Constitutional Court decision reshapes trademark law

Article 7/1(b) of Decree-Law 556 on the Protection of Trademarks contains the principle that there can be only one owner per trademark, and does not allow identical or confusingly similar trademarks to have different owners. In accordance with this principle, in case of assignment of a trademark, under Article 16/5 the Turkish Patent Institute (TPI) conducts a two-stage examination, considering:

1. whether the assignor has any other trademarks that are identical or confusingly similar to the trademark subject to the assignment; and

2. if so, whether there are any similarities between the goods and/or services covered by such trademarks that might lead to confusion among the public.

If both questions are answered in the affirmative, the TPI then stipulates that these other trademarks should also be assigned. Otherwise, the assignment claim is rejected. This rule and its application have forced trademark owners to make unwanted assignments, and prevented sister companies from holding rights over identical or similar trademarks.

Against this background, the Ankara Third IP Court applied to the Constitutional Court for the cancellation of Article 16/5 on the ground of unconstitutionality, claiming that the said article was in breach of property rights and of the owners’ freedom to dispose of such property through assignments as they wish. After examining the claim of the IP Court, the Constitutional Court decided to cancel Article 16/5, as the Constitution provides that “regulations concerning property rights cannot be restricted by decree-laws”. The cancellation decision entered into force upon its publication in the Official Gazette on May 15 2015. 

The decision constitutes a positive development, as it removes an obstacle preventing sister or allied companies from holding rights over identical or similar trademarks, depending on their commercial decisions and trademark portfolio requirements. In this respect, the Constitutional Court’s decision is quite significant.

However, there is an important downside that should be taken into consideration: the decision involves only trademark registrations that are the subject of assignment. It is still unclear how the TPI will evaluate a potential scenario involving trademark applications rather than registrations. For example, if certain trademarks are assigned to a sister company and both companies own identical or similar trademark registrations, and one of the companies applies for an identical or similar trademark with slight differences in style or colour, how will the TPI apply Article 7/1(b), which prevents the registration of an identical or similar trademark when another entity holds rights over such trademark?

Trademark owners and trademark practitioners in Turkey will have to wait to ascertain the impact of the Constitutional Court’s decision and its application by the TPI - unless the Parliament decides to codify a new Trademark Law and abolish the current Trademark Decree-Law.

Ceylin Beyli and Elfiye Kudaki, CBL Law Office, Istanbul