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.