Unauthorized Exercise of the Right to Trademark, and the Right to Compensation for Pecuniary and Non-Pecuniary Damages and the Reputation Compensation to Arise Therefrom

Exercise of the right to the trademark remains with the trademark owner, unless there is an agreement to the contrary. The trademarks, which have been created as a natural consequence of much efforts and intense studies and thus, enable those trademarks’ goods or services to be distinguished from other enterprises’ goods or services, grant their owners the right to use, the right to benefit from and the right to carry out transactions, etc. on those trademarks. Therefore, the right owners may either exercise these rights on their own or transfer these rights to third parties under a license agreement within the framework of certain terms and conditions. However, in many sectors and particularly in the textiles sector, the right to trademark is exercised without the right owner’s permission or approval, and improper personal benefits are derived. The cases of unfair use, called as “trademark infringement”, are regulated by the Industrial Property Code numbered 6769. 

As per the article 149 of the Industrial Property Code numbered 6769; in case it is found that there is a trademark infringement, the right owner may take legal actions whereby the infringement is ceased and prevented, the products causing the infringement are seized and thereupon destroyed, and compensation for pecuniary and non-pecuniary damages are claimed, etc. Pursuant to the Code numbered 6769, the right owner shall have an optional right related to the damage that will be claimed due to the infringement. In other words, the right owner may choose any of the ways for determination of the damage as listed below and submit his request accordingly. The pecuniary damage suffered shall be determined:

a) by calculating the possible revenue that might be gained by the right owner if the competition by the person infringing the industrial property right had not existed,

b) by determining the net revenue obtained by the person infringing the industrial property right,                                                                

c) by calculating the license fee payable by the person infringing the industrial property right, if this person has exercised this right lawfully under a license agreement.

Likewise, the amount of the damage may also vary depending on the level of recognition pertaining to the trademark in Turkey, in the world or in the class for which the trademark is registered.

However, since the trademark infringement acts listed by the Law are unlawful, these acts are committed without issuing an invoice and it is often not possible to determine exactly how long the acts have been committed. Thus, it does not become possible to calculate the net revenue obtained by the infringer and the possible revenue that will be gained by the trademark owner. As a result of such occurrences increased, the 11th Civil Chamber of the Supreme Court of Appeals established the jurisprudence that it is necessary to order an appropriate compensation within the framework of the general provisions, by taking into consideration the specifics of the concrete case and the positions of the parties.   

The decision numbered E. 2015/8383, K. 2016/4194 and dated 14.4.2016, as rendered by the 11th Civil Chamber of the Supreme Court of Appeals, states briefly that:

“…In case it is not possible to determine the amount of the damage suffered by the plaintiff, however, given that the fact of infringement and accordingly, the occurrence of the damage are proven, while the local court should have ordered an appropriate compensation pursuant to the articles 50 and 51 of the Turkish Obligations Code numbered 6098 in force on the date of filing the lawsuit, by also taking into consideration the matters e.g. the specifics of the concrete case and the positions of the parties; the local court has established its verdict as written in its decision on the basis of the insufficient and inadequate report prepared by the experts, therefore, our Chamber finds this verdict unacceptable and thus, it has become necessary to reverse the local court’s decision for the benefit of the parties…”

Non-pecuniary damage constitutes another receivable item that might be claimed by the trademark owner. Pursuant to the article 149/1-ç of the Code numbered 6769 (“the IPC”), in case of occurrence of one of the acts deemed to be a trademark infringement, the trademark owner may also claim against the infringer the non-pecuniary damage suffered by the trademark owner.

In addition to the provisions regulating pecuniary and non-pecuniary damages, it is prescribed that a reputation compensation may additionally be claimed in the case that the trademark has been produced and used without authorization and has been misused and that a loss of reputation consequently occurs before the public or the class for which the trademark is registered. Such reputation compensation, regulated by the article 150 of the Code numbered 6749, is defined as follows:

Article 150/2: “Where the industrial property right is infringed, an additional compensation may be claimed if the reputation of the industrial property rights suffers damage by the reason that the products or services constituting the subject of the right are used or produced by the infringer in an inferior manner or that such products produced in this way are made available or launched to the market in an improper manner.”

Even if the doctrine contains the opinions that such reputation compensation should be brought forward together with together with the compensation for non-pecuniary damages, the decisions rendered by the Supreme Court of Appeals indicate that such reputation compensation should be brought forward as a separate receivable item.

The decision numbered E. 2008/1536, K. 2009/5629 and dated 11.5.2009, as rendered by the 11th Civil Chamber of the Supreme Court of Appeals, states briefly that:

 “On the other hand, the plaintiff’s attorney has asserted that the reputation of his client’s trademark also suffered damage due to the defendants’ acts and thus, the plaintiff’s attorney has requested the court to order a compensation additionally. The article 68 of the Decree Law numbered 556 states that the proprietor of a trademark may claim extra damages for the harm incurred from the improper use of the trademark by the infringing party which were detrimental to the reputation of the trademark. Such claim for damages, regulated differently from the compensation for pecuniary and non-pecuniary damages, is also contained in the article 142  of the Decree Law numbered 551 and in the article 54 of the Decree Law numbered 554. The aim of the said compensation is to recover the loss occurred directly to the detriment of the reputation of the trademark rather than the business. In bringing forward this compensation, what matters is that the reputation of the trademark has suffered damage. However, the local court has not rendered a decision accepting or rejecting the plaintiff’s claim for reputation compensation. So then, this attitude exhibited by the local court is not found acceptable by our Chamber and thus, it has become necessary to reverse the local court’s verdict in this respect as well.”

In conclusion; the pecuniary damage suffered by the right owner in consequence of an unauthorized exercise of his right to trademark shall be determined on the basis of the possible revenue that might be gained by the right owner if the infringement had not existed, the net revenue obtained by the infringer or the license fee payable in case there is a license agreement between the parties; the non-pecuniary damage suffered by the right owner in consequence of the same shall be determined on the basis of the loss suffered due to the harm occurred on his right to trademark, and the reputation compensation shall be determined by taking into consideration the decline occurred in respect of the trademark’s reputation.