A Case-Law Study on Justification of Non-Use of a Trademark

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Despite annulment of Article 14 of the Decree No. 556 by the Turkish
Constitutional Court has created a lacuna about the legal ground of the use
obligation of trademarks; the proprietor always had the obligation for using
its trademark in Turkish and international Trademark Law. In a nutshell a trademark
that has not been genuinely used in Turkey for at least continuous 5 years, the
trademark can be requested to be cancelled due to non-use of the trademark,
unless there is a justification for non-use of the trademark. This article studies
the justifications that can be shown for non-use of a trademark in
consideration of the current case-law. 

1.            
Introduction

Despite annulment of Article 14 of the Decree No. 556 by the Turkish
Constitutional Court has created a lacuna about the legal ground of the use
obligation of trademarks; the proprietor always had the obligation for using
its trademark in Turkish and international Trademark Law. In a nutshell a trademark
that has not been genuinely used in Turkey for at least continuous 5 years, the
trademark can be requested to be cancelled due to non-use of the trademark,
unless there is a justification for non-use of the trademark. This article studies
the justifications that can be shown for non-use of a trademark in
consideration of the current case-law. 

2.            
The Notion of "Use of Trademark" under the Current
Legislation and Due Evidence of Use

The main
function of a trademark is to address the commercial entity of the products or
services bearing the trademark. Therefore, the driving force of having a
trademark registered for the proprietor is to use the trademark. Accordingly the
proprietors are expected to use their trademark on the goods and services
within the scope of the trademark.

The
trademarks that are not subject to "genuine use"[1] in
Turkey can be requested to be removed from the trademark registry through a
request filed before competent courts. As per Article 9 of the Turkish
Industrial Property Code No. 6769 ("IPC"), in short, (i)
the trademark should be used; (ii) the use should be genuine; and (iii)
the genuine use should be conducted in Turkey.

The notion
of use of trademark refers to commercial use. In other words, the trademark can
be considered to be used if the said uses aim to gain a profit and to create or
protect a market share out of it.[2] In
parallel to this, performing serious efforts to protect the trademark against trademark
infringements has not been considered as "trademark use" by the Court of
Appeals ("CoA"), under its decision numbered 2007/4588 E. 2008/13024 K.
and dated November 18, 2008.  

The
proprietors are given 5 years of grace period from the registration of
trademark to the trademark registry as per Article 9 of the IPC, with a view to
allow making necessary arrangements for genuine use, for instance R&D or
creating supply chain.

The magnitude
of use is also another issue in determination whether the trademark has or has
not been used in the context of the obligation for trademark use. In general, use
of a trademark should be genuine enough to meet the obligation. Since the
concept of "genuine use" has been introduced to the IPC recently in January
2017, there are not much comprehensive precedents in Turkish Trademark Law on
what the genuine use is. But it could be said that symbolic use of the
trademark is not considered genuine. In fact, symbolic use of the trademark,
for instance in the last three months of fifth year of non-use, is considered
as an attempt to prevent the risk of facing removal of the trademark.

Also the magnitude
of use should be efficient enough to create or protect the market share. The
sufficiency use can differ depending on the goods and services. For instance,
the sale of 500 wafers is not deemed sufficient for trademark use, while the
sale of 10 luxury private jets is deemed sufficient.

Similarly,
the CoA has made a similar assessment about on the magnitude of use that can be
considered as genuine use, and concluded – with its decision numbered 2014/2295
E. 2014/8122 K. and dated April 30, 2014 – that 2 (two) invoices do not suffice
submitted to prove the genuine use as it cannot be considered sufficient to
create a market share.

The final
main element of use is the "location" of the use, which should be Turkey as per
Article 9 of the IPC, but the use does not necessarily have to in the whole
country. From this aspect, the use of a trademark outside of Turkey will not be
fulfilling the obligation. However, this is assessed with such a strict
approach. As long as the goods and services can be provided in Turkey, the CoA
accepts that the trademark is being used on Turkey. The SKY decision of CoA – numbered 2009/3437 E. 2011/2191 K. and dated
March 03, 2011 – is a case where the world famous SKY is being evaluated in respect of the location that its services
are provided. The CoA concludes that, considering the present technology, the
television channels do not have to have physical organizations and equipment to
provide television broadcast in a place. Accordingly, since the broadcast can
be watched by more than 600.000 people on its websites online from Turkey, it
is evident that the services rendered within the scope of the SKY trademark exist
– and thus the trademark is being used – in Turkey.

In addition,
it should also be noted that, according to Article 9/2-(b), there is an
exception made for the trademarks that are exclusively used for export business
and under the exception, such uses are considered as proper trademark use by
the IPC.

The uses in
compliance with the elements explained above are required to be proved before
the Court as well. In relation to this, due evidence of trademark use is considered
as any material that could attest to the use of the trademark. It should however
be kept in mind that the evidence submitted as proof of use must contain the
date, trademark, location of use, the goods and services bearing the subject
trademark. Thus, brochures, advertisements materials, calendars bearing the
trademark with advertisement purposes would be considered as weak evidences,
though can be regarded as circumstantial evidence.

As a recent
example on due evidence, the Supermac's vs. McDonald's decision[3] on
the trademark "BIG MAC" should be addressed here as well. The case is a non-use
action filed against McDonald's for its trademark "BIG MAC", with the claim
that the trademark has not been genuinely used for 5 years. McDonald's has
argued that the trademark has been duly used and submitted (i) several affidavits stating the sales of the sandwiches bearing
the subject trademark have reach millions, (ii)
brochures and  printouts of advertising
posters, (iii) printouts   from  
several McDonald's   websites, (iv) a  
printout from en.wikipedia.org as proof of use. The EUIPO however
asserts that the evidence is insufficient to establish genuine use of the trade
mark since the affidavits, despite having probative value, are only statements
given by one of the parties while the rest of the evidences originate from
McDonald's. As to the
websites, it is hold that the presence of the subject trademark has an impact
on showing the use of the trademark but having the trademark on a website is
not by itself sufficient to prove use of the trademark. As regards to the
brochures and printouts of advertising posters, it is stated that those
materials are not enough to show whether any product have actually been sold.
Finally, EUIPO explains that the printout from Wikipedia website is also not
reliable since the content of the website is created and changed by people. As
a result, the world famous fast food trademark "BIG MAC" has been cancelled due
to non-use because of a failure on proof of use.

In the same
vein, the CoA rules – with its decision numbered 2013/12512 E. 2014/1977 K. and
dated February 05, 2014 – that the photos submitted by the defendant as proof
of use do not provide any information about the date and also no additional
evidence was provided to attest to the dates on which the photos have been
taken. The CoA adds that the invoices are also inadmissible since they do not refer
to the trademark in question. This decision gives an insight about the nature
and content of evidence that is deemed to be capable of proving the use and
which qualifications the evidence must have to that end.

On the
other hand, evidence that is not found to be sufficient for proving the use could
be found sufficient when it comes to different goods and services. Indeed, another
recent precedent of CoA General Assembly of Civil Chambers, numbered E.
2014/11-106 K. 2016/67 and dated January 22, 2016, holds that brochures and
printouts of advertising posters are sufficient to show genuine use of the
trademark on "construction services"
and it is not imperative that the trademark is used on the real estate that is
being constructed too. 

In general,
invoices, sales contracts, commercial records attesting to the commercial
transactions about the trademark in question are considered as solid evidence since
they can show the use made for commercial profit and with market share
motivation, surely provided that these contain the kind of information stated
above.

The
foregoing represent the main elements of proper trademark use and due evidence that
could refute non-use claims. Lack of these elements might cause the trademark
to be cancelled upon a non-use action but there are also justifications for
non-use, which would prevent cancellation. Below we explore the issues that do
and do not justify non-use in light of the case law.

3.            
Precedents on Issues that do not justify Non-Use of
Trademark

The issues
justifying non-use of a trademark are, in summary, the circumstances that would
make use of trademark impossible in every aspect. In that sense if there is a
change that could allow use of the trademark, the CoA does not see a due justification
for non-use. With a view to provide insight as to the events and issues that
are not considered to be justifying non-use, below we provide as few precedents
that could serve to that end:

  • The
    case has been filed with the claim for cancellation of the "PINAR" trademark
    due to non-use. The defendant argues that the trademark has declared concordat
    and ever since, their business volume has been downsizing; the trademark had
    been seized and the trademark has been allowed to be used by third parties. The
    first instance court have accepted the case and cancelled the trademark since
    there was no evidence submitted to the court showing any use of the trademark neither
    by the proprietor nor the licensees. Also the economic difficulties, such as
    concordat or seizure, are not regarded as justifications for non-use of the
    trademark. The decision was appealed by the defendant and approved by the CoA with
    its decision numbered2007/10093E. 2008/13302 K. and dated 24.11.2008.

  • The plaintiff filed a
    non-use cancellation action for the trademark "PENGUEN", arguing that the
    subject trademark has been used only on the ice-cream goods and not on the
    other goods and services covered under the scope of the subject trademark. The
    defendant stated that the proprietor had declared bankruptcy, therefore they
    were not able to use the trademark and this is a valid justification for
    non-use. The CoA has been examined the case and concluded in its decision
    numbered 2001/844 E. 2001/3429 and dated April 09, 2001 that the proprietor do
    not lose its legal personality by declaring bankruptcy and the trademark right
    can still be made subject to business transactions by the bankruptcy
    administration. In light of the foregoing, declaring bankruptcy was not found as
    a justification for non-use since there were several ways to use it despite the
    bankruptcy.

  • The
    applicant of the trademark "TERE" has filed an infringement case against the
    well-known "TEREM-YAĞ" and the defendant made a "non-use defense" against the
    plaintiff and requested the first instance court to reject the case.
    Accordingly, the first instance court has hold that the plaintiff has not
    renewed its trademark "TERE" and the trademark had lapsed in 1988; further, the
    plaintiff himself went out of business 4 years after the lapse of his
    trademark, in 1992. Therefore, the expropriation of his factory producing the
    products bearing the earlier trademark "TERE" in 1986 cannot be considered as
    justifications for non-use of the trademark. The decision has been appealed by
    the plaintiff but the decision was approved by CoA. Later, the plaintiff
    applied the CoA for a revision of decision and CoA rejected that as well with
    its decision numbered 2002/1719 E. 2002/2064 K.and dated March 08, 2002.

  • The
    claim in the lawsuit reviewed by the first instance court is cancellation of trademark
    due to non-use with respect to certain goods and services registered under its
    scope and revocation of the trademark for the rest of the goods and services
    due to bad faith. The defendant has argued that several pending legal
    proceedings that were pursued for protecting the trademark against third party
    infringements and the intensity of the advertisements made for the trademark to
    establish its place and ownership in the market has created a challenge for
    proper use. But the Court ruled that justifications for non-use of a trademark
    are circumstances that would objectively make it impossible for the proprietor
    to use the trademark. Accordingly, economic inabilities and challenges, such as
    not being able to compete with the competitors, are not considered a due justification
    for non-use of the trademark. The decision has been approved by the CoA in its
    decision numbered 2015/7331 E. 2016/2600 K. and dated March 09, 2016.

  • Finally,
    in a non-use action filed against the "HAVELLS" trademark, it has been argued the sector changes of
    the proprietor after the registration of the trademark and the economic crisis
    in the country affected the business badly and the governmental authorities did
    not grant the necessary permits for the production of the products that would
    be bearing the trademark. Ultimately the defense was that it was not possible
    to make business regarding the products bearing the trademark and requested the
    Court to acknowledge this defense as justification for non-use. But the Court
    did not agree with this defense and cancelled the trademark due to non-use. The
    CoA approved the first instance court decision with its decision numbered
    2015/1512 E. 2015/6851 and dated May 13, 2015.

4.            
A Discussion on "Plain Packaging" from the Perspective
of Non-Use of Trademark

Similar to the European Union legislations to protect public health,
Turkish Government made an amendment on the present Article 4 of the Law No.
4207 on November 15, 2018. Accordingly, cigarette packaging has to contain
warning notes, which should take 85% of the packaging, and monotype calligraphy
for the trademarks on same colored packaging. The Law No. 4207 stated that the
details of plain packaging are going to be determined by a regulation to be prepared
by the Ministry of Agriculture and Forestry ("Ministry").

To that end the Ministry published the Regulation Pertaining the
Procedures and Principles on Manufacturing, Labeling and Supervision of Tobacco
("Regulation") on March 01, 2019. The Regulation provides that the outer
surface of the packaging;

  • shall be on the color numbered Pantone Cool Gray 2
    C Matte,

  • shall contain the trademark with its additional
    letter capitalized on the front surface of the package

  • shall be on monotype font which is "Helvetica" and
    font size without special symbols such as "&" and without any embossment or
    gold foil.

This recent amendment prevents many well-known tobacco trademarks to be
used due to the obligations connected to "plain packaging". Therefore, although
there is no doubt that sole verbal trademarks will be exempt from this
discussion, since only a determined style will be used on the packaging according
to the Regulation, it is a conundrum whether the trademarks that contain
figurative – or both figurative and verbal – elements will be exposed to
non-use actions after 5 years starting with the beginning of plain packaging
implementation.

With a view to shed some light into the abovementioned issue, we can
make note of the non-use action filed against Bacardi's BREEZER trademark by
KIRBIYIK FREEZER. This action was rejected due to the acknowledgement of
Bacardi's justification of non-use, which focused mainly on the regulative
prohibitions on the exportation of the alcoholic drinks at that time. The Court
had held that the prohibitions are due and solid justification for non-use. This
is a rare example of the issues that could pass as justification for non-use of
a trademark and it follows in general terms that regulative prohibition is a
due reason justifying non-use.

An additional argumentative topic on this discussion can be made on the
issue of whether the trademark uses on each cigarette itself is sufficient. As
known, the tobacco trademarks are not only used on the packaging, but also on
the cigarettes itself in a small size. Since the trademark uses on the
cigarettes are not covered in the Regulation restrictions, those trademark uses
might be deemed enough to rebut non-use claims.

5.            
Consequences of Non-Use of Trademark

A trademark that has not been used by the proprietor for 5 continuous years
can be made subject to a cancellation action due to non-use and the effect of
cancellation was retrospective, before the annulment of the relevant law
stipulation. Indeed during the period where Decree no. 556 was in force, the
consequence of the non-use was provided as a cause for "revocation". But upon
annulment of the relevant law clause, i.e. Article 42-1(c) of the Decree No.
556, non-use actions were reformed and gained the nature of cancellation
actions. Thus the effects of a cancellation due to non-use are prospective.

The Court, in a cancellation action due to non-use, focuses on the matter
of trademark use for 5 continuous years preceding the date on which the case is.
The decision in such cases the cancellation decision will be effective from the
date of decision. Then again as per Article 27/2 of IPC, in case the
cancellation conditions have been met on a date earlier than the filing date of
the lawsuit, the plaintiff can request the Court to render its decision
effective from that earlier date on which the conditions were met.

6.            
Conclusion

Both international agreements, to which Turkey is a party, and national
trademark regulation expects the proprietor to use its trademark and attaches
sanctions to non-use. Despite the annulment of Article 14 of Decree No. 556,
which happened only four days before the effective date of IPC, created a lacuna
on regulation-wise, trademark owners are still expected to use their trademark in
business transactions with the purpose of gaining profit and creating a market
share.

As an exception of this obligation for use of trademark, non-use of the
trademark is rendered exempt from repercussions in case of a justification for
the non-use event. The justifications for non-use of trademark are different
from reasons connected to force majeure. These justifications are
expected to be borne from circumstances that would objectively make it
impossible for one to use the trademark. Indeed, the economic crises,
bankruptcy or declaring concordat are not found to be sufficient as a proper justification
for non-use. On the other hand, legal prohibitions or obstacles are found to
justifying non-use of the trademark.

In broader terms, justification for non-use of trademark must be
connected to a circumstance that would objectively make the use of the trademark
impossible, regardless the circumstance being of natural, economic or legal
nature. Yet, even though the certain circumstance might make the use of trademark
challenging or unfeasible for the proprietor, such situations are not found to
be sufficient enough to constitute due justification for non-use.

Authors: Gönenç Gürkaynak, Esq. and Tolga Uluay, ELIG Gürkaynak
Attorneys-at-Law

 (First published by Mondaq on
June 24, 2019
)

[1] CJEU, C-40/01, Ansul
BV v. Ajax Brandbeveiliging
.
See; Cam, Esen. "Avrupa Birliği Hukuku Uyarınca Markanın
"Gerçek Kullanım" Problemi.
" Journal of Commece and Intellectual Property  2.2
(2016): 27-41., p.29

[2] Çolak, U., 2018, Türk Marka Hukuku, On İki Levha
Yayıncılık, 4. Edition, Istanbul, p.972

[3]
EUIPO, Cancellation No 14 788 C, January 11, 2019

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