Well-known trademarks no longer absolute grounds for refusal

Registration applications for trademarks similar to well-known trademarks can no longer be refused on absolute grounds. In the second IP-related cancellation decision in one month, the Turkish Constitutional Court cancelled Article 7/1-(i) of Decree No. 556,On Protection of Trademarks, on May 27, 2015, at the request of the Ankara 3rd Court of Intellectual and Industrial Property Rights (the "IP Court"). Previously, we reported on the cancellation of Article 16/2, which revoked the Turkish Patent Institute's (“TPI”) power to require those assigning a trademark to assign their similar trademarks in the same portfolio. Our previous alert can be found here. We expect more cancellations of other portions of the Trademark Decree to follow.

What does the cancelled provision say?

Article 7 of the Trademark Decree regulates absolute grounds for refusal. Absolute grounds are deemed a matter of public order; therefore, the TPI can reject trademark applications on its own initiative on absolute grounds. Article 7/1-(i) lists well-known trademarks as absolute grounds for refusal, so the TPI has been able to reject an application if a trademark is similar to a well-known trademark. With the cancellation of this provision, the TPI no longer has this ability.

Legal basis for cancellation

Following Turkish procedure where a constitutional issue is raised, the IP Court filed an objection with the Constitutional Court seeking cancellation of Article 7/1-(i) of the Trademark Decree for unlawfully restricting fundamental rights and freedoms. The IP Court reasoned that property rights can only be restricted by a legislative act adopted by the parliament and not by a Council of Ministers decree. Therefore, the restriction of property rights violates the Turkish constitution.

The IP Court stated that Articles 7/1-(i) and 8/4 should be interpreted together with TRIPs Article 16/2 and Article 6 bis of the Paris Convention. According to international regulations, being well-known is not sufficient for rejecting a new trademark; other requirements should exist such as the likelihood of dilution and risk of gaining unfair advantage from the well-known character. Article 7/1‑(i) also has no equivalent in EU Directive No. 2008/95/EC, which is the source of the Trademark Decree.

The IP Court also observed that trademark applications and opposing a trademark based on prior rights are entirely related to liberal, free-market economies, and fall under freedom of contract in Article 48 of the Turkish constitution. Well-known trademarks are also regulated under Article 8/4 as relative grounds for refusal, which means the owner of a well-known trademark can file an opposition to a new trademark application or file for revocation on the same basis. Well-known trademarks, then, should only be in the interest of the owner of the well-known trademark, and the owner should decide whether to oppose a trademark application where the conditions of Article 8/4 exist.

The Constitutional Court accepted the IP Court’s reasoning and annulled Article 7/1-(i) in its entirety.

The Constitutional Court recently issued a similar decision, annulling Articles 42/c and 16/2 of the Trademark Decree on the same grounds — specifically, that only legislative acts can restrict property rights, and the restriction of a property right by decree violates the Turkish constitution. Turkey still has no legislative acts for trademarks, patents, industrial designs, geographical indications and utility models, all of which are only regulated by decree. The cancellation of decree provisions raises the risk of further Constitutional Court decisions based on excessive and unlawful restriction of fundamental rights, including property rights.

To address this situation, a draft law amending several IP-related decrees is pending in the Turkish Parliament. With the piecemeal annulment of the Trademark Decree, Turkey is in need of proper legislation on intellectual property rights to ensure the integrity of the overall legal regime governing their protection.

Implications for trademark owners

After cancellation of Article 7/1-(i), well-known trademarks are no longer matters of public order, and the TPI is no longer able to examine well-known trademarks on its own initiative for absolute grounds for refusal. Well-known trademark owners should, therefore, vigilantly monitor trademark applications for similar trademarks before they are registered. Turkish law grants immunity to trademarks upon registration, and a registered mark cannot be challenged on infringement grounds unless revoked by court decision. As a result, once a similar trademark is registered, the owner of the well-known trademark assumes the burden of pursuing a lengthy judicial action to revoke the registration.