Declaratory and Injunction Actions in Unfair Competition Law

1. General Overview

The maturation of capitalism, the resulting increase in competition, and the consequent need for legal regulations have paved the way for the development of unfair competition law. Modern economic systems bring economic competition along with them, prompting lawmakers to determine which areas are open to competition and which are not. In this context, while competition law ensures the functioning of the free market, unfair competition law aims to prevent unfair practices that emerge as specific forms of tort.

The subject of unfair competition law is to protect labor—encompassing entrepreneurial effort, experience, and investment—against commercial practices that violate the principle of good faith. While competition law seeks to both protect and enhance competition, unfair competition law aims to prevent injustices that may arise during this process. The principle of good faith plays a central role in this area.

In a legally regulated and uncorrupted competitive environment, all market participants (competitors, suppliers, service providers) have the right to expect that others will act in accordance with the rules of good faith. When this principle is violated, such conduct contradicts this trust and results in unfair competition.

2. Regulation of Unfair Competition in Turkish Law

In Turkish law, the main regulations regarding unfair competition are found in the Turkish Commercial Code (TCC) and the Turkish Code of Obligations (TCO). The applicable legal provisions (TCO Art. 57; TCC Arts. 54–63) vary depending on the nature of the dispute. If the issue is commercial in nature, the TCC applies; if the dispute involves false advertisements, misleading statements, or any conduct violating good faith causing customer loss, then the TCO is applicable.

Article 62 of the Consumer Protection Law No. 6502 provides that any commercial practice that fails to meet the requirements of professional diligence and is likely to significantly distort or potentially distort the average consumer’s economic behavior is deemed unfair. Particularly deceptive or aggressive practices, as listed in the regulation's annex, are categorized as unfair commercial practices. Such conduct is prohibited, and consumers may benefit from both the TCC and this provision.

Additionally, Law No. 4054 on the Protection of Competition was enacted to prevent monopolization and abuse of dominant market positions and also serves as a source of unfair competition law.

3. Cases of Unfair Competition

Unfair competition cases are specifically listed in Article 55 of the TCC. These include:

• a) Misleading advertisements, deceptive marketing techniques, and other unlawful behaviors;
• b) Inducing breach or termination of contract;
• c) Unauthorized use of others' business products;
• d) Unlawful disclosure of trade and business secrets;
• e) Violation of standard business terms and practices;
• f) Use of unfair  terms in transactions, especially those that significantly deviate from the statutory regulations or impose a disproportionate burden on one party.

The article's rationale explains that these examples not only broaden the scope of unfair competition but also expand protection to new subject matters and parties. These provisions are directed at ensuring pure and fair competition for the benefit of all market participants.

4. Legal Consequences of Unfair Competition

a. Civil Liability

Under Article 56 of the TCC, the available legal remedies for unfair competition include:

• Declaratory judgment (action for determination),
• Injunction (cease-and-desist),
• Rectification (correction of statements or publications),
• Material compensation (pecuniary damages),
• Non-pecuniary compensation (moral damages).

All actions can be brought if the perpetrator is at fault; however, if no fault exists, only determination, injunction, and correction actions are possible.

b. Criminal Liability

Article 62 of the TCC provides for criminal sanctions for acts of unfair competition. If the act does not fall under a more serious criminal offense, a complaint by one of the entitled parties may lead to criminal prosecution, potentially resulting in imprisonment or judicial fines.

Corporate criminal liability is addressed in Article 63, and where an unfair act is committed within the scope of a legal entity’s operations, special security measures may apply.

5. Action for Determination (Tespit Davası)

An action for determination seeks to establish the existence or non-existence of a right or legal relationship. In the context of unfair competition, it is used to establish whether an act constitutes unfair competition.

1. Fault is not required to bring an action for determination.
2. The action is recognized in both the Code of Civil Procedure (CCP) and the TCC, with the TCC provisions prevailing in unfair competition matters.
3. There is no need to prove legal interest (hukuki yarar) separately under TCC Art. 56, as the protection extends to the public interest, including competitors, customers, and market participants.
4. Limitation period: 1 year from the date the claimant became aware of the act, and 3 years from the date the act occurred.

6. Action for Injunction (Men Davası)

An action for injunction aims to prevent the repetition or continuation of an unfair act:

• May be filed even before the act is committed, provided a credible risk exists.
• Fault is not required.
• It targets the cessation of the offending behavior.
• Under TCC Art. 56/4, an injunction judgment is enforceable not only against the perpetrator but also against any party commercially benefiting from the unfair goods.
• Limitation period follows TCC Art. 60, but courts have held that the statute of limitations does not run while the unfair act continues.

7. Parties to the Lawsuit

a. Plaintiffs

• Affected parties: Persons whose commercial or economic interests are directly harmed or endangered.
• Customers: May sue for injunctive or declaratory relief but not for destruction of goods.
• Professional bodies, public institutions, and consumer organizations: May file lawsuits under TCC Art. 56 and also benefit from Consumer Protection Law No. 6502.

b. Defendants

• Perpetrators of the unfair act.
• Employers: Liable under TCC Art. 57 and TCO Art. 66, particularly in compensation claims where due care is not proven.
• Media and communication outlets: As per TCC Art. 58, lawsuits may be brought against owners of published content or advertisers unless they acted without consent or were unaware of the publication.

8. Competent Court

a. Jurisdiction

• As per TCC Art. 5, Commercial Courts of First Instance are competent, regardless of the amount in dispute.
• In intellectual property-related unfair competition disputes, the IP Courts (Fikri ve Sınai Haklar Mahkemesi) may have jurisdiction.
• If the perpetrator is an employee, Labor Courts may be competent.
• If consumers are involved, Consumer Courts may be competent under the Consumer Protection Law Art. 73.

b. Venue

According to CCP Arts. 6 and 16, lawsuits may be filed in:

• The defendant’s place of residence,
• The location where the act occurred,
• The place where the harm emerged or is likely to occur,
• Or the plaintiff’s place of residence.

Unless a mandatory jurisdiction ruleapplies, the case may proceed even if filed in a court lacking jurisdiction, unless the defendant objects in a timely manner.

9. Conclusion

The liberal economic model and the free market system have necessitated the advancement of competition law, while unfair competition law balances the system by sanctioning wrongful commercial conduct. This study has focused on the key legal actions available to combat unfair competition and emphasized critical procedural and substantive points.

As the economy and markets evolve daily, unfair competition law will continue to adapt, imposing clear rules and outlining procedural paths just like other branches of law.

10. References

• Prof.      Dr. Sabih Arkan, Commercial Enterprise Law, 24th Ed., Ankara, 2018.
• Prof.      Dr. Mehmet Bahtiyar, Commercial Enterprise Law, 19th Ed., Istanbul,      2018.
• Prof.      Dr. Sami Karahan, Commercial Enterprise Law, 26th Ed., Mimoza      Publishing.
• Prof.      Dr. İsmail Kayar, Commercial Enterprise Law, 11th Ed., Seçkin      Publishing.
• Assoc.      Prof. Aytekin Çelik, Commercial Law, 7th Ed., Ankara, 2017.
• Dr.      Mehmet Özdamar & Res. Asst. İbrahim Ermenek, Unfair Competition      Lawsuits and Protected Interests, Ankara Bar Journal.
• Atty.      Engin Erdil, Intellectual Property Law Textbook, Istanbul, 2016.
• Şirin      Koçak Gündüz, Civil Lawsuits in Unfair Competition, Master’s      Thesis, Akdeniz University, 2019.
• Şirin      Güven, Purpose and Protected Interests in Unfair Competition Law,      PhD Thesis, Ankara University, 2011.
• Prof.      Dr. Füsun Nomer Ertan, Unfair Competition Law, 1st Ed.