Introduction

Article 17 of

the Turkish Constitution provides that "Everyone

has ... the right to protect and improve his/her corporeal and spiritual

existence." Based on this provision of the Turkish Constitution, the

general principles of indemnity law will apply to any violation of personal

rights. Article 49 of the Turkish Code of Obligations provides the general

principle for indemnification under Turkish law and states that "Whoever damages someone else with an

unlawful and culpable act is obligated to compensate that damage."

In accordance with

the general principles of indemnity law, the aim of indemnity is to compensate

the damages suffered and the amount of the compensation cannot be higher than

the actual amount of the damage suffered in any case. As an exception, however,

there might be a special provision of law related to the case at hand that

allows the plaintiff to claim compensation higher than the amount of the actual

damage. Turkish intellectual and industrial property law legislation contains

such special provisions. In this article, compensation in excess of damage suffered

and determination of such compensation under Turkish intellectual and

industrial property law will be explained.

Provisions

found in Turkish intellectual and industrial property law legislation providing

for compensation in excess of damage suffered

There are two

opinions among Turkish scholars regarding the nature of the compensation in

excess of the damage suffered. According to the first one, it is dissuasive

rather than compensative, which means that it is a criminal sanction. On the

other hand, the second opinion claims that compensation in excess of the damage

suffered deters violators by encouraging the plaintiffs to bring action, which

makes it a private law penalty. Although there is a discussion regarding the

nature of the compensation in excess of the damage suffered, in practice, the

special provisions of Turkish intellectual and industrial property law

legislation related to the subject are being applied by the courts. The gist of

the provisions found in Turkish intellectual and industrial property law

legislation providing for compensation in excess of the damage suffered is to

encourage the plaintiffs to bring actions, as well as to deter the people who

would violate these rights. Furthermore, the people are encouraged to create

new ideas and inventions by creating the idea that intellectual properties are

secured by the law.

An example for

the special provisions of Turkish intellectual and industrial property law

legislation related to the compensation in excess of the damage suffered can be

found in Articles 68 and 70 of the Law No. 5846 on Intellectual and Artistic

Works. Article 68 provides that "The

right holders whose permission was not obtained may claim the payment of

compensation of up to three times the amount that could have been demanded if

the right had been granted by contract, or up to three times the current value

which shall be determined under the provisions of this Law, from persons who

adapt, reproduce, perform or communicate to the public by devices enabling the

transmission of signs, sounds and/or images the work, performance, phonogram or

productions or who distribute reproduced copies thereof without written

permission of the author pursuant to this Law." It is widely accepted in the

doctrine and the practice that there is no need to establish the existence of

damage and/or negligence, since it is considered that the perpetrator should

know that it is illegal to use an intellectual property without the permission

of the right owner.

Article 70 of

the Law No. 5846 on Intellectual and Artistic Works provides that "... Any person whose economic rights have

been infringed may claim compensation under the provisions governing torts, if

the infringer is at fault. In the cases set out in the first and second

paragraphs [in case of claiming compensation for infringement of moral or

economic rights], the infringed person may, apart from the damages, also claim

the profits gained by the infringing party. In such case, any sum demanded in

accordance with Article 68 shall be deducted from this amount." According

to this provision, the profits gained by the infringing party can be claimed even

if the total amount of the compensation exceeds the damages suffered. This

constitutes another example of compensation in excess of the damage suffered.

Article

149(1)(ç) of the Law No. 6769 on Industrial Property provides that an

industrial property right owner may request indemnification of pecuniary and

non-pecuniary damages from the court if its industrial property rights are

infringed. Article 151(1) of the Law provides that the damage suffered by the

right owner covers the actual loss and loss of profit. The right owner can

choose from one of the three ways while calculating the loss of profit provided

by Article 151(2). The first way is the amount of probable profit if there was

no competition of the perpetrator. The second way is the amount of profit the

perpetrator made using the industrial property right. The third way is the

license fee the perpetrator has to pay if he/she used the industrial property

right legally with a license agreement. The second way opens the way for compensation

in excess of the damage suffered despite the other two ways. Moreover, pursuant

to Article 151(4) of the Law No. 6769, if the industrial property right owner

chooses the second way explained above and the court comes to the conclusion

that the infringed industrial property right is the determinative factor for

the demand for the product, the court decides to add an appropriate amount on

top of the loss of profit calculated according to the second way.

There is also

another type of compensation called the reputation compensation regulated by

Article 150(2) of the Law No. 6769. According to this provision, if the

perpetrator of an infringement regarding industrial property rights use that

right inappropriately and the reputation of the related industrial property

right is damaged, the rightful owner of the right can ask for additional compensation.

This compensation stands for the required expenses in order to restore the industrial

property right's reputation, like advertisements.

It must be

emphasized that in order to rule on an indemnity in excess of the damage

suffered, the damage must be pecuniary. In other words, it is not possible to

rule for compensation in excess of non-pecuniary damage suffered. The wording

of Articles 68 and 70 of the Law No. 5846 on Intellectual and Artistic Works also

support this position.

Determination

of the compensation in excess of damage suffered under Turkish intellectual and

industrial property law legislation

In indemnity

cases, it is essential to determine the amount of damage suffered in order to

reach a verdict accordingly. As stated above, the only way for ruling for

compensation in excess of the damage suffered is the existence of a special

provision of law which allows it. As explained above, Turkish intellectual and

industrial property law legislation contains such special provisions. However,

the question how the compensation in excess of the damage suffered should be

calculated is not clear even in those provisions.

The general

rules for determining the amount of compensation are provided in Articles 51

and 52 of the Turkish Code of Obligations. According to Article 51, the judge

determines the amount and payment form of the compensation by considering the

circumstances and particularly the perpetrator's degree of fault. Article 52 provides

that if the damaged party has consented to the event causing damage or

contributed to the occurrence or increase of damage, or aggravated the

situation of the perpetrator, the judge may decide to decrease or remove the compensation.

Compensation in

excess of the damage suffered in cases of infringement of intellectual rights

is regulated by Articles 68 and 70 of the Law No. 5846. In order to determine

the amount of "three times the value"

compensation, the owner of the infringed right can choose between two methods:

"up to three times the amount that could

have been demanded if the right had been granted by agreement" or "up to three times the current value which

shall be determined under the provisions of this Law". Regarding both

methods, the court needs to conduct an analysis and probably obtain an expert

report in order to determine the amount that could have been demanded if the

right had been granted by an agreement or the current value.

Determination of

loss of profit comes to the stage when an industrial property right is

infringed, as explained above. While determining the exact amount of the profit

made by the infringing party, the Law No. 6769 does not specify any method. Article

151(3) of the Law No. 6769 provides that "Particularly

issues such as economic significance of the industrial property right, number,

duration and type of licenses regarding the industrial property right which

exist during the infringement, nature and size of the infringement are

considered while calculating the loss of profit." Since the provision uses

the phrase "particularly issues such as ..."

it does not limit the issues which can be considered while calculating the

amount of loss of profit. Therefore there may be other issues and/or methods

which may be used in practice while determining the amount of the loss of

profit. At this point, it is possible to consider the perpetrator's commercial

books and financial records. However, there is the danger of commercial books

and financial records not showing the accurate data and amounts due to

different reasons.

The factors for

determining the amount of reputation compensation may be the required resources

to restore the reputation. The industrial property right owner can also rely on

past documents demonstrating the expenses made to reach a certain reputation

and the expenses may be recalculated in order to update the amounts.

Finally, since

Articles 51 and 52 of the Turkish Code of Obligations are applicable to all

indemnity cases, the court must evaluate the specific circumstances of the case

and reduce the amount of the compensation if necessary after calculating the

amount of the compensation according the relevant provisions explained above.

Conclusion

Although the

amount of the compensation cannot be higher than the actual amount of the

damage suffered in any case under the general principles of Turkish indemnity

law, Turkish intellectual and industrial property law legislation contains special

provisions that allow the plaintiff to claim compensation higher than the

amount of the actual damage, as explained above. Those specific provisions do

not specify the method which should be used while calculating the amount of the

compensation. This causes difficulties in practice both for the claimants who

request the compensation and for the courts who are obliged to determine the

amount of the compensation.

Authors: Gönenç

Gürkaynak Esq., Ceyda Karaoğlan Nalçacı and A. Bahadır Erkan, ELIG,

Attorneys-at-Law.

First published in Mondaq on July 31, 2017.