Court of Appeal issues landmark decision in industrial design case

Turkey

In a recent decision, the Higher Board of the Turkish Court of Appeal has considered the possibility for an alleged infringer to claim compensation for the period of protection of an industrial design after the invalidation of that design by a court. This decision may change the approach to, and understanding of, industrial designs by rights owners, as well as by trademark and patent attorneys.

According to the precedent of the Court of Appeal, no compensation could be claimed for the registration and adequate use of a registered IP right during the protection period, even if the registration was invalidated at a later date. The reasoning behind this precedent was that such use was based on a duly registered right (ie, a right granted and acknowledged by the state) and, therefore, it could not be deemed to be unlawful. However, following the decision of the Higher Board of the Court of Appeal in the present case, this precedent may have been changed for good - at least as far as industrial designs are concerned.

The facts of the case were as follows. The owner of an industrial design initiated criminal proceedings against a producer of PVC bands for rain spouts, alleging that it was copying its products. Based on a criminal search and seizure decision, the defendant’s products, as well as production materials, were seized; as a result, the defendant’s business was disrupted and substantially damaged.

Arguing that similar products had been put on the market since the early 1990s by several producers, including itself, and that the design registration dated from 1997, the defendant subsequently filed an invalidation action, as well as an action for compensation, against the owner of the industrial design, claiming that:

  • the design was neither novel nor distinctive; and
  • the owner had acted in bad faith when registering the design.

The defendant was acquitted of the criminal charges and subsequently obtained an invalidation decision against the industrial design. The defendant’s claims for compensation were initially granted by the local court, but the decision of the lower court was overturned by the Court of Appeal in light of the principle that “use was based on a registered right”. When a further appeal was filed by the defendant, the Higher Board of the Court of Appeal issued a ground-breaking decision in this respect.

In its decision, the Higher Board explained that the Turkish Patent Institute (TPI) carried out the registration procedure for industrial designs based on the examination of form, rather than substance. In this respect, the Higher Board emphasised that the TPI did not conduct an examination of novelty and/or distinctiveness; under the relevant regulations, these issues were addressed via an opposition before the TPI or an invalidation action before the courts. The Higher Board concluded that, in order to “abstain from creating a mechanism which produces victims”, Article 45 of the Industrial Design Decree Law should be applied, without taking into consideration the precedent of the Court of Appeal, which granted protection to right owners for the entire protection period, even if their rights were subsequently invalidated. Accordingly, the Higher Board concluded that, if a design registration is invalidated, such decision had retrospective effect. Therefore, the claim for compensation should not have been rejected by the court in the present case.

This decision is significant in that it shows to owners of industrial design, as well as to trademark and patent attorneys providing services to IP rights owners, that the registration of an industrial design lacking novelty and/or distinctiveness does not provide any protection against claims for compensation.

Ceylin Beyli and Elfiye Kudaki, CBL Law Office, Istanbul

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