Can unfair competition allegations narrow limits of lawful exercise of patent rights?

The initiation of patent infringement actions by patent holders to protect their exclusive rights, as well as the notification of third parties outside the proceedings who are suspected of involvement in infringing activities, undoubtedly falls within the scope of the rights conferred by patent law. Nevertheless, particularly in disputes between originator and generic pharmaceutical companies, the boundary between the exercise of patent rights and the prohibition of unfair competition frequently becomes the subject of legal debate.

In this article, claims of unfair competition brought against a patent holder – arising from the filing of a patent infringement action and the sending of a warning letter to a third-party contract manufacturer during the proceedings – together with the accompanying claims for pecuniary and non-pecuniary damages, are examined within the framework of a recent reversal decision of the Turkish Court of Cassation (Yargıtay).

As is well known, patent rights grant the patent holder monopoly-like exclusive rights for a limited period. The effective protection of these rights may necessitate the initiation of legal proceedings against acts giving rise to a suspicion of infringement and, where appropriate, the notification of third parties. When the exercise of such patent-derived rights intersects with the unfair competition provisions regulated under the Turkish Commercial Code (TCC), the question of where the lawful boundaries of conduct begin and end gains particular importance.

The subject of this article is a Court of Cassation decision from May 2025, in which the court sets out significant principles regarding whether the filing of a patent infringement action and the sending, during the proceedings, of a warning letter to a third-party contract manufacturer of the alleged infringer may give rise to liability for unfair competition.

In the concrete dispute underlying the Court of Cassation’s decision, the originator company filed a patent infringement action against a generic company based on its patent rights. The filling of the generic medicinal product alleged to infringe the patent was carried out by a third-party contract manufacturer that was not a party to the litigation.

During the proceedings, the claimant patent holder sent a warning letter to the contract manufacturer, providing information regarding the scope of the relevant patent and the existence of the pending litigation, and requested that the patent rights be respected. In the warning letter, no comments were made regarding the possible outcome of the ongoing proceedings, nor were any false or misleading statements included.

During the patent infringement proceedings, following access to evidence – namely, the initial review of the generic marketing authorisation dossiers and the expert report obtained – the patent holder concluded that the generic product did not fall within the scope of the patent. Accordingly, the patent holder declared that the proceedings should be terminated without delay and requested the closure of the evidentiary phase. Ultimately, the patent infringement action was dismissed without any preliminary injunction having been granted; the decision was not appealed and thus became final.

Subsequently, the generic company initiated a separate action against the patent holder, asserting claims for pecuniary and non-pecuniary damages based on allegations of unfair competition. The generic company argued that, due to the patent infringement action and the warning letter sent by the patent holder to the contract manufacturer responsible for filling the product alleged to infringe, it had been unable to place its product on the market, it had missed the opportunity to become the first generic entrant, and these acts collectively constituted unfair competition.

The court of first instance held that although the warning letter sent to the third-party contract manufacturer contained factually accurate information, it nevertheless created the impression that a preliminary injunction might be granted. The court found that this impression led the contract manufacturer to suspend production and, on this basis, concluded that the patent holder had acted in violation of the principle of good faith within the meaning of Article 54(2) of the TCC, thereby giving rise to unfair competition. While the court dismissed the claim for pecuniary damages on the ground that it had not been proven by evidence, it upheld the claim for non-pecuniary damages, holding that the claimant’s loss of reputation constituted moral harm.

Although the patent holder’s appeal was rejected by the 14th Civil Chamber of the Istanbul Regional Court of Justice, the decision failed to sufficiently examine the balance between the exercise of patent rights and the principle of good faith, nor did it conduct a concrete assessment of the content and scope of the warning letter.

Accordingly, the patent holder lodged a further appeal before the Court of Cassation, acting in its capacity as the highest court. Upon review, the Court of Cassation reversed the decision of the 14th Civil Chamber of the Istanbul Regional Court of Justice, which had rejected the appeal on the merits.

The key points highlighted in the reversal decision, grounded in law and equity, may be summarised as follows.

According to the Court of Cassation, the filing of a patent infringement action by the patent holder and the notification of third parties in relation to such action fall within the scope of the rights arising from the patent. The exercise of patent rights in this manner cannot, in itself, be characterised as unfair competition.

The court determined that the warning letter under review:

• Did not state that patent infringement had been definitively established;

• Did not create a false or misleading impression as if a preliminary injunction had already been granted; and

• Provided accurate and objective information regarding the ongoing proceedings.

Accordingly, the court concluded that the warning letter could not be regarded as false, misleading, or disparaging in nature.

The Court of Cassation held that the patent holder’s conduct did not violate the principle of good faith within the meaning of Article 54 of the TCC. It emphasised that, while a legal dispute concerning the existence of patent infringement remains pending, the patent holder’s act of informing third parties of such dispute cannot be deemed a breach of the duty of good faith.

The Court of Cassation’s decision constitutes a significant clarification of the boundaries between the lawful enforcement of patent rights and the prohibition of unfair competition. By expressly affirming that the initiation of patent infringement proceedings and the good-faith notification of third parties fall within the legitimate scope of patent rights, the court has curtailed the risk of unfair competition claims being deployed as a strategic countermeasure to patent enforcement.

Importantly, the ruling underscores that the decisive criterion is not the commercial impact of the patent holder’s actions on competitors but whether such actions are carried out in an objective, proportionate, and non-misleading manner, in accordance with the principle of good faith.

From a practical perspective, the decision provides much-needed legal certainty for patent holders, particularly in the pharmaceutical sector – by confirming that the fear of subsequent unfair competition liability should not deter them from asserting their rights, provided that communications with third parties are factually accurate and refrain from prejudging the outcome of pending proceedings.

More broadly, the judgment re-establishes the delicate equilibrium between intellectual property protection and competition law, ensuring that the enforcement of exclusive rights remains robust while preventing their abuse through deceptive or oppressive conduct.