Controversial provision of Trademark Decree annulled

Following a decision of the Turkish Constitutional Court on May 13, 2015, the Turkish Patent Institute can no longer require those assigning a trademark to assign their similar trademarks in the same portfolio. Article 16/5 of Decree No. 556 on Protection of Trademarks had long been criticized for granting TPI excessive authority to the point of infringing on the freedom of contract. The Constitutional Court has now curtailed that authority.

TPI's application of Article 16/5

Article 16 regulates the requirements for the assignment of trademarks. Sub-Article 16/5 extended not only to identical or nearly identical trademarks, but also similar trademarks, which are not normally subject to absolute grounds examinations, and imposed an additional requirement on assignors which have more than one similar trademark registered for similar goods and services, requiring that those similar trademarks be assigned together.

This provision was based on the Turkish law "principle of uniqueness," according to which a trademark can have only one owner, as the co-existence of trademarks is not permitted. This provision was problematic, especially for owners with large trademark portfolios, as they could be forced to assign trademarks which the owners were not contractually obligated to assign.

As a consequence, when considering an assignment of a trademark, the TPI would routinely examine the assignor's entire Turkish trademark portfolio and order the parties to also assign other similar trademarks, failing which the TPI would refuse to approve the assignment.

Legal Basis for Cancellation

In accordance with Turkish procedure where a constitutional issue is raised, the Ankara 3rd Court of Intellectual and Industrial Property Rights filed an objection with the Constitutional Court seeking cancellation of Article 16/5 of the Trademark Decree, on the basis that it violated the Turkish constitution and freedom of contract.

Constitutional violation

The IP Court raised a constitutional objection after concluding that Article 16/5 unlawfully restricted 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 decree of the Council of Ministers. Therefore, the restriction of property rights violated the Turkish constitution.

Freedom of Contract violation

The IP Court reasoned that, even though Article 16/5 is an interpretation of the principle of uniqueness, the provision granted excessive authority to the TPI. The court observed that, under the principle of uniqueness, Article 7/1-b of the Trademark Decree already granted the TPI the right to refuse trademark applications that are identical or confusingly similar to previously registered rights. Article 16/5, however, required trademark owners to assign all similar trademarks together and, if the owners wanted to assign only one of those trademarks, the TPI would refuse to record the assignment, rendering the assignment invalid. The IP Court concluded that, in compelling the assignor to assign all similar trademarks, the TPI exceeded its authority.

The Constitutional Court accepted the IP Court’s reasoning and annulled Article 16/5 in its entirety.

Implications for trademark owners

The cancellation of Article 16/5 now enables right holders to retain their rights to trademarks similar to an assigned trademark, and will ease transactional requirements for assignor parties with large portfolios.

The cancellation of the entire article also raises new questions where an assignor has identical trademarks in different but similar classes. This may lead to further discussion on the principle of uniqueness.

The Constitutional Court recently issued a similar decision, annulling Article 42/c 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 is a violation of 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 provisions in decrees, therefore, 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, waiting to enter into force. With the piecemeal annulment of the Trademark Decree, Turkey is certainly in need of proper legislation on intellectual property rights to ensure the integrity of the overall legal regime governing their protection.