Thanks to its geographical location, Turkey has the privilege of enjoying various advantages compared to its neighbors and has maintained its attractive position through centuries of being the home of many civilizations and as a connecting bridge between the main continents providing easy access to remote markets. Roots on the Asia harmonized with the motivation to keep up with the fast growing allure of the West, Turkey seems to prove the promising elevation thanks to the policies adopted.
With a population of almost 80 million, Turkey has a highly promising and growing economy within Europe, and continues to be one of the center of attraction for foreign investors. According to data disclosed by the Prime Ministry Office of Public Diplomacy of the Turkish Republic, the amount of foreign investment Turkey received between 2005 and 2014 alone was $144 billion compared to corresponding data from 2002, which was nine times less than the recent value.
In line with the strategic studies followed with the target deadline of 2023, Turkey is motivated to pave the way for a prospering future to be achieved. International investment is one of the core focuses to achieving that goal. The recent approach of the administrative institutions has been to achieve a friendly investment environment for foreigners and to enable local procedures to be as convenient as possible. Examples include reduced local procedures for establishing a company (down from 38 days to six days), equal treatment of national and international investors as secured by related laws, and so on. This may well be interpreted as a positive effect of the long lasting negotiations for the accession to EU where the regulations and laws have been liberated comprehensively. However, it is a total different topic to be discussed as to what extent, and whether the said can be achieved compared to what is served on the table by EU.
Looking at the data
The chart overleaf (Fig. 1) has been generated using data obtained from the Republic of Turkey Prime Ministry Investment Support and Promotion Agency (www.invest.gov.tr). It summarizes practical details as to Turkey’s level of competitiveness in different aspects compared to its neighbors.
To translate the above overall present situation in terms of levels of competitiveness and the outcome of the transparent investing environment in Turkey into numbers, the data in Fig. 2 overleaf has been gathered from the Central Bank of Turkey and Ministry of Economy and grouped per year. It will be referred to in order to further address the growing interest and investment of international firms in Turkey.
According to the 2013 statistics, all that is available so far through the publication dated June 25, 2015, of the Turkish Statistical Institute under no. 18858, regarding the Foreign Controlled Enterprises, “the production value of full enumerated part of Annual Industry and Service Statistics ( AISS), the Foreign Control Rates (FCR) in 2013 was 13.4%” and German, American and French enterprises controlled 2.3%, 1.8% and 1.5% of the total production respectively”.
Intellectual Property Rights
To nominate Turkey as one of the attractive countries for foreign investment, the question is further to be raised as to whether it is a convenient ground for the protection of intellectual property rights. This being one of the critical assets companies create after investing in a foreign country.
Referring to the data available as of February 17, 2015 at the Turkish Patent Institute’s (TPI) official website (http://www.tpe.gov.tr/TurkPatentEnstitusu/statistics), in line with the Statistical Classification of Economic Activities in the European Community ( NACE Rev 1.1), the inventions for which protection was sought by foreign filers in Turkey belongs to the following main industries listed in Fig. 3 overleaf:
Based on the data provided by the Information, Documentation and IT Department of the TPI, breakdown of the routes that filers use to get protection in Turkey is given in the chart opposite (Fig. 4). It provides statistical information from local patent registry covering 2010 to 2015.
The registry records of 2010-2015 for patent applications filed by foreign firms show that 37,260 cases out of a total of 38,768 sought patent protection through validation of European Patents in Turkey. The number of national phase entries for Patent Cooperation Treaty (PCT) applications in the same period is 877 cases, while the national patent applications as filed by foreign firms remains at the a limited case number of 631.
Regarding the origin of the foreign companies opting for validation of European Patents the largest group are based in Germany (9,494 cases), followed by the US (6,014 cases), and then Switzerland (3,194 cases), Italy (2,921 cases), France (2,765 cases) and the UK (1,357 cases). For national phase entries, the US tops the list with 202 applications, while China (151 cases), Japan (111 cases), Korea (100 cases), Germany (41 cases) and the Russian Federation (32 cases) are among the top countries to prefer to use the international patent system to protect inventions in Turkey. The national patent applications, reaching a total number of 631 files between 2010 and 2015, are again mirroring the leading presence of US and Germany respectively while Asian firms may well be listed as the following countries with noticeable numbers. Still, the recent numbers for 2015 even reflects a change of attitude of Asian firms who also start to prefer the regional path towards the protection of the inventions in Turkey.
It is of course not surprising to note that Germany and the US are the two leading top patent filers in Turkey. This is a reflection of the presence of German and US firms in Turkey, their market share, and the investment directed from those countries. And, in parallel, they expand the protection of their inventions into Turkey via validation of European Patents as these countries are among the top patent filers before the European Patent Office too.
National Turkish Patents
Still, for international firms to prefer to file national patent applications, is the granting system for inventions in Turkey actually friendly and promising?
The granting system for inventions are regulated under the provisions of Decree Law No. 551 and Regulations pertaining to the protection of inventions as in force as of June 27, 1995. The current decree law and the respective regulation in relation to the implementation of the said was put into force to achieve practical solutions that reflect the corresponding international treaties, regarding the protection of inventions. In 2012 a draft was promulgated for a smoother adoption of European regulations. This was followed by inevitable arguments and discussions in relation to the coherency of the revisions and whether the proposals could realistically be put in practice by the TPI once the technical background and the capacity of the patent examiners was considered. The related patent draft has not yet been come into force.
Therefore, the current practice will be summarized stating that inventions are protected under three main types to be listed respectively as follows:
- patent with examination (term of protection is 20 years)
- patent without examination (term of protection seven years)
- utility model certificates (term of protection is 10 years)
Where a term of protection of 20 years under patent with examination is sought, the applicants are notified with an official notification once due formal examination is completed. Where an official search as to novelty is to be requested that should be filed within 15 months, either as of the actual date of filing or the date of priority if claimed. Once the search report is conducted and notified, the applicant has the right to select a system either for a patent with or without examination.
If a system for a patent without an examination is requested by the applicant, the next step will be the publication stage. This is followed by a notification as to the decision of grant.
For a patent with examination to seek a term of protection of 20 years, the applicant is to proceed with a request for examination, while an official request for an examination to be carried out is limited to three examination reports. That is, if the final and third examination report is not affirmative as to the patentability of the claimed invention, the application will then be rejected and the applicant has a further right to file counter arguments against the said decision before the respective Specialized IP Court in Ankara.
A Utility Model Certificate on the other hand may well be nominated as the smoothest, yet weakest, type of protection for inventions considering the administrative steps, yet the capacity of enforcement. The procedure may well be summarized to include an initial filing proceeded by a publication to be finalized with a notification of decision of grant. The respective type of protection is granted where no technical search and examination are carried out. This leaves the rights owner vulnerable to third party arguments on the patentability of the claimed and protected invention.
Translation and Search/Examination
Turkey is not a party to the London Agreement regarding translation requirements of granted European Patents during national validation stages. Even so, the European Patents option is more practical than local practices that have to be followed for either local patent applications or national phase entries for International Patent Applications (PCT). Basic translation requirements along with due costs to occur, during local procedures, the period either from national filing or national phase entry to a possible stage of grant will literally be time consuming.
For PCT applications where the IPRP is available at the time of national phase entry, further local procedures are still friendly, since a notice of decision of grant will be notified if the respective IPRP is affirmative as to the patentability of the claimed invention, since TPI does not further proceed with a local examination. On the contrary, where the international search report is available during national phase entry, the applicants are to proceed with an examination to be carried (as limited to three as stated above) and the local procedures may last longer than projected. Indeed, one of the reasons for delays is the current practice of the TPI, whereby applicants are requested to select search/examination offices authorized to act on behalf of the TPI as subsidiary offices.
Due to the limited technical capacity of the related department of the TPI, once a local patent or a national phase application is filed, applicants are notified by the TPI as to whether the related technical field of the claimed invention falls within the scope of fields to be searched and examined by the patent examiners of TPI. Where it does not, the offices notified to be selected are the European Patent Office (for search only), Russian Patent Office, Danish Patent Office, Swedish Patent Office and Austrian Patent Office. Inevitable delays are experienced due to the cooperation between the selected authority and the TPI covering communication of the request, sequence of operations, and the deadlines to be followed for the issuance and notification of the reports by the selected authority to the TPI and then on to the applicant by the TPI, etc.
As a sign of a promising change, thanks to the dedicated work of the Turkish Patent Institute, the related procedures have evolved into a scheme whereby the number of patent applications searched and examined by local patent examiners has climbed to 45% in 2014. A big improvement considering only 9% in 2009 were searched and examined by local examiners. Recently, TPI declared that the corresponding rates are increased by 32% to reach to a total file number of 1,038, meanwhile all due related procedures are planned to be attended locally by TPI by 2016.
Under current practice, and the alternative types of protection available, the approach and the preferences of the filers varies depending on their priorities. It could be either to achieve a type of protection and to delay concerns regarding possible third party attacks to an unknown future, or to start to struggle during the administrative stages before TPI to seek a term of protection with shields of criteria of patentability affirmed.
Looking back again at the portfolio of foreign filers, the current statistics available in the TPI’s registry records show that the regional path via validation of a granted European Patent is the most preferred route to protecting inventions in Turkey. As of 2000, when Turkey became a member of the European Patent Convention, there has been a remarkable increase in organizations using this method and a subsequent decrease in the numbers of patent applications recorded at the local registry for national phase entries.
We assume that the leading position of the regional path into Turkey through validation of European Patents will prevail, depending on i) the concentration of the foreign filers coming mainly from major European countries and the US and ii) the adaptation to the new Unitary Patent era, which offers advantages yet also brings the need to put in place practical strategies for gaining IP protection in non-EU countries.
Trademark & Patent Attorney
This Article first published and circulated at The AIPPI World Congress 2015 in The Patent Lawyer Magazine, of CTC Legal Media.