Mediation in patent disputes
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Using methods of alternative dispute resolution (ADR) has recently become more common in Turkey. According to the Ministry of Justice’s official newsletter (October 2020), 1,045,875 of 1,520,416 legal disputes have been solved through voluntary and mandatory mediation since 2013 when the Mediation Act entered into force.
Turkey has a well-established legal system, with national and international convention tools enabling the use of arbitration procedures and the enforcement of arbitration awards. Since 2013 it has been focusing on mediation as another ADR method to encourage parties to opt for an out-of-court settlement. Turkey first enacted legislation for voluntary mediation, then gradually introduced mandatory mediation rules that have since affected certain IP matters including patent disputes.
Court system for IP litigation
Turkey has specialised IP courts established in Istanbul, Ankara and Izmir, which have jurisdiction in all IP matters, including patent disputes. Other cities have specific first-instance courts that are designated as specialist IP courts. These specialised courts comprise one judge, who has no technical background but is experienced in IP disputes.
In practice, Istanbul is the city in which the highest number of patent litigation matters are filed. It is where the highest number of agents of foreign IP rights holders are domiciled and it is the central city for most industrial activities. The Istanbul IP courts have been involved in the most complex patent disputes and have issued key decisions shaping the patent litigation environment.
Turkey has a three-instance court system and civil procedure, consisting of the first-instance court, the regional appellate court and the Supreme Court. Depending on the complexity of the matter and the various the rounds of expert examination required by the panel of experts during proceedings, a straightforward patent litigation action can take around 24 to 36 months from filing the action up to the first-instance court’s decision. It takes a similar time for appeals to be considered before a regional appellate court and the Supreme Court.
A patentee whose patent has been infringed will aim to get the court ruling as soon as possible to avoid the market being saturated with the infringing products or technology. A quick outcome is crucial in the rapidly changing technology world where patents and protected innovations can become rapidly outdated. Patents grant a limited period of exclusivity (ie, 20 years of protection), which must be used efficiently. Patent disputes inherently include technical complexity. This complexity might be relatively low for a simple mechanical dispute; however, it may increase dramatically with IT or biotechnology disputes, which require additional sophisticated technical expertise during litigation.
Patent disputes can involve trade secrets, know-how that must be kept strictly confidential during litigation. A patent dispute may also involve more than one jurisdiction with respect to the patented technology, which can prove costly to parties.
Considering the characteristics of a patent dispute, a patentee can opt for ADR to:
- obtain a speedy outcome;
- benefit from confidentiality;
- use a more flexible procedure; and
- control selection of the technical expertise.
Implementing a well-structured mediation procedure can result in both the patentee and the opposing party benefiting.
The Mediation Act entered into force on 22 June 2013 and introduced mediation as an ADR method. The legislation provided that the settlement agreements received at the end of the mediation would have the effect of a court verdict on certification by the court. In 2018 mediation became mandatory for labour disputes, which resulted in huge interest and reached a considerable number of out-of-court settlements.
By 1 January 2019 the Code of Commerce was amended to ensure that the implementation of mediation before instituting a court action became mandatory. According to this amendment, the plaintiff should submit the mediation minutes indicating the outcome of the mediation proceedings together with the motions for instituting the court action. In the absence of the minutes, the court will grant the plaintiff one week to submit the minutes. If it is determined that the action has been filed without implementing the mediation procedure, the court action will be dismissed on procedural grounds due to the lack of condition enabling to file the court action.
The amendment became mandatory for all types of commercial dispute involving the collection of receivables or compensation claims. The following patent infringement actions involving compensation claims are affected by this change:
- disputes regarding the payment or calculation of remuneration for employee inventions and designs; and
- disputes regarding licence agreements.
Is mediation mandatory for all IP disputes? The reply will be affirmative with respect to all IP disputes that include a compensation request. However, the following are not affected by mandatory mediation requirements:
- actions for determining evidence;
- ctions involving preliminary or permanent injunction; and
- the seizure and destruction of infringing products or machinery where there is no separate compensation request claimed within the context of the same action.
Mandatory mediation procedure will not be applied if arbitration or another ADR method is required or if the parties in a dispute have already agreed to an arbitration agreement.
How does the mandatory mediation procedure work?
- Mediators are appointed from a list of registered mediators according to specialisation.
- A mediator from the list can be selected by agreement of both parties. If this is not possible, the mediation bureau established in the jurisdiction of the competent court will appoint a mediator. The Civil Court of Peace will work as a mediation bureau in the absence of a mediation bureau in the jurisdiction of the competent court.
- Mediation proceedings will be concluded within six weeks of application. Where necessary, this can be extended for a further two weeks only.
- Unless agreed to the contrary by the parties, the mediation proceeding will be kept confidential. The mediator, parties and third parties attending the mediation proceedings:
- cannot disclose requests or proposals made by the parties;
- cannot disclose suggestions or acknowledgement of an act or claim;
- cannot disclose documents prepared only for mediation purposes; and
- cannot use these document as evidence in a court action.
- The minutes of the first meeting can disclose only the information of the parties and their intention for having the matter resolved through mediation.
- A party which fails or refuses to attend the first meeting in a mediation proceeding will be ordered to pay the subsequent court costs, even if its claims are partially or totally accepted by the court.
- The plaintiff will be entitled to file the action if no settlement is achieved by the end of the mediation, if the other party does not attend the mediation proceedings or if it attends but refuses the settlement.
The existence of the mandatory mediation rules does not prevent parties from using the voluntary mediation procedure for patent infringement claims, whether or not there is monetary relief.
The ministry has recently decided to add an IP specialisation to the mediation procedure by training mediators to be specialised in areas of intellectual property, as well as other areas such as construction, labour and sports law. With such a specialisation established, the mediation bureau can appoint a specialised mediator. However, there is room for improvement regarding specialised mediators, especially in patent disputes as a result of their technical nature.
A new era for mediation
According to the Law on Mediation in Civil Disputes, the settlement agreements that are mediated and signed jointly by the parties are deemed in Turkey to be a document in the nature of a verdict. However, this is not valid for foreign commercial settlement agreements mediated outside Turkey. Likewise, the enforcement of settlement agreements mediated and signed in Turkey are not accepted by foreign courts.
On Turkey’s ratification of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention) on 25 February 2021 and the enactment of the Law Regarding the Approval of the United Nations Convention on International Settlement Agreements Resulting from Mediation (7282), the Singapore Convention is expected to enter into force on 22 October 2021.
With the Singapore Convention, the settlement agreements that have been mediated by conflicting parties and resolved commercial disputes of an international nature will be enforceable in Turkey. The convention enables the enforceability of foreign commercial settlement agreements in Turkey, including patent disputes.
Being party to the Singapore Convention will value settlements obtained through the WIPO ADR procedure, which offers effective mediation with specialised neutral parties who have deep IP expertise and provides the enforceability of settlements.
The national and the international legislation that is now applicable in Turkish law regarding ADR, and particularly mediation, enables the implementation of ADR procedures in SEP disputes. Before initiating any action against infringing past use, an SEP owner must mediate before filing an action as per mandatory mediation. Mandatory mediation for IP disputes that involve a commercial payment can evidently pave the way for negotiating a licence for the SEP in FRAND terms.
Sui generis settlement method
Article 35 of the Turkish Attorney at Law Act provides the possibility to settle a matter between the attorneys of two parties before litigation or at its early stages before the first hearing is held. The settlement agreements concluded and signed by the parties and their attorneys will have the effect of a verdict, with the condition that it meets simple procedural requirements set out in Article 35. This option is another valuable remedy for use in patent disputes as it is simple and requires no mediator involvement.
Both mediation and sui generis settlement are valuable ADR methods, as they provide quick, less costly procedures, with a settlement that gives a verdict effect. Having a verdict effect means that the provisions of the settlement agreement achieved on mediation or sui generis settlement can be executed as a finalised court order.
Moreover, in both procedures the evidence exchanged during negotiations cannot be used in a possible litigation in case the parties fail to reach a settlement that allows them to act more flexibly in exchanging facts and documents within the context of settlement negotiations.