The 11th Civil Chamber of the Turkish Supreme Court’s recently published a decision in which it considered a claim that the plaintiff’s trademark was infringed because a retailer continued to use of the trademark after termination of the franchise agreement. The Supreme Court held that such use of the trademark constitutes trademark infringement and an expert’s report is necessary to assess the amount of compensation.

At the First Instance Court, the plaintiff claimed the defendant continued to use its trademark, despite termination of the franchise agreement. It also claimed the defendant’s actions constitute unfair competition, sought prevention of this violation, as well as compensation for pecuniary and non-pecuniary damages.

The defendant claimed its use of the trademark was permitted by the fair use exception (Article 12 of Decree Law No. 556 Pertaining the Protection of Trademarks).

The Court of First Instance accepted the plaintiff’s claims. It ruled that the defendant had continued to use the plaintiff’s trademark as if there was a continuous organic link between parties and the defendant has failed to act as a prudent merchant by failing to make efforts to discontinue use of the trademark. The lower court noted that the defendant’s continuing use of the trademark after termination of the franchise agreement constitutes trademark infringement and unfair competition, even if sale of the remaining original goods is legal. The defendant appealed the decision to the Supreme Court.

The Supreme Court held that sale of remaining goods, which were obtained within the scope of the franchise agreement, does not constitute trademark infringement nor unfair competition. Accordingly, it held that the profit obtained through such infringing use of the trademark should be determined with an expert witness report.

The Supreme Court overturned the lower court’s decision on the basis that the Court of First Instance’s examination was incomplete due to the absence of the expert witness report. Accordingly, the Supreme Court held that the Court of First Instance must re-consider the amount of pecuniary and non-pecuniary compensation once such a report is obtained.

Case reference: Yarg. 11. HD. 16.12.2014, 2014/911 E., 2014/19859 K.

Information first published in the MA | Gazette, a fortnightly legal update newsletter produced by Moroğlu Arseven.