Ways to fight trademark squatting in Turkey

June 2013 | PROFESSIONAL INSIGHT | INTELLECTUAL PROPERTY

Financier Worldwide Magazine

Trademark squatting is the registration of a trademark which belongs to a third-party for the purposes of benefiting from the commercial reputation of the trademark by misleading the local market or reselling the trademark to the real owner for the highest amount.

Brand owners are usually slow in protecting their trademarks in other countries and therefore fail to register their brands internationally. Trademark squatters take advantage of the lack of local trademark registration by legally registering the trademark in their own name, which is often the case in Turkey. Since many countries in the world, including Turkey, apply a ‘first to file’ system in terms of trademark protection, it is not possible to avoid such local registration unless an opposition is filed on time by the real owner before the trademark is registered in the name of another person. The fact that the real owner has been using the trademark in his home country or elsewhere before the date of local filing does not automatically avoid bad-faith filing. The Turkish Patent Institute does not require any evidence on the first use of the trademark and does not investigate if the trademark was stolen or not. Therefore, brand owners who have not yet filed to register their trademarks in Turkey may discover that their trademarks have already been registered by a third party.

In the last few years, trademark squatting has become the number one reason for lawsuits concerning the cancellation of trademarks in Turkey. A major part of the cancellation cases examined by the Turkish Courts of Intellectual Property Rights is based on the bad-faith registration of foreign trademarks by third parties, who aim to benefit from such registration by reselling the trademark to the real owner. Even if the purpose behind the registration is obvious, it is not always easy to cancel a registered trademark, especially if the foreign trademark is not well-known or has not created a certain awareness in the relevant sector by means of active use prior to local registration. Foreign brand owners might therefore spend considerable time and money rescuing their trademarks from local trademark squatters.

Since the registration system is quite open to misuse by trademark squatters, brand owners need to be proactive in protecting their trademarks in Turkey. However, in practice, brand owners are not either conscious that their national registration does not protect their trademarks in Turkey or postpone the registration by considering the costs of filing. As a matter of fact, the filing and registration costs are always lower than the costs of filing a cancellation case against trademark squatters. It should be noted that the local registration obtained by a trademark squatter not only avoids registration in the name of the real owner but also creates a serious legal obstacle against the manufacturing, importation, sale and marketing of the product bearing the registered trademark. Therefore, the risk is worth considering.

Trademark squatters usually know that the legal process is slow and thus create a commercial pressure on the real owner to accept their price by using this time span as leverage. Even though it is not frequent in practice, those whose aim is to make best use of a bad-faith registration have been known to spend their money to take out a precautionary injunction decision from the court against the sale and importation of the products with the original brand.

Trademark squatters focus especially on rising US and European brands, which are not actively used or known in Turkey. Others consider bad-faith registration as a negotiation tool for obtaining the local distributorship of a foreign brand. These commercial attempts almost never succeed in practice, but nevertheless cause a legal and commercial issue for the real owner. In all cases, getting a material benefit from trademark squatting encourages local squatters to pursue future bad-faith registrations.

In terms of possible legal remedies, under Turkish Trademark Law, owners of well-known trademarks within the meaning of Article 6bis of the Paris Convention, may either submit their opposition to a local application before the Turkish Patent Institute or file a lawsuit for the cancellation of the local registration. As a rule, the cancellation case is subject to a statutory limitation of five years from the registration date. However, if the local registration was filed with bad-faith, this limitation does not apply.

For other trademarks (which are not well-known and do not have any prior trademark filing in Turkey) the chance of success through opposition is quite weak, since the Turkish Patent Institute refrains from making a decision in these conflicts and leaves the evaluation to the IP courts. Although the legislation does not explicitly recognise the unregistered trademark owner’s right to file a cancellation case against the registered owner, the general tendency of the Turkish Supreme Court and the doctrine is to accept the existence of such right, especially if the trademark was registered prior to the local registration in Turkey in another country which is a member of the Paris Convention and/or before WIPO through the Madrid System. Based on the principle of good faith, Turkish courts accept that, if the trademark was actively used and had gained a certain reputation in the relevant market, and an application was filed or a registration was made for the trademark in other countries, it is unlikely that the local owner was not aware of the trademark and thus should be considered to have filed the local application for the same mark, in the same class with bad-faith. It is worth mentioning that this attitude of Turkish jurisprudence is not crystal clear, since each case needs to be evaluated under its own conditions and the prior effective use of the trademark in question needs to be proven with strong evidence.

During the court process, brand owners should initially claim a precautionary injunction for avoiding the use of the trademark in Turkey and an assignment prohibition to prevent the sale of the trademark to a third person. In practice, Turkish courts immediately prohibit the assignment of the squatted trademark by sending an official notice to the Turkish Patent Institute. However, taking a precautionary injunction is quite difficult since the IP courts usually determine a high material security which is required to be deposited in cash or as a letter of guarantee taken from a bank.

Esra Tekil is a lawyer at Tekil Law. She can be contacted on +90 216 346 74 00 or by email: esra.tekil@tekil-law.com.

Esra Tekil

Tekil Law