Arbitration in Turkish Trademark Law: A Viable Option or Limited Tool?

Arbitration, as an alternative dispute resolution (ADR) method, is widely used in various areas of law to settle conflicts without resorting to traditional court proceedings. It offers benefits such as quicker resolution, confidentiality, and the option to select expert arbitrators. In Turkish trademark law, the applicability of arbitration depends on the nature of trademark disputes and the extent to which arbitration is recognized within Turkish legal principles.

Legal Framework for Arbitration in Turkey

Arbitration in Turkey is primarily governed by the Turkish International Arbitration Law (Law No. 4686), enacted in 2001, which aligns with the UNCITRAL Model Law. This law encourages arbitration as an efficient means of resolving commercial disputes. In addition, Turkey is a signatory to various international treaties, including the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) which ensures the enforceability of arbitral awards in member countries.[1]

For the parties involved in a dispute to opt for arbitration, the dispute must be eligible for arbitration, and the parties must mutually agree to resolve their commercial or contractual disputes through arbitration. This agreement can either be a provision within the primary contract between the parties or a separate arbitration agreement independent of the main contract. In essence, arbitration as a dispute resolution method relies on the consent of the parties.[2]

Applicability of Arbitration in Trademark Disputes

In Turkey, trademark law is regulated by the Turkish Industrial Property Code (Law No. 6769), which outlines the procedures for the registration, protection, and enforcement of trademarks. While this law offers comprehensive regulations for the legal protection of trademarks, it does not explicitly address the use of arbitration to resolve trademark disputes. Consequently, it is important to assess whether trademark conflicts can be resolved through arbitration based on the current legal framework and case law.

Trademark disputes generally involve issues such as infringement, unfair competition, and the validity of trademark registrations. These disputes can be categorized into contractual and non-contractual issues. Many trademark-related disputes arise from agreements between parties, such as franchising, licensing, and mergers and acquisitions.[3] In particular, during company transfers, disputes may arise regarding the representations and warranties made by the seller concerning trademark rights and licensing rights. Additionally, various disputes can emerge from agreements concerning the transfer of trademark rights.

While the Industrial Property Code does not explicitly mention arbitration, it does not prohibit its use for resolving such disputes. In commercial contracts involving trademark licenses or assignments, parties may include an arbitration clause, agreeing to settle trademark-related issues through arbitration.

Furthermore, Turkey's adherence to international agreements on intellectual property rights, such as the Paris Convention for the Protection of Industrial Property and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), allows for alternative dispute resolution, including arbitration, as an alternative to court litigation for protecting intellectual property rights.

Challenges and Considerations

While arbitration can be a viable option for many trademark disputes, challenges exist, primarily due to the lack of clarity in Turkish law about its applicability to trademark matters. The absence of specific provisions in the Industrial Property Code means that parties must rely on general arbitration principles and case law. Trademark disputes often involve public interests, such as consumer protection and fair competition, leading some to argue that courts should handle these cases to ensure that public policy considerations are addressed.

A key point in the debate over arbitration in trademark disputes is the jurisdiction of Turkish Patent and Trademark Office (TPTO) and Turkish courts. Under Turkish law, trademark disputes are typically handled by the TPTO and Civil and Criminal Courts of Intellectual and Industrial Property Rights or if unavailable, the Civil or Criminal Courts of First Instance in cases involving infringement, registration issues, or invalidation actions. Additionally, appeals against the TPTO’s final decisions can be made to the Ankara Civil Courts for Intellectual and Industrial Property Rights. These procedures can create potential obstacles for arbitration. [4]

Moreover, Article 1 of the Turkish International Arbitration Law states: “This Law shall not be applicable to disputes related to real rights concerning immovables and to disputes that are not within the parties’ disposal.” Since the trademark registration, invalidation, or cancellation procedures are not subject to the will of the parties, they cannot be applied to disputes of this nature.

However, disputes arising from commercial contracts, such as franchise agreements, licenses and infringement claims, may be subject to arbitration if they fall within the parties' discretion. In such cases, Turkish courts will respect the arbitration agreement, as long as the dispute does not fall under the exclusive jurisdiction of the court.

For instance, in the decision of the 11th Civil Chamber of the Court of Cassation, the first-instance court noted that a master franchise agreement, including an arbitration clause, had been signed between the parties for a branded fruit arrangement business and the case was about whether unfair competition occurred between the plaintiff’s subcontractors and the defendant. The court addressed the arbitration objection under Article 413 of the Civil Procedure Code (Law No. 6100) and the arbitration clause in the main franchise agreement required the parties to resolve disputes through arbitration. Therefore, the case was dismissed procedurally because the defendant initially raised the arbitration objection. Also, the Regional Court of Justice ruled to reject the plaintiff's appeal, citing the existence of a valid arbitration clause in the franchise agreement. The court determined that the arbitration clause applies not only to the agreement itself but also to disputes arising from the parties' relationship, and that the defendant had timely objected to arbitration. Finally, the Court of Cassation upheld the decision, finding the plaintiff's appeal insufficient to overturn the ruling.[5]

Recent Developments and Trends

Although arbitration in trademark disputes is not yet a dominant practice in Turkey, there has been a growing recognition of the advantages of arbitration in resolving commercial disputes, including those related to intellectual property. As international trade increases and cross-border trademark issues become more prevalent, arbitration may gain popularity as a means of resolving these conflicts, particularly in cases involving international parties or cross-border trademark rights.

Turkey's membership in organizations like WIPO (World Intellectual Property Organization) and its ongoing efforts to align its laws with EU regulations may contribute to greater acceptance of arbitration for intellectual property dispute resolution in the future.[6]

Conclusion

Arbitration can be a viable option for resolving certain types of trademark disputes in Turkey, particularly those related to contracts, licensing, franchising and co-ownership. However, its applicability is constrained by jurisdictional limitations under Turkish law, which mandates that certain trademark issues be addressed by the TPTO or the courts. Arbitration is generally not suitable for matters such as trademark validity, infringement, or cancellation.

Thus, while arbitration offers potential for resolving some trademark-related conflicts, it remains a limited tool in Turkish trademark law and is unlikely to replace traditional legal processes for most trademark cases. However, as Turkey continues to align its intellectual property practices with international standards, the use of arbitration may gradually increase.