Unfair Competition Lawsuits in Turkish Law

UNFAIR COMPETITION

Unfair competition arises when the right to compete is not exercised within the boundaries of the legal order. In its broadest sense, it is the misuse of the right to compete through deceptive behaviors and other means contrary to good faith principles. Using tools that crush others unfairly, making it difficult for them in the competitive field, or deceiving customers constitutes unfair competition.

The emergence of unfair competition dates back to ancient times. French and Swedish courts have particularly established this term on a legal basis.

UNFAIR COMPETITION IN TURKISH LAW

Unfair competition is a significant institution regulated in both Contract Law and Commercial Law in our legal system. Besides these two main regulations, the concept of unfair competition has also been addressed in other legislations. The Law on the Protection of Competition is one of these. In this article, we will address the provisions of unfair competition as regulated under the Turkish Commercial Code.

The Turkish Commercial Code explicitly states the purpose of the provisions on unfair competition. Accordingly, the purpose of these provisions is to ensure fair and uncorrupted competition for the benefit of all participants. Deceptive or otherwise improper behaviors and commercial practices affecting relationships between competitors or suppliers and customers constitute unfair competition. Based on this definition;

1. There must be a relationship between competitors or between suppliers and customers.

2. There must be deceptive or otherwise improper behaviors or commercial practices.

LEGAL NATURE OF UNFAIR COMPETITION

Under Turkish law, the legal nature of unfair competition is tortious act. Every act of unfair competition also constitutes a tort.

ELEMENTS OF UNFAIR COMPETITION

1. The existence of competition

2. The competition taking place between competitors or between suppliers and customers

3. The competition occurring through deceptive or otherwise improper behaviors and commercial practices

4. The competition being unfair and illegal.

CASES OF UNFAIR COMPETITION

Although there are 6 categories and 23 clauses of unfair competition cases listed in the law, these cases are not limited to those listed. The cases specified in the law are the most frequently encountered ones in practice.

Cases of unfair competition are as follows;

DENIGRATION

Defaming others or their goods, work products, prices, activities, or commercial affairs with false, misleading, or unnecessarily offensive statements constitutes unfair competition.

1. There must be an act of denigration.

2. This denigration must be directed at others, their goods, work products, prices, activities, or commercial affairs.

3. The act must be false, misleading, or unnecessarily offensive.

For example; saying that the competitor’s products are of poor quality, or stating that the competitor’s activities are not conducted meticulously.

GIVING FALSE AND MISLEADING INFORMATION ABOUT ONESELF

Making false or misleading statements about oneself, one’s commercial enterprise, business signs, goods, work products, activities, prices, stocks, sales campaigns, or business relations, or advancing a third party in competition through the same means constitutes unfair competition.

For example; promising qualities that a product does not possess.

USING UNDESERVED TITLES, PROFESSIONAL, DEGREES, AND SYMBOLS

Acting as if possessing a title, diploma, or award that one has not received and creating the impression of possessing exceptional skills or using false professional titles and symbols suitable for such purposes constitutes unfair competition. For example, it is illegal for someone to act as if they have a diploma in a subject when they do not. The use of terms like “award-winning translator” or claims such as “tested product, approved product” must reflect the truth. Adding the title “DR” before one’s name without having completed a doctorate is also an example.

CAUSING CONFUSION

One must avoid behaviors that cause confusion with the goods, work products, activities, or business of others. Otherwise, it constitutes unfair competition. For example, using a registered business name or trademark in a way that causes confusion constitutes unfair competition. In this case, the registered one may seek special protection. This situation frequently arises in practical life. It is intended to prevent unfairly benefiting from the reputation of well-known brands in the market. In this context, using phrases like “Not as good as Persil but at least as good as it” constitutes unfair competition.

INCITING OTHERS’ ASSISTANTS TO BREACH THEIR DUTIES

Trying to obtain an opponent’s personnel or encouraging them to breach their duties constitutes unfair competition. For example, trying to recruit the representative of a competing firm solely to put that firm at a disadvantage is a case of unfair competition.

INFLUENCING OR DISCLOSING COMPETITOR’S TRADE SECRETS

USING AND SPREADING COMPETITOR’S TRADE SECRETS

SELLING CERTAIN GOODS AND PRODUCTS BELOW SUPPLY PRICE AND HIGHLIGHTING THIS IN ADVERTISEMENTS

MISLEADING CUSTOMERS WITH ADDITIONAL SERVICES

The cases of unfair competition listed above are not limited to these and can be evaluated according to the situation to determine whether a specific case constitutes unfair competition. For detailed information, you can consult a Commercial Lawyer in Istanbul to protect your rights in a special way.

UNFAIR COMPETITION LAWSUITS AND SANCTIONS

If there is a situation that constitutes unfair competition in the specific case, you will have the right to file a lawsuit. According to the TCC, the lawsuits that can be filed in such cases are specified. Whether or not the victim has suffered damage is irrelevant; if there is unfair competition, a lawsuit can always be filed. The presence of damage is important in determining the amount of compensation.

LAWSUIT FOR DETERMINATION OF UNFAIR COMPETITION

A lawsuit for determination can be filed regardless of whether the unfair competition continues or has ended. This lawsuit determines whether there is an ongoing or ended state of unfair competition. It investigates whether the mentioned act is unfair. This lawsuit forms the basis for the plaintiff’s future lawsuits and, most importantly, interrupts the statute of limitations. The determination decision constitutes a final judgment and can be used as evidence in other lawsuits. Together with the determination lawsuit, if the unfair competition continues, it can be requested to stop or prevent it, as well as to compensate for the damage.

LAWSUIT FOR PREVENTION OF UNFAIR COMPETITION

As a rule, a person who suffers damage or is in danger of suffering damage due to unfair competition can file a lawsuit for prevention of unfair competition. This lawsuit aims to prevent and stop the situation that constitutes unfair competition. The fact that unfair competition has occurred once constitutes a presumption that it may occur again in the future, and this lawsuit path can come into play. In the specific lawsuit, the court clearly states which behavior the defendant should avoid. For example, it can be decided to stop an advertisement or stop the dissemination of trade secrets. This lawsuit is not subject to a statute of limitations. As long as the act continues or there is a high probability of it being repeated, the statute of limitations does not run.

If the given decision is not followed and the unfair competition act is continued with minor changes, the person can be sentenced to imprisonment for not less than 6 months and a fine between 5000 and 10,000 liras.

LAWSUIT FOR RESTITUTION

This lawsuit aims to eliminate the material situation resulting from unfair competition. In this context, it can be requested to correct false statements, and if it is inevitable to prevent the infringement, it can be requested to destroy the tools and goods. For example, it can be requested to return formulas, and collect and destroy counterfeit products.

LAWSUIT FOR COMPENSATION DUE TO UNFAIR COMPETITION

A person who suffers damage due to an act of unfair competition can request compensation from the person who committed the act if they are at fault. In this case, the defendant’s fault is required. The judge determines the amount of compensation. Due to the difficulty of determining this amount, the judge can also rule for the amount equivalent to the benefit the defendant is likely to obtain as a result of the unfair competition. The likely benefit can be easily determined from the defendant’s commercial book. However, the plaintiff can also request moral compensation. However, in this case, the act constituting unfair competition must violate the plaintiff’s personal rights.

PRECAUTIONARY MEASURE

In situations where it is understood that it will cause a dangerous or serious damage during the period until the court gives a final decision, a precautionary measure can be taken. In this context, it is possible for customs administrations to seize goods that constitute unfair competition as a precautionary measure.

COMPETENT COURT FOR UNFAIR COMPETITION LAWSUITS

The competent court for unfair competition lawsuits is the Commercial Court of First Instance.

The authorized court is;

– The court of the place where the defendant resides

– The court of the place where the unfair competition act was committed or where

the damage occurred or is likely to occur

– The court of the place where the plaintiff (injured party) resides

MANDATORY MEDIATION IN UNFAIR COMPETITION LAWSUITS

If you want to file a lawsuit for material and moral compensation due to unfair competition, you are required to apply to a mediator before filing a lawsuit. However, this obligation does not apply to other lawsuits arising from unfair competition (determination, prevention, restitution). To avoid losing your rights, it is recommended to consult a Commercial Lawyer in Istanbul.

EXCERPTS FROM COURT DECISIONS

“The plaintiff’s attorney stated that the defendant A.. D.. worked as an engineer at the workplace belonging to the plaintiff and developed projects that provided an advantage against competitors, which were considered trade secrets by the plaintiff, during his employment. The defendant A.. D.. learned these projects because of his work at the workplace, and after his employment contract was terminated on 06/10/2010, he sent the unique machine projects belonging to the plaintiff company to his own email account from the company’s computer and then to the other defendant, who is the manager and partner of the defendant company operating in the same sector. This situation was confirmed by evidence collection by the Sincan Commercial Court of First Instance. The plaintiff claimed that the defendants aimed to gain unfair profits by unlawfully seizing and copying the projects that the plaintiff had invested in and developed uniquely over many years, and demanded the determination and prevention of the defendants’ unfair competition.”

(11th Civil Chamber         2013/11991 E., 2014/1309 K.)

“The plaintiff company claimed that the defendants, who were company employees, left their jobs together and started operating the … service under the company named … Automotive Transportation Petroleum Products Industry and Trade Ltd. Şti., after signing a non-competition agreement under Article 348 of the Code of Obligations with the plaintiff. Despite this agreement, these individuals established the company and used the knowledge and experience they gained while working at the firm in a way that constituted unfair competition, and requested the prevention of unfair competition. It was determined by a final court decision that the contractual arrangement regarding unfair competition between the parties was invalid. In this regard, the basis of the current lawsuit, which is based on the business relationship between the parties, has lost its legal ground, and the lawsuit should have been dismissed.”

(9th Civil Chamber         2019/8283 E., 2020/336 K.)

“The plaintiff’s attorney claimed that the defendant used the “PRIMA GOLD” mark in a way that would cause confusion with the plaintiff’s registered “PRIMA NOVA” mark and imitated the packaging used by the plaintiff, constituting trademark infringement and unfair competition. The plaintiff requested the determination, prevention, removal of the infringement, the collection and destruction of counterfeit products and “PRIMA GOLD” labeled counterfeit product packages, and the payment of 50,000 TL in material and 5,000 TL in moral compensation from the defendant. Although the court stated that the packages used by the plaintiff for “Prima Nova” and the defendant for “Prima GOLD” were not similar, it was observed that the word “Prima” was written in the same way and italicized on both packages, and the words “Nova” and “GOLD” were written in red and large fonts on both packages. Below these words, there was the phrase “telescopic corner shelf- yaylı banyo köşe seti” written in white on a blue rectangle. On the front side of both packages, there were photos of the product placed in the corner of a bathroom with blue tiles, and on the right upper corner of this photo, there were the same writings in a red rectangle placed diagonally. On the right lower corner of the photo, there were two rectangles in blue and green with the same warning writings inside, and the back side of the packages had similar drawings and information about the product’s assembly.”

(Civil General Assembly         2017/156 E., 2021/295 K.)

“It was decided to examine two books presented as evidence by the plaintiff under Article 266 of the CCP. It was determined by an expert report from a retired Literature Teacher that the books printed by the defendant, “…” and “…,” were compared with the books approved by the Ministry of National Education. It was concluded that the promotional logo on the books printed by the defendant violated the principle of good faith and constituted unfair competition, and the lawsuit was accepted based on this finding.”

ANKARA 12th COMMERCIAL COURT OF FIRST INSTANCE (CASE NO: 2018/57 DECISION NO: 2021/51)

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