ABSTRACT
This article examines the principle of exhaustion of trademark rights in Turkish trademark law, analyzing its place, elements, and scope within industrial property law. It will also evaluate the concepts of national, regional, and international exhaustion.
I. INTRODUCTION
Trademark rights are crucial industrial property rights that allow businesses to distinguish their goods and services from those of their competitors. The use and protection of this right are crucial for the sustainability of commercial activities. However, certain limitations on the authority granted to the trademark owner regarding the subsequent sales and free circulation of branded products placed on the market by the trademark owner or with their permission are referred to as the principle of exhaustion of trademark rights.
The principle of exhaustion of trademark rights is based on the idea that the circulation of goods placed on the market by the trademark owner or by third parties with permission cannot be prevented on the grounds of trademark rights and that the trademark owner will not suffer from the circulation of originally branded goods in the market once they are first placed in commerce. Additionally, it is justified by the fact that obtaining the trademark owner’s permission for each transfer of branded goods would be contrary to the requirements of trade and would extend beyond the purpose of trademark rights.
II. TRADE MARK RIGHT SAND PROTECTION OF TRADEMARKS
In society, a trademark is described as a sign that helps a company to distinguish its goods and services from those of its competitors and demonstrates the relationship between the company and its goods and services, whether registered or not. In doctrine, a trademark is defined as a sign companies use to distinguish their goods/services from those of other businesses. Additionally, it is noted that a trademark does not actually target the trader or the industry. It is not necessary to own a commercial enterprise to be a trademark owner, meaning that non-trader natural or legal persons can also use trademarks1.
Article 4/1 of the Industrial Property Law2 No. 6769 (“IPL”), titled “Signs that can be trademarks”, stipulates that any sign, including personal names, words, shapes, colors, letters, numbers, sounds, and the shape of goods or their packaging, which can distinguish the goods or services of one enterprise from those of other enterprises and can be represented in the registry in a way that the subject of the protection provided to the owner can be clearly and precisely understood, can be a trademark. The use of any sign, including personal names, shapes, colors, letters, numbers, sounds, and the shape of goods or their packaging, as a trademark and its application to the Turkish Patent and Trademark Office (“TürkPatent”) is possible as stated in the article.
The registration of signs as trademarks is at the discretion of the owner. As a rule, unregistered signs are protected under unfair competition provisions in the Turkish Commercial Code3 No. 6102 (“TCC”). However, exceptionally, unregistered trademarks are also protected under the IPL. For example, under Article 6/3 of the IPL, individuals using unregistered trademarks and/ or certain signs in trade are granted the right to oppose subsequent trademark applications for the same and/ or similar signs in the same or similar class of goods or services before TürkPatent. It should be noted that the exercise of this right depends on the sign having acquired distinctiveness. Within the scope of prior rights, it is also possible for the subsequent trademark owner to be accused of acting in bad faith to benefit from the recognition of the sign. In line with the precedents of the Supreme Court, registering a trademark made in bad faith to benefit from the recognition of the sign is canceled by determining the actual right holder4.
It can be said that the essence of the rejection, partial rejection, and acceptance decisions regarding the trademark applications explained above is the protection granted to trademark owners. Due to the fact that a trademark subject to industrial property has asset value, it grants its owner economic value rights such as the right to sell, the right to import and export, the right to lease, the right to stop infringement, the right to protection, and the right to license/use. The income generated by the trademark owner due to these actions may vary depending on the frequency of use of the trademark in the commercial field, the economic value of the goods/ services it is used for, the nature of the consumer base, and its preference among consumers.
Pursuant to Article 7 of the IPL, if registered trademarks in Türkiye5 are used in the commercial field without the permission of the trademark owner (placing the trademark on goods or packaging, offering goods bearing the trademark for sale and delivery, stocking for these purposes, or offering services under the trademark or offering that they can be provided, importing or exporting goods bearing the trademark; using the trademark in the business documents and advertisements of the enterprise/undertaking, using the same or similar trademark in a way that creates a commercial effect on the internet (trademark) domain name, redirecting code, keyword, or similar forms, provided that the person using the trademark does not have the right or legitimate connection to use the trademark), the trademark owner has the right to request the prevention of such uses.
Whether a trademark application is made or not, if signs of a trademark nature are used in the same/similar manner as registered trademarks before the TürkPatent within the framework of the rights granted to the trademark owner under Article 7 of the IPL, it is possible for trademark owners to raise infringement claims under Article 29 of the IPL titled “Acts Considered as Infringement of Trademark Rights”. In addition, due to the identical/similar uses, criminal sanctions related to trademark infringement may also be applicable under Article 30 of the IPL titled “Criminal Provisions Related to Trademark Infringement”.
It should be noted that the powers granted to the trademark owner are not unlimited. As an exception, the exhaustion of rights is regulated in the standard provisions section of the IPL. According to Article 152/1 of the IPL, actions taken after the industrial property subject products are placed on the market by the right holder or another person with his permission are outside the scope of protection. Although the principle of exhaustion is a general principle concerning industrial rights, an exception is foreseen for trademark rights. The following section will include evaluations regarding the exhaustion of trademark rights.
A. Principle of Exhaustion of Trademark Rights
Within the framework of Article 152 of the IPL titled “Exhaustion of Rights”, the absolute right over the trademark is considered exhausted following its placement on the market by the trademark owner or with his consent. That is to say, the trademark owner who places branded products on the market himself or through a third party does not have the right to interfere with subsequent sales and free circulation of the products after the first sale.
Additionally, the second paragraph of the IPL specifies an exception to the principle of exhaustion for trademark rights. Accordingly, the trademark owner has the right to prevent third parties’ commercial use of goods if they have been altered or deteriorated. Changes made to the trademark, such as removing the trademark emblem from the branded product, placing the trademark emblem on other products, and altering the trademark emblem on the product, are also considered alterations of the branded product6. As a result of the alteration or deterioration of the product, the source indication and guarantee functions of the trademark become ineffective. The consumer of the branded product cannot obtain the expected benefit from the product. Consequently, the trademark’s reputation is damaged in the eyes of the consumer. Therefore, in the event of alteration or deterioration of the product, the trademark owner’s right over the products is not considered exhausted7. For instance, removing the trademark emblem from the branded product eliminates the trademark’s source indication and advertising functions, causing harm to the trademark owner8.
1. National, Regional, and International Exhaustion: Market
National exhaustion means that the right to the first sale of the branded product is exhausted only within the borders of the country where it was first placed on the market. In this case, putting the branded product on the market outside the country by the trademark owner or with his permission does not affect the trademark right within the country. Since the first sale made outside the country does not affect the rights within the country, the trademark owner can prevent the importation of goods from outside the country into the country. However, the trademark owner cannot prevent the re-importation of goods exported abroad after being placed on the market within the country9.
Regional exhaustion means that when certain countries are considered a single region, the exhaustion occurs within that region. In a common economic area like the European Union, goods placed on the market by the trademark owner or with his permission in one country can be sold in all other countries, and the trademark owner cannot prevent this10.
International exhaustion means that if the branded product is placed on the market anywhere in the world by the trademark owner or with his permission, the right of first sale is exhausted worldwide. In this case, the product placed on the market anywhere in the world can be freely bought and sold, re-imported, and parallel imported worldwide. It is stated in the doctrine that the principle of national exhaustion has been abandoned in Turkish Trademark Law, and the principle of international exhaustion has been adopted because, in the justification of Article 152 of the IPL, it is stated that the principle of international exhaustion has been accepted. Accordingly, it is accepted that the term “market” in the text of the article refers to “the whole world” rather than the Turkish domestic market11.
Additionally, in the doctrine, there is an opinion that the market concept is not defined in the law, and its boundaries are not specified. Hence, the exhaustion refers to international exhaustion12. Furthermore, it is stated that the universal exhaustion dimension has been introduced due to the removal of the phrase “in Türkiye” in the current industrial property legislation, which was present in the repealed Decrees13.
In summary, although trademark rights are national, trademark owners may have different rights in different regions. However, once a trademark owner places his product on the market, the circulation of that product can no longer be prevented. This principle is based on the idea that the trademark owner does not have the right to interfere with subsequent ownership changes after the first sale, and it aims to balance the interests of the trademark owner, consumers, and public welfare. Additionally, it is accepted that the principle of exhaustion applies only to products and not to services14.
B. Elements of the Exhaustion of Trademark Rights
Article 152 of the IPL states that the exhaustion of trademark rights will come into question within the framework of “placing on the market” by “the right holder or by third parties with his permission”. At this point, the right holder’s consent is the primary element, and placing on the market is the other element.
The most fundamental condition for applying the principle of exhaustion of rights is to determine whether the right holder has consented to the placement of the product on the market. Since the trademark owner’s authority to use the trademark is exclusive, it is accepted that the consent given by the trademark owner must be explicit and clear. However, in contracts such as licensing or exclusive dealership agreements, the authorization of third parties will be considered a declaration of consent. However, in cases where the rights regulated in these contracts are excessively used, the lack of action by the trademark owner cannot be interpreted as implied consent15.
Another fundamental element necessary for applying the principle of exhaustion of rights is the placement of the product on the market. This element refers to the lawful offering of the product for sale. Therefore, when evaluating whether the element of placing on the market has been fulfilled, it should also be considered whether this action is lawful. A product subject to trademark rights can be placed on the market in two different ways. The trademark owner can market the product under his own trademark in the domestic or foreign market. He or he can authorize a third party (such as through an exclusive dealership, agency, distributorship, or licensing agreement) to place the product on the market16. Additionally, there is an opinion that it is not necessary to generate income from the products in this regard and that it is sufficient for the product to have been placed on the market17.
III. CONCLUSION
The exhaustion of trademark rights is a principle that provides an essential balance within industrial property law. This principle ensures that the trademark owner does not have the right to interfere with subsequent ownership changes after the first sale while also aiming to balance the interests of consumers and public welfare.
In Turkish trademark law, it is stated that the principle of national exhaustion has been abandoned, the principle of international exhaustion has been adopted, and goods placed on the market can now be freely bought and sold worldwide. However, some uncertainties and debates continue in practice.
In the future, there may be a need for more explicit regulation regarding the application of the principle of exhaustion of trademark rights and the limitations brought by this principle. This issue is essential for protecting the rights of trademark owners, facilitating consumer access to products, and supporting competition.
BIBLIOGRAPHY
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FOOTNOTE
1 Sabih Arkan, Commercial Enterprise Law, Bank and Trade Research Institute Publications, 28th Edition, Ankara, 2022, p. 295.
2 Official Gazette dated 10.01.2017, No. 29944
3 Official Gazette dated 14.02.2011, No. 27846.
4 Supreme Court 11th Civil Chamber, D. 19.04.2002, C. 2001/9903, D. 2002/3699; Supreme Court 11th Civil Chamber, D. 13.10.2003, C. 2003/2883, D. 2003/9171; Supreme Court 11th Civil Chamber, D. 18.01.2018, C. 2016/5961, D. 2018/455.
5 The protection of an unregistered trademark can be provided as an exception under the provision of IPL 6/3, which states, “If a right has been acquired for an unregistered trademark or another sign used in trade before the application date or, if applicable, the priority date, the trademark application shall be rejected upon the objection of the owner of this sign”. There is also an opinion that the invalidity of registered trademarks can be claimed based on this provision.
6 Hayrettin Çağlar, Trademark Law Basic Principles, Adalet Publishing, Ankara, 2013, p. 167.
7 Sabih Arkan, Exhaustion of Trademark Rights, Prof. Dr. Ali Bozer’e Armağan, Ankara, 1998, p. 206.
8 Çağlar, p. 167.
9 Uğur Çolak, Turkish Trademark Law, On İki Levha Publishing, İstanbul, 2023, p. 820.
10 Çolak, p. 820
11 Çolak, p. 821
12 İlhami Güneş, Practical Trademark Law in the Light of Industrial Property Law No. 6769, Adalet Publishing, 4th Edition, Ankara, 2024, p. 399-400.
13 Ünal Tekinalp/ Ersin Çamoğlu, Industrial Property Law, Vedat Publishing, İstanbul, 2017, p. XL.
14 Necati Meran, Trademark Rights and Protection, 3rd Edition, Seçkin Publishing, Ankara, 2014, p. 326.
15 Arkan, p. 204
16 Hamdi Pınar, Intellectual Property Rights and Competition Law Exhaustion of Rights, Thursday Conferences, Ankara, 2002, p. 113-120; For precedent decisions, see: İstanbul BAM, 16. HD., T. 2.5.2024 E. 2022/1391 K. 2024/823. İstanbul BAM, 13. HD., T. 8.11.2023 E. 2021/1062 K. 2023/1736.
17 Pınar, Exhaustion of Rights in Trademark Law, In Memory of Prof. Dr. M. Kemal Oğuzman, İstanbul, 2000, p. 862.
