In recent years, our country has seen significant efforts in producing products domestically that were previously imported (import substitution). Every day, we proudly and happily hear about new ventures and facilities established for this purpose. With super incentive programs like HAMLE, our government strongly supports all efforts aimed at reducing the current account deficit and making our economic dynamics more stable.
Moreover, many of the products subject to import substitution are not only targeted at the domestic market but also address a wide hinterland. Therefore, the export of value-added products produced through import substitution efforts in our country to neighboring and even distant geographies is definitely considered, and is already happening to some extent.
So far, everything sounds great, but companies developing technological and innovative products need to pay attention to the path they are on as they progress toward their goals. Producing and selling an innovative product already in demand in the market is like trying to reach a beautiful garden through a minefield. If you identify the locations of the mines, you can reach your goal smoothly, but if you are unaware that you are in a minefield, you could face serious problems.
What do I mean? Every trademark, design, patent, or utility model registration obtained by third parties in your field of activity is essentially a mine laid on the path you walk by your competitors.
The way to avoid stepping on these mines is to better understand intellectual property instruments, to have at least a basic understanding of how infringements occur in this area, and to plan your business with this parameter in mind, with the support of a competent patent office.
Let me explain the process with an example. Let’s say a surgical instrument with significant advantages over older solutions, widely used globally, is imported from abroad and sold to public and private hospitals for around 10,000 EUR. You conducted a feasibility study and found that even with a good profit margin, you could sell the same equipment in the domestic market for 2,500 EUR. You also have no short- or medium-term export goals.
Before dreaming big, one of the first things you should do at this point is to immediately contact a competent patent office and ask them to prepare a freedom-to-operate (FTO) report to see if you are infringing on anyone else’s intellectual property rights while producing and selling this equipment in Turkey.
The patent office will examine at least the following three points: whether there is a trademark registration similar to or exactly the same as the name you gave to the product, whether there is a design registration for the product’s appearance, and finally, whether there is a patent or utility model registration for the technical functions that provide an advantage in the product (e.g., a body design that makes it lighter, electronic systems that enable more precise operation).
If the answer to any of these is yes, you do not have the freedom to operate in Turkey, and before entering the market, you must take steps to get out of the radar of the conflicting intellectual property right under the supervision of the patent office you are working with. Generally, it is easier to get out of the radar of third-party trademark and design registrations, but if the infringed intellectual property right protects technical functions through a patent or utility model, the process is more challenging, and it is not always possible to circumvent a well-constructed patent or utility model.
Let me also mention that having a registered patent, utility model, or design does not necessarily mean that you are not infringing on someone else’s rights in that area. Intellectual property rights are negative rights and grant the owner the right to exclude others from producing the product, rather than the right to produce it. For instance, if a pencil is patented by Company A and you obtain a patent for a pencil with an eraser, you might still infringe on Company A’s patent if you produce the pencil with an eraser without obtaining permission from Company A for the pencil part (core technology). In summary, if you make innovations on a core patented by someone else, even if you obtain a patent for those innovations, you cannot commercialize a product that includes the core technology without the permission of the core technology owner.
At this point, I would also like to briefly mention the basic steps involved in the FTO (Freedom to Operate) analysis for patents. FTO is a detailed subject worthy of a separate article, but I will try to convey only the general framework here. FTO should be conducted by patent attorneys/experts experienced in this field, as it involves not only technical but also legal analyses (like the warning not to try this at home).
The following minimum information must be gathered initially to properly determine the scope of the FTO: what are the patentable elements in the product to be produced, by what technical methods do these elements perform their functions, will you produce the solutions providing these elements or will you procure them from somewhere, and how will you procure them (e.g., by obtaining a license, purchasing the product/component), and in which countries will you produce and sell the product.
Based on this information, a patent pool is created, and patents in this pool that pose a risk in terms of claim scope and geographical scope are identified. Literal and, if necessary, doctrine of equivalents-based infringement analyses are conducted for the identified risky patents, and an FTO report is prepared accordingly. I also recommend that FTO reports include a roadmap for the subsequent process. This roadmap can include at least actions to be taken regarding patents still in the application process but infringing based on their current claims, and/or unpublished patents identified during the FTO process.
To summarize, if you ask what happens if you infringe on an intellectual property right, I must inform you that you could face serious legal sanctions that could damage your business and reputation. What are these? An IP owner with an infringed registered intellectual property right can file a lawsuit to request compensation for lost profits, seizure of counterfeit products (such as those in your warehouses or with your dealers), seizure of production equipment specifically used for these products, and even public announcement of the infringement in national media. If the infringement involves a trademark right, additional administrative fines and even imprisonment in case of repeat offenses may apply.
Of course, alternative dispute resolution methods are always pursued before going to court. For example, although rare, some IP owners may take a constructive approach and grant you a license to use the intellectual property right in exchange for a fee (a fixed amount and/or a percentage of sales).
I hope I have conveyed useful information.
With love and respect.
Erdem Kaya
