UNFAIR COMPETITION

UNFAIR COMPETITION http://www.morogluarseven.av.tr/uploads/new-turkish-commercial-code-and-ip-rights.110414024408.pdfhttp://erdem-erdem.com/erdem-erdem.php?katid=12110&id=14651&main_kat=14647

Unfair competition provisions have been set forth under articles 54-63 of the new Turkish Commercial Code numbered 6102 (“NCC”).

The definition in NCC identifiesthe subjects between whom the unfair competition cases take place. As per this definition, the acts or commercial practices between competitors or providers and customers which are misleading and violating the bona fide principle are unfair and against the law. All cases fall under this scope shall be considered as unfair competition. Imitation of another business’s products or other trademarks, misleading advertisement for its own products, falsely claim to have veritable qualifications they do not actually have or to use misleading names and signs are cases of unfair competitions.

The purpose of these provisions of the law is identified as to ensure fair and uncorrupted competition for the benefit of all the participants of the market. As indicated both in the definition and the purpose, the NCC aims to widen the implementation area of the unfair competition provisions and to preclude the application only between competitors.

The New TurkishCommercialCode has amendedtheunfaircompetitionprovisionstoprotectconsumers as well as commercialestablishments. As in othercountries, unregisteredtrademarks, patents, industrialdesignsandtradesecretsareprotectedbyunfaircompetitionprovisions.

UnderthenewTurkishCommercialCode, an actionthatconstitutes an abuse in principlewill be consideredunfaircompetitionwithoutconsideringabuse of economiccompetition. Also, withthenewlaw, thedescription of unfaircompetition is expanded in a mannerthatwill not onlyaffectcompetitors. Inthenewlaw, in additiontoprotectingcompetitorsandensuringfaircompetitionthepurchasers/consumersareprotected in a comprehensiveway.

Thenew TCC, alsoprovidesmoredetailednon-restrictedlist of examples of actsthatconstituteunfaircompetition.

Article 55 of the NCC lists the cases of unfair competition under six main titles. However, the unfair competition cases set forth under this article are not numerusclausus. Analyzing the cases set fort under the article, we see that list of acts which constitute unfair competition expanded under the provision and as well as sample cases for the protection of competitors, especially cases which are aiming to protect the consumers and public interest are also set forth. Another new aspect is that the article also sets forth acts, which covers use of unfair general terms of contracts.

The sample acts of unfair competition listed in the article are summarized below: • Acts or Practices Violating Bona Fide Principle • Acts or Practices Guide for the Breach or Termination of an Agreement • Acts of Unauthorized Benefiting from Others’ Business Products

Acts or Practices Violating Bona Fide Principle: • To decry others’ businesses, business products or activities in a false and misleading way, • To make false and misleading statements regarding one’s own business, business products or activities, • To create a false pretense of having honors, diplomas or awards or using misleading occupation titles or symbols, • To create confusion with others’ businesses, business products or activities, • To compare one’s own, business products or prices with others, their business products or prices in a false, misleading, discrediting way, • To mislead customers concerning one’s own or competitors talents by selling products under supply prices,

To mislead customers concerning the real price of the product by way of providing additional products or services, • To limit the freedom of choice of the customers with aggressive sale tactics, • To mislead customers by concealing the qualifications, benefits, dangers of one’s products or activities, • Not to indicate the trade name, price or cost information clearly in the advertisements regarding installment sale contracts and similar transactions,

Not to indicate the trade name, net amount of credits, total costs, effective annual interests clearly in the advertisements regarding the consumer credits, • To use contract formulas which contain false or missing information on the subject, price, payment terms, contract term, and specific rights of the customer of installment sale or consumer credit contracts.

Acts or Practices Guide for the Breach or Termination of an Agreement: • To conclude contracts with customers by leading them to breach agreements signed with others, • To try getting advantages to one’s own or third parties by proposing unfair benefits to the employees, attorneys or other associates of third parties,

To lead employees, attorneys or other associates to disclose or to get confidential information on production or business, • To lead persons to cancel or terminate sale contracts or consumer credit agreements signed with others for singing of contract.

Acts of Unauthorized Benefiting from Others’ Business Products: • Unauthorized benefiting from the business products such as offers, calculations or plans which are trusted to them, • Unauthorized benefiting from the business products such as offers, calculations or plans of third parties, • Benefiting from others’ work products, which are ready marketing by way of transferring them though technical duplication methods.

Unlawful Disclosure of Confidential Information: • Violation of Business Terms: • Use of General Contract Terms Violating Bona Fide Principle: • Use of general contract terms materially diverging from legal provisions which are applicable directly or through interpretation, or • Use of general contract terms, which includes distribution of rights and obligations materially in contrary to the nature of the agreement.

Legal Actions to be Filed • DeclaratoryAction • Action for Prevention of Unfair Competition • RestitutionAction • CompensatoryAction

DeclaratoryAction • This action seeks for determination of unfair competition acts. This action sets forth for the situations where a declaratory judgment is sufficient.

Action for Prevention of Unfair Competition • This action aims to stop an unfair competition act. It is regulated for the on-going unfair competition action.

RestitutionAction • This action is for eliminating the factual situation upon an unfair competition act or if the unfair competition made by false and misleading statements, for correction of those statements. In this action, all negative effects of the unfair competition act in the market shall be eliminated. It is possible to correct false and misleading statement with this action. It does not have a compensatory nature; however it is possible to file this action with a compensatory action.

CompensatoryAction • This action can be filed both for pecuniary and non-pecuniary damages. With this action, the one who suffer from the unfair competition act will claim for his damages. It requires a fault of the defendant/perpetrator and damages of the plaintiff. In this action, the plaintiff shall prove the fault of the defendant, the amount of the damages and the casual link between the defendant’s fault and the damages he suffers. It is not always easy to prove and calculate the scale of the damages. For this reason, article 56/1(e) of the NCC sets forth that “an amount equal to the benefits the defendant gains as a result of unfair competition act may be judged as the amount of compensation”. In such case, upon the plaintiff’s demand, the court can decide compensation at an amount of the defendant’s profits.

It is possible to file a compensatory action for non-pecuniary damages against unfair competition acts. This action could be filed as per article 58 of the Turkish Code of Obligations.In these cases, the court may rule for the payment of specific amount for damages, condemnation of the act and announcement of the decision by way of press. The scope and the form of announcement is decided by the court, however in practice, the announcement is made through a daily newspaper.

One of the new aspects of the NCC regarding the legal actions is the clear indication that these legal actions could be filed by customers whose economic benefits are harmed or in danger. In addition, it is also set forth that the first three legal actions indicated above can be filed by the chambers, occupational associations and the non-governmental organizations aiming to provide protection of consumers’ economic benefits. So that the law, clearly indicates that these rules are not only set forth for protection of competitors but also, prevent a narrow interpretation by clearly stating that, those legal actions can be filed by the customers and organizations as well as competitors.

Statute of Limitations • The above listed actions should be filed within one year from the date that the act is informed by the plaintiff and in any way within three years as of the occurrence of the act. Article 60 of the NCC also refers to the Penal Code that in case of an act, which is also a crime as per the Penal Code, then the statute of limitation set forth for this crime in the Penal Code shall be applicable for the legal actions as well.

UNFAIR COMPETITION