A new approach to combating counterfeits in Turkey
Baris Kalayci, Zeynep Seda Alhas and Ali Bozoglu examine a new approach to preventing the sale of smuggled products in the world’s second largest counterfeit economy
1 minute read
Thanks to its location between Asia and Europe and its large manufacturing industry, Turkey is a key country for anti-counterfeiting. Its Customs provisions have been amended in line with TRIPs and provide robust procedures for seizing suspected infringing goods, whether they are being exported or imported or are in transit. The use of online forms means that Customs applications are faster and more effective than they used to be, and filing them is recommended. Once a seizure is made, rights owners can pursue both criminal and civil remedies, and each has some advantages. It is also important to take note of the opportunities available under the Anti-Smuggling Law, which may prove more effective in many cases.
Almost every IP owner knows that Turkey, due to its unique location between Asia and Europe and its enormous manufacturing industry, is in a crucial position for anti-counterfeiting activities. The Turkish Customs alone play a key role in the protection of IP rights. Turkey is a party to almost all IP-related international treaties, including the TRIPs Agreement, which aims to harmonise the legal framework on anti-counterfeiting and anti-piracy in member countries. Hence, the Turkish Trade Mark Decree-law Number 556 is almost fully compliant with TRIPs.
The Turkish Customs Law and relevant Customs regulations were amended in line with the TRIPs provisions and these provide a strong protection for IP holders at Turkish Customs. In this respect, Turkey has adopted and launched numerous practices with the purpose of protecting IP rights effectively and combating counterfeit and pirated goods at the point of entry.
According to the Customs Law, IP owners may apply to Customs for seizure of infringing goods, via a simple online application form for each and every IP right; the form covers trade marks, patents, designs, copyright and geographical signs. The Directorate General, located in Ankara, accepts applications on behalf of all local Customs authorities and the information therein is made available to all Customs officials through its online system. With the implementation of the new system, Customs applications are now much faster, and are easily tracked by applicants. This application can be filed by IP rights holders and/or their representatives; however, applicants are required to submit a Turkish national identity number together with their electronic signature. Foreign IP rights holders will only be able to file an application through their local representative in possession of an electronic signature. When filing the application, applicants are required to submit documents proving the registered right's existence/validity and any documents showing how to distinguish original products from counterfeit ones are also accepted and appreciated. There are no official fees.
It is possible to file a Customs application for any determined time frame, with an upper limit of one year. Although it is totally at the discretion of the Directorate General of Customs to decide on the period, the applications are almost always accepted for one year, provided that the protection period of the IP right does not end before the one-year timeframe. The General Directorate of Customs will notify the IP rights holder via e-mail if the application has been accepted within 30 working days of it being submitted.
Those Customs IP applications cover all shipments subject to import, export and transit trade at Turkish Customs and the trade located in any Turkish free trade zones. Customs authorities may also take ex officio action and seize suspected goods, after which they inform the rights holder, invite them to check the relevant shipments and to take any necessary action. But it would be optimistic to expect Customs to take such steps without a proper application, so filing Customs applications is highly recommended.
Temporary suspension decision
Customs authorities that discover suspected goods will grant a temporary suspension decision and serve the goods to the right holder or its recorded representative, whereupon it is required to obtain samples/photos of the seized goods and to provide a preliminary injunction decision/criminal seizure order (as set out below) within 10 working days. Right holders can request an additional 10-day period, should the process require more time for the examination of samples etc.
Furthermore, article 57/6 of the Customs Law provides for the so-called simplified destruction procedure, whereby it is possible to have the counterfeit goods destroyed directly by the Customs administration without a court order, provided that agreement is reached between the rights holder and the owner of the goods.
It is possible to take criminal and/or civil action against the goods suspended at the Turkish Customs. There are specialised civil and criminal IP courts in Turkey's three biggest cities Istanbul, Ankara and Izmir. In other cities the regular civil courts have jurisdiction in IP matters. While judges at the specialised IP courts have a deeper IP knowledge, it is fair to say that even the non-specialised court judges have a broad understanding of the importance of IP issues.
Additionally, there is an elite Department for Intellectual Property Rights at the Security Department of the Police Headquarters, which deals mainly with applications for search warrants based on IP rights. Branches of the Department have been established in all 81 Turkish cities.
Article 61/A of the Trade Mark Decree-Law provides that "those who manufacture, sell or offer for sale the goods by infringing the rights of a trade mark owner by imitating or creating confusion shall be sentenced to an imprisonment of between one to three years and to pay a judicial fine of up to 20,000 days". Moreover, the court orders the confiscation of the counterfeit products at the end of the criminal proceedings.
The wording of the new Article 61/A of Trade Mark Decree-Law, which stipulates that suspects who manufacture, sell or offer for sale fake products will be penalised. This sometimes leads to problems for import, export and transit, especially before non-specialised courts. Thus a draft bill which explicitly makes reference to import, export and transit trade should be enacted as soon as possible. Despite this, it is possible to enforce the criminal route against goods suspended at the Customs.
Once a criminal complaint is filed by the IP right owner, the public prosecutor and criminal judge act ex officio, but the continuation of the action totally depends on the validity of the complaint and if the complaint is withdrawn, the criminal procedure lapses in all aspects.
The criminal complaint is filed with the local public prosecutor's office, who may obtain the search and seizure warrant from the local criminal court and order the Customs to seize the goods at the warehouses. The prosecutor then conducts his/her own investigation and prepares the indictment, the investigation then matures into a criminal case against the accused before the local criminal court.
The trial takes around a year in the first instance and almost 90% of the cases end up with a punishment. Provided that the accused does not have a criminal record, the court mostly decides to postpone the declaration of the verdict in line with the Article 231 of the Code of Criminal Procedure, meaning that the accused will be under supervisory control of the local prosecutors office for five years and the verdict will be declared if they commit a new crime within that period. The five years of supervisory control could be very effective against many of the accused and could actually stop them infringing in the future.
As to the seized goods, the courts decide on confiscation and following the finalization of the decisions it is important to follow-up the confiscation procedure to make sure that the goods are indeed destroyed. The procedure starts with the preparation of the necessary writs by the court and delivery of the decision to the National Estate Directorate and ends with the actual destruction of the products.
The protection of a trade mark can be based both on the Trade Mark Decree-Law and the unfair competition provisions of the Turkish Commercial Code. This protection is afforded in the event of an attempt to create confusion regarding the third party's goods, products, activities and commercial enterprise; or by abusing the names, marks, signs and similar promotional material used by a third party. A trade mark owner may rely on its registered trade mark and demand the cessation of the infringement. If the trade mark is not registered, the rights owner is entitled to file an unfair competition action.
Rights holders are entitled to apply to the civil court for preliminary measures for the protection of their IP rights. They can also apply for a determination of evidence, with or without a request for a preliminary injunction to prevent further infringement.
Turkish IP law sets out specific provisions that require courts to issue preliminary injunctions in such a manner as to secure a final judgment. Provided that the registered IP rights and the likelihood of infringement or continuing infringement are proven, the courts are likely to grant a preliminary injunction to prevent an offence, or to put a stop to an infringing activity that is already taking place. The preliminary injunction decisions are enforced by local enforcement offices, again upon request of the claimant, which should be filed within one week, otherwise the preliminary injunction decision lapses.
The action for the cessation and prevention of an infringement aims to eliminate all the results of the infringement and to restore the situation that existed prior to the infringing activity. An action for damages aims to achieve the same purpose financially and to compensate any losses incurred by the rights holder, while also returning any profits made by the infringer to the rights holder. This results in a situation where the rights holder profits as if the infringing activity had been carried out with his consent.
Liquidation sales of counterfeit products
The Customs Directorates and the police deliver the smuggled and abandoned products to the Customs Liquidation Directorates for confiscation under relevant legislation and/or court decisions. The Customs Liquidation Directorates organize tenders for the sale of those products and deliver products to the successful tenderer, regardless of whether or not those are counterfeits. In other words, no initial examination is conducted on the nature of the smuggled products, while these might as well be counterfeits apart from being smuggled.
Under the relevant piece of legislation, Customs Directorates should inform the right holder ex officio before delivering the products to the Liquidation Directorates to provide 10 days to obtain a court decision based on trade mark infringement. If the products have been delivered to Liquidation Directorates without such notification by the relevant Customs Directorate, the publication of the tender has been accepted as notification and the right holders are entitled to file an application for the cancellation of the tender. Rights holders have to obtain a court decision within 10 days starting from the application date otherwise the products will be sold by tender. Right holders are entitled to obtain samples/photos of the said products to determine whether those are counterfeit or not within the same 10 days.
In practice, the ex officio notification to the right holders is an exception and the Customs Directorate does not pay attention to IP rights. Hence, it is important to regularly follow the publication of the tenders and rights holders must file applications once the goods bearing their brands are determined. We have come across more than 100,000 counterfeit products just in the last couple of months and taken action against all of them, succeeding in preventing the sale of the products bearing relevant protected brands while the others have been sold in the market when no action was taken by the rights holder.
Another problem is the publication of tenders using definitions such as "various trade marks". It is better to file applications to the relevant Customs Liquidation Directorates explaining the relevant legislation and requesting the determination of the trade marks one-by-one. The General Directorate of Liquidation Directorates has issued a circular letter to local directorates warning them to define the trade marks in publications following applications.
There are 21 Customs Liquidation Directorates all over Turkey under 15 Customs Regional Directorates and as the legislation for the sale of counterfeit products is not regulated in detail, the practices of the directorates can differ immensely. It is very important to take the necessary steps at the Customs based on their requirements, to cancel the tenders so that the goods can be examined and not sold back into the market.
This new approach in the fight against counterfeit goods has allowed rights holders to be aware of the counterfeit goods that were never brought to their attention in the first place, and to take action against smuggled counterfeits – which are always more numerous than counterfeits alone – and prevent the sales of these products by the state itself.
A new approach
Smuggling in Turkey
The smuggling offence has been regulated by the Anti-Smuggling Law Number 5607, the purpose of which according to Article 1 is "to determine smuggling offences and penalties and the principles and procedures for preventing, monitoring and investigating smuggling activities".
Article 3 of the Anti-Smuggling Law regulates the offences under 22 subclasses in detail. The Turkish Parliament has enacted a Law numbered 6545 on June 18 2014 and amended several laws together with the Anti-Smuggling Law. All the changes to the new law are related to Article 3 and generally increased the lower and upper limits of penalties.
The main enforcement-related difference between the Trade Mark Decree-Law and the Anti-Smuggling Law is the ex-officio action of the police and Customs enforcement officers in smuggling offences. As explained earlier, the trade mark infringement offence is subject to criminal law but the law officers can take ex-officio action against smuggling offences.
Additionally, as smuggling is a direct tax loss to the Turkish state, Customs officers who reveal smuggling activities are rewarded and in general more importance is attached to smuggling offences.
According to a report on Anti-Smuggling and Organised Crime by the Department of Turkish National Police, 6,448 suspects were arrested in 3,921 operations and 15,186,556 products including mobile phones, pills, electronic goods (watches, cameras, video cameras, computers, OEMs, detectors, etc), and miscellaneous commodities (lighters, eyeglasses, toys, textile products, cosmetic materials and mobile phone accessories) were seized during operations. In comparison, the seized smuggled products are up to hundreds of times more than the seized counterfeit products and indeed, most of the smuggled products are also counterfeits.
Zeynep Seda Alhas
© 2015 Gun + Partners, Istanbul. Barış Kalaycı is a partner of the firm; Zeynep Seda Alhas is a managing associate and Ali Bozoğlu is senior associate