recent developments in EU IP law, and make current provisions clearer, more understandable and systematic.

The IP Code includes most of the provisions in the abolished decree laws, as well as some new provisions. It consists of 193 articles divided into five chapters and six provisional articles. The first four books of the IP Code regulate trademarks, geographical indications, designs and patent rights. One of the most essential and desired amendments in the trademark law is made via the introduction of the ‘co-existence’ principle. Article 7/1(b) of the abolished Decree Law No 556 Pertaining to the Protection on Trademarks was one of the absolute grounds of refusal of trademark applications. It prevented the registration of trademarks that were identical or indistinguishably similar to an earlier dated trademark/trademark application. The IP Code removes the ex officio refusal authority of the Office in the case in which a notarised letter of consent from the senior trademark owner to the registration of the application is submitted to the Office. Another major amendment is that if an opposition is filed against a trademark application and the trademark shown as ground for opposition has been registered in Turkey at least five years before the filing date of the application, the opponent must submit evidence to show genuine use of the trademark in Turkey or legitimate reasons for non-use in the case in which the applicant of the contested trademark application requests such from the Office. The opposition will be refused unless sufficient evidence is submitted to prove genuine use in Turkey.

It is also foreseen that such a request can be used as a defence in an infringement action. The applicants of the opposed applications subject to the IP Code will most likely assert this provision and thus, if a senior trademark shown as ground for the opposition is not used in Turkey, or there is not any justified reason for non-use, such opposition will be rejected. Therefore, the right owners should be aware of this amendment and carefully decide whether to oppose an application or not in the case in which their trademark is not used in Turkey. As a last major amendment, the Office will be authorised to evaluate the non-use of a trademark. Accordingly, the Office has the right to revoke a trademark if the subject trademark has not been used without rightful reason for the goods and services covered by the registration within five years, starting from the publication of registration, or if its usage has been suspended for an uninterrupted period of five years. However, the enforcement date of this provision is postponed for seven years with a provisional article within the IP Code, and until that time, the right to revoke a trademark due to non- use will belong to the competent IP courts. However, just four days before the entry into force of the IP Code, the Constitutional Court annulled the provision regarding revocation possibility for non-use foreseen in Decree Law No 556. So currently, there are ongoing intense discussions about how the non- use actions should be filed, whether those pending will be dismissed or whether the legal gap will be filled with the new provision in the IP Code.

In addition to the aforementioned major amendments, there are some minor amendments in the IP Code. Protection of well-known trademarks within the meaning of the Paris Convention has been foreseen as a relative opposition and invalidation ground. The bad faith claim is regulated as a separate opposition and invalidation ground. It is regulated that a sign that contains a geographical indication cannot be registered as a trademark. The five-year period for the loss of right by remaining silent has been regulated with a separate provision. The opposition period has been shortened to two months from three months. It is an important shift to which right holders need to pay attention, considering that the opposition period is definite and there is no recovery mechanism. In an infringement action filed by a priority right holder, a trademark/ patent or design right owner cannot assert its registered right as a defence. Therefore, having a registration does not directly result, as there is no infringement created. The IP Code adopted the international exhaustion principle, and the exhaustion of IP rights has been limited to the products released to the market and it does not apply to next- generation products before they have been released to the market.

One of the major amendments to design rights regulated in Book 3 of the IP Code is that novelty examination is foreseen for the registration of designs. The protection of unregistered designs for three years as of becoming publicly available is foreseen to be in line with Article 11 of the Council Regulation No 6/2002 related to Community designs.1 Article Provisional 1 of the IP Code regulated that the pending trademark and design applications, before the entry into force of the code, will be subject to the provisions of the respective decree laws until the completion of the registration procedures, which means that the aforementioned amendments will apply to trademark and design applications filed after 10 January 2017.

Finally, Book 4 of the IP Code introduces relatively new provisions regarding the patent system in Turkey, which brings national law in line with the European Patent Convention (EPC), for instance, provisions corresponding with Article 53/(c), Article 54/(3), Article 56, Article 57, Article 88/(1), (2), (3) and (4), Article 101 and Article 122 (and Rule 136) of the EPC. It should be mentioned that the provisions of the abolished decree law related to prior user rights, use/work requirements of the patent and service invention that were too vague have been improved. Another important improvement is the introduction of a post-grant opposition system in line with the system regulated in Article 101 of the EPC. Moreover, the IP Code abolished all criminal sanctions in the case of patent infringement. In addition to these improvements, it is also pleasing that now all patents shall be granted upon examination; there will be no more patent granting without going through an examination process, and this will lead to stronger patents in Turkey. Further, there are some substantial matters that are still not regulated in the IP Code.

The IP Code does not include a clear provision regarding the ‘novelty’ requirement of second or subsequent uses of a known substance or its composition. Although it was the perfect opportunity to introduce Articles 54/4 and 54/5 of the EPC into national law, the legislator strongly resisted such provisions. In defence of the legislator, it has been stated that such inventions are already protected in Turkey, and there is no need for such clear provisions. The same situation is valid for the definition of ‘biotechnological invention’ and the conditions required obtaining patents for such inventions. It is difficult to understand why bringing clear provisions into the law has been strongly avoided if such inventions are truly and already protected in Turkey.

With an aim to lead to stronger patents or patents with a fairer scope of protections, the IP Code introduced a post-grant opposition system. However, as the system will extend the time needed to reach a decision on a final grant, objections have been raised during parliamentary commission hearings, particularly by the generic (gx) pharmaceuticals industry. The gx industry argued that the ambiguity surrounding the patentability of an invention will prevent it from entering the market. In addition, the gx industry argued that it is unfair to let the patent benefit from the rights of a finally granted patent during opposition proceedings, despite the possibility of revocation or limitation. However, the legislature appears to have dealt with such unfairness arguments by ruling that the claims of a patent as filed or amended during opposition or invalidity proceedings determine the scope of patent protection retrospectively.

As a reflection of the post-grant opposition system, the IP Code also governs what happens if an invalidation action is filed before the IP courts while an opposition on the same patent is pending. The IP Code states that the court cannot issue a decision on the invalidation action until the outcome of the opposition has been published in the Official Bulletin or it has been confirmed that no opposition has been filed against the patent.

In fact, this is a routine scenario for European patents validated in Turkey after the first grant decision of the examining division of the European Patent Office (EPO). Referring to the fact that a patent subject to invalidity proceedings in Turkey may be revoked or amended before the EPO, and that this will be directly binding on a European patent validated in Turkey, the Turkish IP courts are often asked to delay the invalidation proceedings until the completion of the opposition. However, as the law makes no explicit provision for this, the delay is at the discretion of the IP courts. As the IP Code does not cover European patents validated in Turkey for which the post-grant opposition is conducted before the EPO, it is still possible for an invalidation action to take place at the same time as a post-grant opposition for a European patent.
On the other hand, one key feature of the post-grant opposition system has not been included in the IP Code. Like the abolished decree law, the IP Code prohibits any amendment or limitation of the patent after the conclusion of the patent office proceedings. In other words, a patent can be amended or limited only during examination or opposition procedures before the office. This provision explicitly precludes the possibility of amending or limiting a patent during invalidity proceedings. As well as being inconsistent with Article 138/(3) of the EPC and creating bifurcation between European patents validated in Turkey and national filings, this provision makes the post-grant opposition system useless, or at least vulnerable to being used in bad faith. However, it is inevitable that third parties will prefer to challenge the patent via an invalidation action, where the patent holder will have no right to amend or limit the patent, rather than via an opposition, where the patent holder may be able to maintain its patent through amendments or limitations. Further, third parties may use this situation as a pre-invalidation action strategy to force the patent holder to limit or amend the claims to a certain scope and then file an invalidation action. In addition to missing provisions, there are some provisions causing serious concern for patent holders.

Article 130
In Article 130, the IP Code specifies the situations in which a compulsory license can be granted if the subject patent is not used/worked. Indeed, it is stated in the
second paragraph of the article that ‘relevant persons… can request the compulsory licensing due to the… use of invention subject to the patent is not sufficient to cover the national market need’. It is important to note that ‘public interest’ is not a precondition for granting a compulsory license as per Article 130 of the IP Code. Compulsory license in case of public interest is ruled in Article 132 of the IP Code as a separate situation for compulsory license.
Therefore, the arguments against this provision focused on the fact that the expression of ‘satisfying national market’s needs’ points to a specific quantitative amount of production/marketing of a patented product. It is important to emphasise here that it covers any patented product, even luxury goods, as there is no public interest condition. Therefore, there is no obstacle for a competitor of a patented product to apply to the IP court and demand a compulsory license on the grounds that the product has been manufactured/used/ marketed/imported in the amount of, for example, 500,000 items per year; however, it should have been 600,000 in order to ‘satisfy the national market’s needs’.
During commission meetings at Parliament, the Ministry argued that Article 130 is completely in line with the Paris Convention, and as the international convention rules in the same way about compulsory license over patents, there should not be any discussion. However, Article 5 of the Paris Convention mentions ‘failure to work or insufficient working’ and clearly does not mention ‘satisfying local market’s needs’. Apparently, the Ministry wants ‘insufficient working’ to be interpreted as ‘satisfying local market’s needs’ in Turkey without preconditioning ‘public interest’.

International exhaustion principle
Another drastic change brought by the IP Code is the introduction of the international exhaustion principle for any type of IP rights, including patent rights. The most important threat to such a patchy protection umbrella is that the international exhaustion of rights in one single jurisdiction is capable of defeating all territorial protections. Once goods are sold in one jurisdiction, having exhausted all jurisdictions, it would be almost impossible for the right owner to interfere with the importation of those goods in other jurisdictions based on the right owner’s local registrations. Indeed, how could the right owner, on the one hand, having exhausted
its rights globally, argue, on the other hand, that its rights should be protected? Given similar case law in South Africa, Canada and Switzerland that allows for parallel imports of goods first sold in other jurisdictions, although the rights may not have been internationally exhausted, it would be very difficult for right owners to exercise IP rights on goods once sold in the Turkish market, exhausting rights internationally. Moreover, the ‘international exhaustion of IP rights’ is explicitly in conflict with Turkey’s obligations from the Customs Union agreement between the EU and Turkey.

The IP Code brings complete or partial solutions to some of the main problems of Turkish IP law; on the other hand, the IP Code does not include clear provisions with respect to some of the problems within Turkish IP law, especially patent law. There are some provisions causing serious concerns for right holders as well. Finally, it is expected that the Regulation on the Implementation of the IP Code will be published in the Official Gazette within a few weeks, and afterwards, we will witness the implementation of the IP Code by the Office and courts.

First published by IBA Intellectual Property and Entertainment Law Committee Update, VOLUME 9 ISSUE 1, in 28.06.2017

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