CANCELLED TRADEMARK CASES STILL UNRESOLVED

UNCLAS SECTION 01 OF 02 ANKARA 001843

SIPDIS

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DEPT PLEASE PASS USTR FOR MMWOREY, JCHOE-GROVES
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E.O. 12958: N/A
TAGS: EINV ETRD KTDB KIPR USTR TU
SUBJECT: CANCELLED TRADEMARK CASES STILL UNRESOLVED

REF: A) 08 ANKARA 2175, B) 08 ANKARA 2191, C) ANKARA 15, D)
ANKARA 48, E) ANKARA 117

This cable is sensitive but unclassified. Please protect
accordingly.


1. (SBU) Summary: As reported in reftels, the temporary
suspension in 2008 of the criminal provisions of Decree 556
(Trademark Law) led to the cancellation of as many as 9,000
IPR cases and the possible re-entry of millions of units of
seized counterfeit goods into the Turkish market. Previously,
Ministry of Justice officials promised that these cases would
be considered under the "unfair competition" provision of the
commercial code. However, some recent lower and appeals court
rulings have found no legal basis for criminal prosecution and
have ordered that the seized counterfeit goods be returned to
defendants. Although the Ministry of Justice could intervene
and issue new guidance to the courts, this seems unlikely. If
the counterfeit goods re-enter the market, the new trademark
law would give the companies the right to re-seize the goods
if counterfeiters decided to sell them again, but would entail
enormous costs to injured companies to re-open court cases, as
well as requiring law enforcement to duplicate seizures,
presumably against more savvy criminal operations. End
summary.


2. (SBU) On July 5, 2008, the Constitutional Court struck down
the provisions of the "Protection of Trademarks" law (Decree
556) that made trademark violations a crime. A new amendment
to re-criminalize trademark violations was passed in January
2009, but was not retroactive, causing the cancellation of up
to 9,000 pending IPR cases (see reftels for further detail).
At the time, the Ministry of Justice promised that the
canceled cases would be considered under the "unfair
competition" provision of the commercial code. Unfortunately,
recent lower court rulings found no legal basis for criminal
prosecution and ordered that confiscated goods should be
returned to the former defendants. Reportedly, many of the
defendants were dealing in such large volumes - tens of
thousands of units - that it was strongly likely that they
were organized crime elements engaged in manufacture as well
as distribution, rather than just small-time sellers.


3. (SBU) Representatives of several companies affected by the
recent rulings met with ECON and FCS staff on December 10,
2009 to identify potential courses of action to stop the
counterfeit goods from re-entering the market. Many of the
companies have appealed the decisions to return the goods, but
the first wave of Court of Appeals decisions indicates that
the rulings of the lower courts will be upheld. Thirteen
international brands have identified 5,374 cases that have
been or may be impacted, representing more than 2.6 million
units of counterfeit goods which would return to defendants.


4. (SBU) The courts have ordered the destruction of products
in some cases, such as cosmetics and perfumes, on the basis of
public health concerns. This would not apply to textiles or
footwear products, and as it is only a crime to sell
counterfeit goods (possession is not criminal),the police
cannot simply re-seize the goods absent an actual attempt to
market them. The companies claim that the Minister of Justice
could make an extraordinary appeal and issue guidance to the
courts, but this seldom-used option is unlikely, and would be
dependent upon a series of strict conditions that this
situation does not appear to meet. Another option would be
for the GOT to criminalize possession of a sufficiently large
number of counterfeit goods (similar to antinarcotics laws
that presume the intent to distribute). The companies are
investigating that option, but such a legislative fix is
unlikely to happen quickly enough to help.


5. (SBU) Companies affected by these cases are left with few
options except to prepare for the counterfeit goods to re-
enter the market. The new trademark law would give them the
right to re-seize any goods which counterfeiters attempt to
sell again on the market, and they could then be tried under
the new code. The associated legal costs are likely to be
enormous, however, and goods returned to smaller street
vendors are probably not going to justify this extra expense
and effort.


6. (SBU) Comment: The position of the Turkish courts is

ANKARA 00001843 002 OF 002


legally correct - in the absence of a crime, the state has no
legal right to deprive individuals of property. As the only
reason there is no crime is because of the GOT's own inability
to fix a technical legal problem by a known deadline, however,
the GOT should be more willing to work out an equitable
solution that does not allow counterfeit goods back onto the
market. Post will continue to raise this issue with GOT
interlocutors, especially as we begin discussions with them on
this year's Special 301 process. End comment.