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Turkey has granted intellectual property (IP) rights through a number of legal regulations. This legislation consists of the following:
In terms of antitrust issues, the main legal source of competition law in Turkey is the Law No. 4054 on the Protection of Competition (the Competition Law), which is similar to EU law. In addition, there are some regulations, communiques and guidelines that set out this field in the form of secondary legislation.
Article 129 of the Industrial Property Law governs the interplay between competition law and intellectual property (IP) law. If patentee carries out activities distorting, hindering or limiting competition while a patent is in use, the potential licensee may request a compulsory licence from the Turkish Competition Authority (TCA).
Other than this provision, there is no law that directly regulates interactions between competition and IP law. Nevertheless, within the scope of competition law, secondary legislation addresses the interaction between competition law and IP law. In this context:
There has not been any developments regarding legislation or policies pertaining to both intellectual property (IP) and antitrust.
In terms of any decisions that have been rendered that incorporate both IP and competition matters, while the TCA has referred to IP issues within individual exemption and merger clearance decisions, these statements have merely been mentions that IP rights were involved, and no further evaluations or explanations were provided on how IP rights were affected and incorporated into the analysis of competition law.
The only investigation decision relating to standard essential patents, which was passed in 2019, was when the TCA investigated whether Koninklijke Philips NV (Philips) violated the Competition Law by not complying with its commitment to the relevant standard-setting organisation that it would license its essential patents related to subtitling technology for digital video broadcasting (DVB) in fair, reasonable and non-discriminatory (FRAND) terms.
The TCA deemed that standard essential patents held by Philips grant monopolistic power to Philips, and Philips' practices led to an abuse of dominance, under Article 6 of the Competition Law. Upon investigation, through its decision dated 26 December 2019 and numbered 19-46/790-344, the TCA set forth that Philips was engaged in anticompetitive practices by not acting in accordance with FRAND principles, and, consequently, issued the company with a fine of 0.75 per cent of its turnover generated in the financial year preceding the date of the decision.
The Competition Board's reasoning in finding a violation was as follows:
Recently, the Ankara 11th Administrative Court accepted Philips' appeal to the case and annulled the TCA's decision with its decision numbered E 2020/1525, K 2021/1121. The Court annulled the decision by drawing the following conclusions:
Philips resorting to a court decision cannot be regarded as an abuse of dominant position, as Philips had only filed a lawsuit to protect its IP rights after negotiation attempts came to no avail, and that as per the Huawei–ZTE decision,3 it has been understood that applying to a third party is left to the discretion of both parties.
While in some instances a non-challenge clause may lead to competitive concerns, Philips incorporating a non-challenge clause and reversing the burden of proof was not a violation, bearing in mind the history of events between Philips and Vestel.
As per Article 44 of the Competition Law setting forth that the TCA may not base its decisions on issues about which the parties were not previously informed of and granted the right to defence to, the Court found that the parties were not previously directed that the transparency principle would be a pillar for evaluating whether practices are abusive, therefore Philips was not granted a right to defence.
Upon the annulment of the TCA's decision, the case has been carried over to regional court for an appeal, therefore the judicial process is pending.
Under the Competition Law, obtaining, granting and transferring IP rights are regulated under the general provisions of anticompetitive agreements (i.e., Article 4 of the Competition Law), provided that they do not satisfy the block or individual exemption conditions. According to Article 4 of the Competition Law, agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings that have as their object or effect, or likely effect, the direct or indirect prevention, distortion or restriction of competition in a particular market for goods or services are illegal and prohibited. Such cases are, in particular, as follows:
Separately, Block Exemption Communiqué No. 2008/2 on Technology Transfer Agreements (Communiqué No. 2008/2) also stipulates restrictions that render technology transfer agreements out of the scope of the block exemption. In that sense, in the event that a technology transfer agreement incorporates a hardcore restriction of competition, the agreement as a whole will fall outside the scope of the block exemption. A point that is specific to technology transfer agreements, is that hardcore restrictions cannot be separated from the rest of an agreement.
Furthermore, Articles 6(2) and 6(3) of Block Exemption Communiqué No. 2008/2 on Technology Transfer Agreements (Communiqué No. 2008/2) are applicable to agreements between competitors and agreements between non-competitors, respectively. In this regard, directly or indirectly, in isolation or in combination with other factors under the control of the parties, should either type of agreement have as their object any of the restrictions stipulated within their respective articles, these agreements would fall outside of the scope of Communiqué No. 2008/2.
For agreements between competitors, these restrictions are as follows:
For agreements between non-competitors, these restrictions are as follows:
However, Article 7 lists the restrictions that cannot benefit from the block exemption and therefore require individual exemption assessments. According to Article 7, where a technology transfer agreement contains any of the restrictions laid down in that article and the related restriction is separable from the rest of the agreement, only that restriction shall not benefit from the block exemption, and the rest of the agreement shall continue to be covered. In case any of the restrictions laid down in this article cannot be separated from the rest of the agreement, the whole agreement shall not benefit from the block exemption. These restrictions are as follows:
Moreover, Article 7 sets forth that where the parties are not competitors, the block exemption would not be applicable for any obligation which directly or indirectly restricts:
In the eyes of the TCA, non-IP related conduct is not distinguishable from IP-related conduct. The essential facility doctrine is accepted by the TCA, therefore a simple refusal to license by a dominant undertaking does not automatically result in a violation of Article 6 of the Competition Law. The Guidelines on the Assessment of Abusive Conduct by Undertakings with Dominant Position elaborate on refusal to supply as a form of abuse, and under Paragraph 43 of the Guidelines, it has been stated that three cumulative conditions are sought by the TCA in the evaluation of such a claim:
If the TCA deems an IP right as an essential facility and finds an infringement by way of refusal to deal, mandatory licensing is a possible remedy.
The Guidelines on Horizontal Cooperation Agreements published by the TCA contains explanations regarding access to the standard on fair, reasonable and non-discriminatory (FRAND) terms. According to Paragraph 258, FRAND commitments are designed to ensure that any essential technology under IPR protection incorporated in a standard is accessible to the users of that standard on a fair, reasonable and non-discriminatory basis. In particular, these commitments can prevent IP rights holders from making the implementation of a standard difficult by refusing to license or by requesting unfair, unreasonable (i.e., excessive) or discriminatory fees after the industry has been locked in to a standard.
While Communiqué No. 2008/2 mentions patent pooling, it is set forth that the Communiqué shall not apply to the licence agreements made through pooling of technologies in order to grant licences to third parties as a package. With this, Article 4 of the Competition Law is applicable to patent pooling matters.
Moreover, the Technology Transfer Guidelines state that patent pools may cause the restriction of competition. In this regard, patent pools are referred to more broadly as 'technology pools', and in addition to reducing competition between the parties, technology pools may also, in particular when they support an industry standard or establish a de facto industry standard, resulting in a reduction of innovation by foreclosing alternative technologies. The existence of the standard and a related technology pool may make it more difficult for new and improved technologies to enter the market.
The Communiqué No. 2008/2 is applicable to software licensing matters, provided cumulative conditions are met. The TCA has also ruled in its Bilsa decision dated 21 March 2007 and numbered 07-26/238-77, that Bilsa abused its dominant position by disrupting competition in the market for school software. In this earlier decision, the TCA found that Bilsa took advantage of the technological and commercial benefits of encryption and did not let customers to change service providers by refusing to provide encryption keys that would decode the data the schools stored within its software. This way, the schools which were not satisfied and wanted to change software were unable to choose the products of another company as they could not risk losing data. In this regard, the TCA did not find the encryption defences by Bilsa to be essential to protect their IP rights, but rather prevented schools from terminating contracts by hindering their ability to access their data after agreements with Bisla were terminated.
As per the Technology Transfer Guidelines and the Communiqué No. 2008/2, a licensor may authorise a licensee to use its trademark on the products incorporating licensed technology, as this trademark allows consumers to make an immediate link between the product and the characteristics imputed to it by the licensed technology. However, if the value of the licensed technology is limited because the licensee already uses the same or similar technology and the main objective of the agreement is the trademark, the Communiqué will not apply.
Furthermore, with regards to tying practices that are normally either not restrictive on competition or covered by exemption, as per Article 5 of the Competition Law, where the licensees use the licensor's trademark or brand name or where it is otherwise obvious to consumers that there is a link between the product incorporating the licensed technology and the licensor, the licensor has a legitimate interest in ensuring that the quality of the products is such that it does not undermine the value of its technology or its reputation as an economic actor.
In terms of undertakings under the obligation to not abuse their dominant position, the general conditions stipulated under Article 6 of the Competition Law apply to trademark licensing.
Within the TCA's Toshiba–Vestel decision,4 a brand licensing agreement between the relevant undertakings was evaluated in terms of an exemption application. The relevant agreement was concerning the trademark use of Toshiba in favour of Vestel, where the TCA found that it would fall within the scope of Article 4 of the Competition Law. Within its analysis of whether the Communiqué No. 2008/2 was applicable, the TCA stated that the agreement was horizontal in nature, and therefore the Communiqué was not applicable. With this, an analysis in terms of Article 5 of the Competition Law was conducted, and an individual exemption was granted by the TCA.
In its Philips decision of 26 December 2019 and numbered 19-46/790-344, the Turkish Competition Authority (TCA) recognised that holding standard essential patents (SEPs) grant a certain market power in the relevant product market. It has been stated that once a patent is announced as a standard by the relevant standard-setting organisation, the holder holds effective market power and may even become a monopoly most of the time. While making this statement, the TCA also references the Treaty on the Functioning of the EU, where it indicates that a SEP grants significant market power to its holder and may lead to severe competitive issues.
However, the TCA also mentions the Guidelines on Horizontal Cooperation Agreements, Paragraph 240 of which sets forth that even if the establishment of a standard can create or increase the market power for those undertakings which hold the intellectual property (IP) rights essential for that standard, simply holding the IP rights essential for a standard does not necessarily equate to the direct possession or exercising of market power. The question of market power, therefore, can only be assessed on a case-by-case basis. In this regard, the TCA evaluated the following when determining that Philips held a dominant position:
In its Philips decision, the TCA has also followed the systematic of the Huawei–ZTE decision5 with regards to its evaluation of abuse of dominant position. The TCA has stated that injunction requests that do not follow the conditions set forth within the Huawei–ZTE decision would constitute an abuse of dominant position. The conditions to adhere by in order to utilise the right to an injunction in coherence with competition law has been set forth as follows:
The proprietor of the SEP in question, should first alert the alleged infringer of the infringement complained about by designating the SEP and specifying the way in which it has been infringed.
After the alleged infringer has expressed its willingness to conclude a licensing agreement on FRAND terms, it is for the proprietor of the SEP to present a specific, written offer for a licence on FRAND terms to the alleged infringer, in accordance with the undertaking given to the relevant standardisation body, specifying, in particular, the amount of the royalty and the way in which that royalty is to be calculated.
It is for the alleged infringer to diligently respond to that offer, in accordance with recognised commercial practices in the field and in good faith, a point which must be established on the basis of objective factors and which implies, in particular, that there are no delaying tactics.
Should the alleged infringer not accept the offer made to it, it may rely on a claim that an action is of an abusive nature to secure a prohibitory injunction or for the recall of products, only if it has, promptly and in writing, submitted a specific counteroffer that corresponds to FRAND terms to the proprietor of the SEP in question.
Where the alleged infringer is using the teachings of the SEP before a licensing agreement has been concluded, it is for the alleged infringer, from the point at which its counteroffer is rejected, to provide appropriate security, in accordance with recognised commercial practices in the field (e.g., by providing a bank guarantee or by placing the amounts necessary on deposit). The calculation of that security must include, among other things, the number of the past acts of use of the SEP. Also, the alleged infringer must be able to render an account in respect of those acts of use.
Where no agreement is reached on the details of the FRAND terms following the counteroffer by the alleged infringer, the parties may, by common agreement, request that the amount of the royalty be determined by an independent third party, by decision without delay.
An alleged infringer cannot be criticised either for challenging, in parallel to the negotiations relating to the granting of licences, the validity of those patents or the essential nature of those patents to the standard in which they are included, or their actual use; or for reserving the right to initiating such a challenge in the future.
The Guidelines on Horizontal Cooperation Agreements published by the TCA contains explanations regarding access to the standard on FRAND terms. According to Paragraph 258 of the Guidelines, FRAND commitments are designed to ensure that any essential technology under IP rights protection incorporated in a standard is accessible to the users of that standard on a FRAND basis. In particular, these commitments can prevent IP rights holders from making implementing a standard difficult by refusing a licence or by requesting unfair, unreasonable (i.e., excessive) or discriminatory fees after the industry has been locked in to a standard.
With regards to any case law relating to FRAND terms, while there are three cases overall where the Competition Board has referred to FRAND terms, only the Philips decision has evaluated the matter in depth. Within its Digiturk6 and Turkish Football Federation/Digiturk7 decisions, FRAND terms were only mentioned when defining what each letter of the acronym stands for.
On the other hand, Article 129 of Law No. 6769 on the Industrial Property titled 'Compulsory License' indicates circumstances in which compulsory licences may be granted. In this regard, a compulsory licence may be given in cases where the patent owner engages in preventative, abusive or restrictive practices in terms of competition.
The Competition Law does not bear any provision that relates the royalty rates to any kind of competition violation. However, even though the Competition Board found the royalty rates to not be excessive within its Philips decision, it is seen that the royalty rates may be subject to review in terms of abuse of dominance. In this regard, royalty rates can be regarded within the scope of excessive pricing.
Paragraph 260 of the Guidelines on Horizontal Cooperation Agreements provides clarification with regards to licence fees (royalty) in exchange for IP rights. In the case of a dispute, the assessment of whether fees charged for accessing IP rights in the standard-setting context are unfair or unreasonable should be based on whether there is reasonable relationship between these fees and the economic value of the IP right. In principle, cost-based methods are not suitable because of the difficulty in assessing the costs attributable to the development of a particular patent. Instead, it is possible to compare the licensing fees charged by the undertaking in question for the relevant patents in a competitive environment before the sector has been locked in to the standard (ex ante) with those charged after the sector has been locked in (ex post). This method may be applied where the comparison can be made in a consistent and reliable manner. Licensing fees charged for the same IP rights within the context of similar standards may also be used as an indicator for FRAND licensing fees.
As per Article 7 the Competition Law, the TCA governs mergers and acquisitions, including those related to IP, if the relevant transaction leads to a change of control on a lasting basis. Accordingly, mergers and acquisitions exceeding the turnover thresholds stipulated within the Communiqué No. 2010/4 Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board are subject to the TCA's review and approval to gain validity.
Communiqué No. 2010/4 was amended in March 2022. Along with several other revisions, the new amendments stipulate that as of 4 May 2022, the turnover thresholds for transactions that require TCA approval will increase. Within this scope, transactions regarding the acquisition of technology undertakings operating in the Turkish geographical market, having R&D activities or providing services to users in Turkey shall be subject to notification to the TCA regardless of the turnover thresholds stipulated within the Communiqué. In this regard, technology entities are defined as undertakings or related assets operating in the fields of digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agrochemicals, and health technology under the relevant communiqué.
Proposed remedies aimed at eliminating competition problems created by a concentration transaction may be structural or behavioural. Proposed structural remedies generally involve the divestiture of a certain business, while proposed behavioural remedies involve the arrangement parties' future market behaviours. The main purpose of the proposed remedies is to protect the competitive structure that existed in the market prior to the transaction. Therefore, due to their characteristics of bringing about a sustainable result in the short term in terms of eliminating competition problems and not requiring supervision after being implemented, structural remedies – particularly those causing structural changes in the market, such as the divestiture of a business – more properly fit within the purpose expected from proposed remedies. However, it is not disregarded that proposed behavioural remedies, such as ensuring access to important infrastructure and raw material in a non-discriminatory manner, are also likely to solve competition problems caused by a transaction.
As regards to divestiture packages, the parties shall be asked to waive from all of the rights relating to intangible assets included in a divestiture package. For instance, granting a limited-time licence concerning IP rights falls short of eliminating the anticompetitive effects of the transaction, because sometimes the licensee is not able to compete effectively with the parties following the expiration of the licence period. Furthermore, due to the fact that a licence – because it requires an ongoing relationship between the two parties – allows the licensor to affect the behaviours of the licensee in the market and conflict arises between the licensee and the licensor with regard to the scope and conditions of the licence, proposed remedies involving the granting of a licence concerning the rights pertaining to intangible assets instead of divesting those assets are not considered as suitable remedies, save for exceptional cases.
In exceptional cases where the competitive problems arise from a market position based on the superiority of owning a certain technology or IP right, the divestiture of the said technology or IP right may be considered as a suitable remedy.
As regards to access to remedies, remedies foreseeing the granting of access to key infrastructure and network technologies, such as patent, know how or other IP rights, and essential inputs may be accepted as an appropriate remedy in some cases to facilitate market entry by competitors.
In addition, use of certain IP rights may lead to foreclosure of competitors which depend on those technologies as an essential input in downstream markets. For instance, this may be the case where competition problems about the transaction arise as the parties withhold information necessary for the interoperability of different equipment. Similarly, in certain sectors where undertakings must cooperate by licensing patents to each other, the possibility of the parties introducing licensing behaviour with different terms than those in the past may lead to competition problems. This type of competition problems may be eliminated by a commitment to grant licences on the same basis and on reasonable conditions after the transaction. In those cases, the proposed remedies should give non-exclusive access to the licence or confidential information for the IP right in question to the third parties concerned. Moreover, the remedy must clearly determine the conditions under which the licence is given and the licence charge or fee in order not to impede effective implementation of such remedy. An alternative may be granting a royalty free licence.
The Mey İçki8 decision is an example of a divestiture decision taken by the Competition Board, where Diageo committed to divest all IP-related rights of the Saga and Hare brands during its acquisition of Mey İçki.
There have been no cases where a sham IP litigation proceeding have commenced incorporating competition law matters. In case of such a misuse, the TCA would evaluate the matter as applicable.
There have been no cases where an undertaking has used the patent process to gain any kind of advantage in terms of competition law matters. In case of such a misuse, the TCA would evaluate the matter as applicable.
There have been no cases where an undertaking has attempted to settle IP disputes in an anticompetitive manner. In case of such a misuse, the TCA would evaluate the matter as applicable.
Currently, there are no pending TCA investigations that relate to IP rights. In terms of the court proceedings that are currently pending with regards to challenged decisions by the Competition Board, the Philips case is the only one concerning intellectual property. Right now, the Ankara Administrative Court has annulled the TCA's decision stipulating an infringement and an administrative monetary fine, and this ruling was been appealed to the Regional Courts. The appeal decision is expected before the end of 2023. The Regional Court's decision may be submitted to the Council of State for a final appeal, however the Council may take two or more years to issue its decision.
Together with the fact that the European Commission has been foreseeing policy developments with regards to standard essential patents, and since the TCA closely follows the activities of the European Commission, there might be emerging trends in the intersection of IP and antitrust policy. The policies adopted within the European Commission, and even their frameworks, will undoubtedly be utilised in Turkey within the scope of possible future disputes, which will affect the Turkish case law on this matter from here on.
This would inevitably enrich the Turkish stance on the intersection between IP and competition law. Especially with the TCA delving into specifics of an IP matter may be an indicator that the TCA may choose to examine more cases where competition law and IP law coincide. An increasing number of cases that incorporate both areas of law may prompt guidelines to be published in the future that regulate the coinciding areas; currently, this is only carried out by comparing general provisions of the Competition Law.
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