Recovery of Damages Due to Patent Infringement in Turkey
25.03.2020
ABSTRACT
Patent holders may file lawsuits in order to claim the damages occurred due to infringement of their patents. However, calculation method of the pecuniary and non-pecuniary damages may differ in accordance with the request of the Patent Holder. Besides, since patents are very valuable assets which contains technical characteristic, strategy of the lawsuit should be carefully analyzed, and Patent Holder should secure the documents which proves the patent infringement. In this article, we will discuss the actions which are accepted as patent infringement, legal actions which can be taken prior to lawsuit, calculation methods of the pecuniary damages and essential points of mentioned lawsuit.
1. INTRODUCTION
In accordance with the 6769 numbered Industrial Property Code (“IPC”), Patent Holders are entitled to take legal actions against the infringement of their registered patents. Such legal actions may differ in accordance with the characteristics of the infringement and Patent Holder shall choose the best method in order to prevent the infringement and collecting the pecuniary and non-pecuniary damages. However, first of all, we should briefly explain the patent rights and it’s registration procedure.
2. WHAT IS PATENT?
An invention shall have three characteristics in order to be registrable as a patent. Mentioned characteristics are stated in the article 82/1 of IPC and they are as follows;[1]
i. Invention should be new, (original )
ii. Invention should possess the sufficient “inventive step”, in other words should provide advantage compared to previous knowledge,
iii. Invention should be feasible to industry,
Complying with the above-mentioned definition, World Intellectual Property Organization (“WIPO”) has designated the characteristics which are required for the patent registration. Thus, an invention must meet several criteria if it is to be eligible for patent protection. These include, most significantly, that the invention must consist of patentable subject matter, the invention must be industrially applicable (useful), it must be new (novel), it must exhibit a sufficient “inventive step” (be non-obvious), and the disclosure of the invention in the patent application must meet certain standards.[2]
If an invention is complying with the mentioned characteristics, it can be registered as “Patent” before Turkish Patent and Trademark Office. Applicants should fulfill the required transaction in order to complete the registration. If an invention is registered as Patent, Patent holder will be sole and absolute owner of the Patent and will be entitled to use all kind of legal and commercial powers arising from the patent rights.
In principle, if patent application is registered before Turkish Patent and Trademark Office, registered patent will be protected only in Turkey. However, patent holder may file an application for the international registration in accordance with the Patent Cooperation Treaty and Paris Convention for the Protection of Industrial Rights.[3]
As it is already known, Patents had become one of the most important and valuable assets of the Companies, due to improving technology. Besides, almost always, patents allows to manufacture the goods faster and with better quality, than the previous methods. As a result of these benefits, sometimes third parties may use the patent without the prior consent of the Patent Holder and thus may infringe the patent rights which are provided by the IPC regulations.
Actions which shall be accepted as patent breach is stated in the article 141 of IPC. In this regard, a. imitating the invented product partially or wholly by manufacturing, b. Producing and commercializing the same in any way, c. If the patent concerns a process, commercializing the product directly obtained through such process; d. Enlarging the scope of the rights granted by the patent holder on the basis of a contractual license or granted by compulsory license or transferring such rights to third persons, without permission.[4]
In order to prevent such infringements, IPC provides Patent Holders to right the take legal actions in order to stop or prevent such actions or compensate the damage occurred because of the patent infringement. However, Patent Holder may take preventive actions in order to secure it’s rights and documents which proves the patent infringement.
3. PREVENTIVE ACTIONS
Patent holder shall file a lawsuit before the authorized court for the compensation of pecuniary and non-pecuniary damages. However, in order to prove the patent infringement, Patent Holder may commence “declaratory action” before the “Civil Court of Peace”.
Also, Patent Holder may request a preliminary injunction in order to temporarily prevent the infringement actions until the lawsuit is finalized.
i. Declaratory Action
If Patent Holder files a lawsuit against the breaching party, defendant may stop the infringement actions or hide the evidences. In order to protect the rights of Patent Holder, Declaratory action allows Patent Holder to record the patent infringement before commencing the lawsuit. In this regard, Patent Holder shall file an application before the Civil Court of Peace, by stating the documents which proves that patent is registered.[5]
If declaratory action is accepted by court, the place which patent infringement is conducted will be visited without prior notice and expert will investigate the type of infringement.
After that, expert will write a report which is investigating that if infringement is occurred or not. If mentioned report proves that infringement is occurred, Patent Holder may use this as a proof during the lawsuit.
Also, if products which are manufactured through the patent infringement are exhibited at the website of breaching party, Patent Holder may issue an online declaratory action through notaries.[6] In this way, even if breaching party removes the products from the website, Patent Holder will be able to prove the infringement.
If declaratory action is accepted by court, the place which patent infringement is conducted will be visited without prior notice and expert will investigate the type of infringement.
After that, expert will write a report which is investigating that if infringement is occurred or not. If mentioned report proves that infringement is occurred, Patent Holder may use this as a proof during the lawsuit.
Also, if products which are manufactured through the patent infringement are exhibited at the website of breaching party, Patent Holder may issue an online declaratory action through notaries.[6] In this way, even if breaching party removes the products from the website, Patent Holder will be able to prove the infringement.
ii. Preliminary Injunction
When Patent Holder files a lawsuit in order to stop the breaching activities, breaching party may continue to infringement activities and production, until final determination is ordered. In this case, infringement activities will continue, and damage of the Patent Holder will increase.
In order to prevent this, article 390 of the Turkish Civil Procedure Code (CPC) regulates the preliminary injunction, aimed at the prevention of damages generated by breaching party, prior to final court order.[7] However, preliminary injunction restricts the operation of breaching party, that’s why preliminary injunction is subjected to strict regulations.
In accordance with the article 390/3 of CPC, requesting party shall have to approximately prove that preliminary injunction is true. “Approximate proof” is subjective term and it is not defined in the code; however Supreme Court Practices might be helpful about this matter.
Requesting Party should clearly explain the reason of preliminary injunction and type which is stated in the writ of summons and should "approximately prove" rightfulness of the preliminary injunction request, with the legal evidences. Proof evaluation should be determined in accordance with the “approximate proof” rule. In this rule, judge accepts that request is probably right, but also considers that opposite is possible even if it is much more minimal chance.[8]
In the light of Supreme Court decisions, approximate proof can be defined. Declaratory Action would be very beneficial for the approximately prove the rightfulness of the preliminary injunction claim. Also, Patent Holder is obliged to provide guarantee in order to pay the damages sustained by the defendant party, if preliminary injunction is determined to be unjust at the end of the lawsuit. On the other hand, Court may decide not to take any guarantee if the preliminary injunction request is based on legal document, or any other certain proof or situation requires the preliminary injunction.
Court shall state the grounds of not taking any guarantee payment explicitly.[9]
Patent Holder can request to seize the products which has been manufactured through patent infringement, stop the infringement actions, destroy the products which has been manufactured through patent infringement and any kind of action that would prevent the breach of patent rights.[10]
Also, preliminary injunction is regulated in the article 159 of the IPC too, and most common preliminary injunction actions are stated. They are as follows;[11]
- Preventing and stopping the all kind of actions which constitutes an infringement to industrial property right of the requesting party.
- Seizing the products which has been manufactured or imported through infringement of industrial property, seizing the tools or machines which has been exclusively used for the production of the breaching products.
- Requesting a guarantee for the recovery of any kind of damage.
If preliminary injunction is granted by the court, requesting party should execute the preliminary injunction within a week beginning from the date of order. Or else, preliminary injunction order will be removed.
4. PECUNIARY, NON-PECUNIARY AND REPUTATIONAL LOSS DAMAGES
By filing a lawsuit, Patent Holder may ask for the recovery of damages occurred because of the infringement of the patent rights. In Turkish Regulations, Patent Holder is entitled to request to recovery of three type of damages, such as Pecuniary Damages, Non-Pecuniary Damages, Reputational Loss.
Patent Holder should note that, mediation is specified as condition of action pursuant to article 4 of the 6102 Turkish Commercial Code. (TCC) If lawsuit is filed without fulfilling the mediation procedure, lawsuit will be rejected without prejudice.[12]
i. Recovery of Pecuniary Damages:
As it is stated above, Patent Holder has a right to claim the recovery of damages occurred because of the patent infringement. However, calculation of the pecuniary damages is a complicated issue which may differ in accordance with the characteristics of each lawsuit. Because of this reason, Turkish Code provides three different calculation method to Patent Holder.
- Possible revenue which Patent Holder would earn if defendant party had not committed unfair competition.
- Net revenue which defendant party earned through the patent infringement.
- Annual license price of the patent, for each year that defendant party infringed the patent.
Patent Holder should state the selected calculation method in writ of summons, by carefully analyzing the characteristics of patent infringement.
ii. Recovery of Non-Pecuniary Damages:
Patent Holder is entitled to recovery of non-pecuniary damages, pursuant to IPC, article 149/1-ç. Since non-pecuniary damages are not regulated in the IPC, Patent Holder shall request the non-pecuniary damages based on 6098 numbered Turkish Obligations Code (“TOC”).
Infringement of patent rights is considered as the violation of personal rights, thus patent holder can request the non-pecuniary indemnification based on article 58 of TOC. However, there is not certain calculation method for the determination of non-pecuniary damages. That’s why, Supreme Court decisions should be a guideway for the calculation of non-pecuniary damages.
While determining the non-pecuniary damage amount, judge shall consider the characteristics of the violation, defective fraction of the parties, their title, their social and economical situation. Since there would be specific conditions for each lawsuit, judge should state the “objective” reasons of the decision at the court order. Because, it is stated in the article 4 of the Turkish Civil Code that judge shall use the juridical discretion complying with the law and fairness. Determined amount, shall aim to recover the peace of the damaged party. It is not a penalty as well as it is does not aim to recover the certain tangible damage. In this regard, amount of the indemnification shall be determined in accordance with the it’s purpose.[13]
In Turkish legislation, non-pecuniary damages are not “punitive” and only aims to recover the peace of damaged party.
iii. Reputational Loss Damages:
In the article 150/2 of IPC, Patent Holder is entitled to request for the recovery of the reputation loss occurred since products which constitutes an infringement to patent rights are manufactured with low quality, submitted to sale by non-conforming methods or any other way. This shall not be considered as, non-pecuniary damage and can be requested as different indemnification.
It should be noted that, pecuniary damages, non-pecuniary damages and reputational loss damages does not compete with each other, but they accumulate. Patent Holder is entitled to request all of the abovementioned damages separately.[14]
5. CONCLUSION
In this article, recovery of the damages occurred because of the patent infringement is briefly explained. As a result, most important matter with the protection of patent rights is, carefully evaluating the characteristics of patent and shaping the strategy of lawsuit in this regard.
To understand the technical characteristics of violated patent, Patent Holder may require an assistance from the patent attorneys, experts and professionals.
Av. Selman BALTACI
02165192000
sbaltaci@dnblegal.com.tr
[1] 6769 numbered Turkish Industrial Property Code art. 82/1
[2] WIPO Intellectual Property Handbook: Policy, Law and Use, Chapter 2 : Fields of IP Protection, art. 2.6
[3] Paris Convention for the Protection of Industrial Rights, 1883 art. 4 – Patent Cooperation Treaty, 1970 art. 3
[4] 6769 numbered Industrial Property Code, art. 141
[5] 6100 numbered Turkish Civil Procedure Code, art. 400
[6] 1512 numbered Turkish Notary Code, art. 198/A
[7] 6100 numbered Civil Procedure Code, art. 390
[8] T.C. Supreme Court 19th Civil Chamber E. 2019/2981 K. 2019/4812 T. 17.10.2019
[9] 6100 numbered Civil Procedure Code, art. 392
[10] 6100 numbered Turkish Civil Procedure Code, art. 391/1
[11] 6769 numbered Turkish Industrial Property Code, art. 159
[12] 6102 numbered Turkish Commercial Code, art. 4
[13] T.C. Supreme Court 4th Civil Chamber E. 2018/1327 K. 2019/5335 T. 18.11.2019
[14] KARAHAN, Sami/SULUK, Cahit/SARAÇ, Tahir/NAL, Temel; s.406