Edition 54: 25 October 2017
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Turkish Parliament Considers Legislative Regime for Crowdfunding

Turkey’s parliament is considering a new legislative regime focused on crowdfunding. It is the first time that crowdfunding structures receive specific attention from Turkish legislators. The proposed regime includes definitions, licensing aspects, as well as the roles of various regulators.

Notable aspects of the proposed regime include:

– Defining crowdfunding as the collection of money from the public, in order to provide funds for a project or an entrepreneur’s needs, within the principles determined by the Capital Market Board (“Board”).

– Crowdfunding platforms are defined as the institutions performing electronic mediation activities for crowdfunding.

– Crowdfunding platforms will be required to obtain a license from the Board.

– The Board will determine procedures and principles for the crowdfunding system and platforms via additional regulations announced at a later date.

– The Board will be entitled to take measures and cancel platform licenses in certain circumstances.

– The Information Technologies and Communications Authority will be entitled to block websites at the Board’s request, if the Board determines that:

– Crowdfunding activity is being performed without license, or

– A Turkish resident performs a derivative transaction as leveraged transaction outside Turkey.

Please see Articles 109-113 of the Draft of Amendment to the Tax Laws and Decree Laws Including Crowdfunding Regulations at this link, submitted to parliament on 27 September 2017 (only available in Turkish).

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Turkey Announces Compensation Rules for Employee Inventions made Within Higher Education Institutions

Under Turkey’s recently overhauled intellectual property regime, employees in higher education institutions are entitled to a reasonable fee for employee inventions. The fee must be at least one third of the employer’s profit from the invention. Details have now been announced to clarify minimum standards, profit and fee calculation, dispute resolution, as well as and related matters.

The Regulation on Inventions of the Employees, the Inventions made in the Higher Education Institutions and Supported by the Public Institutions and Organizations (“Regulation”) was published in Official Gazette number 30195 on 29 September 2017, entering into effect the same date.

Employees and employers are free to negotiate the terms of compensation for employee inventions, although contracts must meet the Regulation’s minimum standards. Agreements which are disadvantageous and unfair to employees will be deemed invalid.

Calculating profit

Accoring to the Regulation, the profit obtained from the invention is the sum of the profit obtained from the invention’s:

– Use by the enterprise, calculated via:

– Comparison with a similar free invention,

– Calculating the difference between enterprise’s costs and revenues, or

– Estimation (if the other methods are not possible).

– Licensing, transfer or exchange, calculated via detailed methods to determine net income.

Types of employee inventions

Employee inventions are divided into three groups, with a different coefficient used in each compensation calculation for each:

1st Group: Inventions which are not directly relevant to the employee’s field of duty and enterprise did not contribute to.

2nd Group: Inventions which arose in response to needs determined by the enterprise, where the enterprise contributed to the invention, but it is not directly relevant to the employee’s duties.

3rd Group: Inventions which arose within the employee’s duties and the enterprise fully contributed to.

Dispute resolution

The Regulation introduces arbitration for disputes, in line with relevant provisions of the:

– Code of Civil Procedure numbered 6100.

– Code of International Arbitration numbered 4686.

If the parties are not able to resolve disputes about methods and payments within two months of the employee notifying the higher education institution, the matter can be escalated to arbitration.

Public scholarships or grants supporting experimental work

Cooperation agreements must be signed where public institutions offer support in the form of scholarships or grants, intended to allow experimental work to occur. The inventor must inform the institution whether he/she claims ownership rights over any inventions.

The inventor must notify the institution about inventions within one year, or the institution will receive ownership rights free of charge.

If the inventor claims ownership, the institution can receive a license right, free of charge, within the scope of the institution’s purposes.

Please see this link for the full text of the Regulation (only available in Turkish).

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Turkey Updates Rules for Organized Natural Gas Wholesale Market

Turkey’s Energy Market Regulatory Board (“Board”) has introduced principles and procedures for the organized natural gas wholesale market (“Market”). The updated rules focus particularly on market conduct, obligations for Market participants, registering transactions, as well as settlement, imbalance and guarantee mechanisms.

Notable aspects of the updates include:

– Enerji Piyasaları İşletme A.Ş. (“Market Operator”) must carry out activities with respect to Market’s and the Platform’s operations, in accordance with related procedures and principles.

– The subscription agreement for the Standard Carriage Platform (“Platform”), which must be signed by all Market participants, will be published on the Market Operator’s website.

– Transmission companies must inform the Market Operator of the capacities used by charterers, under executed Standard Carriage Agreements.

– Market participants must be registered with the Market Operator.

– Market participants must deliver their offers to the Market Operator via the Platform. Market participants can see offers on the Platform. Market participants must notify the Market Operator through the Platform if an offer is accepted.

– Transaction settlements in the transmission system and daily imbalances by charterers will be made according to a specific formula.

– Market participants must give a daily transaction guarantee to cover financial risks arising from advance payments related to transactions carried out in Market. The guarantees will be liquidated if an advance payment is not made in time.

– Charterers must give a guarantee to the transmission company for financial risks that may arise from imbalances.

– Market participants must sign an agreement with the Central Settlement Authority regarding guarantee transactions.

– Each market participant must open a guarantee account with the Central Settlement Authority.

– The Market Operator will notify the invoice amounts and imbalance guarantees to the relevant market participant and to the Central Settlement Authority at 15:45 each day. Market participants must then deposit the necessary amounts in their Central Settlement Authority account by 15:00 the next day.

– If a debt arises from transactions on the Platform, the market operator will recover this amount from the market participant’s Central Settlement Authority account.

Please see this link for the full text of the Board’s decision dated 21 September 2017 number 7293-7, published in Official Gazette numbered 30189 on 23 September 2017, entering into force on the same day (only available in Turkish).

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Turkey Updates Rules on Double Taxation Prevention Treaties for Independent Professional Services

Turkey has clarified rules for taxing income derived from independent professional services (and similar activities) carried out within Turkey, by residents of countries which have double taxation prevention agreements with Turkey. The number of days a company’s employees spent in Turkey will now become the only basis for calculating the company’s duration of stay. Foreign residents must now also apply for a Certificate of Residence, from the competent authorities in their own country.

The Communiqué on Prevention of Double Taxation Treaties Serial Numbered 4 (“Communiqué”) was published in Official Gazette number 30192 on 26 September 2017, entering into effect the same date.

Calculating the Duration of Stay in Turkey for Legal Entities and Enterprises 

Previously, the number of employees at a company and their duration of stay in Turkey were taken into account when calculating the company’s duration of stay in Turkey. The Communiqué clarifies that the number of days employees spent in Turkey will become the only basis for calculating the company’s duration of stay. The company’s number of employees will no longer be considered.

Under the new approach, if a legal person or enterprise which is resident in another country performs 20 days of independent professional service activities in Turkey with ten employees, the duration of stay will be calculated as 20 days. Previously, the duration of stay would have been calculated as 200 days.

Calculating the Duration of Stay in Turkey for Projects which are the Same or Related 

Double Taxation Treaties occasionally foresee that the duration of stay in Turkey for projects which are the same or contingent on each other will be evaluated together. The definitions of “same and “related” projects in this context have now been clarified.

Certificate of Residence 

To benefit from Double Taxation Treaties, foreign residents must now apply for a Certificate of Residence, obtained from the competent authorities in their country. The original of the Certificate of Residence must be submitted to Turkish tax authorities, alongside with a certified Turkish translation. Failure to submit a Certificate of Residence will mean local legislation will apply, instead of the relevant Double Taxation Treaty.

The certificate for each calendar year must be valid until the fourth month of the following year. An original, notarized or certified Turkish translation of the certificate must be presented to the relevant tax office or tax accountants.

Please see this link for the full text of the Communiqué (only available in Turkish).

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Turkey Introduces Electronic Invoices and Archives for Financial Factoring Transactions

Turkey’s Banking Regulation and Supervision Agency has announced a series of changes, allowing electronic invoices and electronic archives to now be used for factoring transactions. Details are also announced for retaining and using these electronic documents during financial factoring transactions.

The Regulation Amending the Regulation on Procedures and Principles in Factoring Transactions (“Amendment Regulation”) was published in Official Gazette number 30202 on 6 October 2017. 

Notable changes include:

– Definitions are introduced for:

– “Electronic archive”: Preservation and presentation of electronic invoices, having the necessary conditions under General Communique (Serial No: 433) of Tax Procedure Law published in Official Gazette number 28867 on 30 December 2013.

– “Electronic invoice”: An invoice created in the form of an electronic document, having the necessary conditions under General Communique (Serial No: 397) of Tax Procedure Law published in Official Gazette number 27512 on 5 March 2010.

– During factoring transactions, a representative of the customer must sign a receipt notification form and billing information before finance is given. Electronic invoices and electronic archives can now be used in this process, as per procedures which will be announced by the Revenue Administration.

– Organizations must retain original copies of invoices, to be presented for inspection. However, copies of electronic invoices are excluded from this rule.

Please see the link for full text of the Regulation (only available in Turkish).

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Turkish Patent and Trademark Office Publishes Guide for Proving Use of Trademarks

The Turkish Patent and Trademark Office (“TPTO”) has published a guide (“Guide”) outlining the factors which it considers when assessing proof of use under Article 19 of Industrial Property Law (“IP Law”). The TPTO aims to harmonize Turkish intellectual property law and practice with the EU’s approach. Accordingly, the Guide takes the EUIPO and European Court of Justice’s case law into account.

In opposition proceedings based on similarity, where the opponent’s trademark is registered for five or more years, the TPTO is entitled to ask (at the applicant’s request) for proof of the use, as of the filing date or date of priority of the later trademark application. If the opponent does not prove its use, the opposition will not be accepted. If the use only covers some goods and services for which the basis trademark is registered, the opposition will only be examined in terms of these limited goods and services.

The Guide states that a request for proof of use should be clear, explicit and unconditional. A proof of use request must be made within one month of the TPTO notifying about the trademark opposition.

When proving use, the Guide states that evidence should be submitted within one month after receiving the request. No new evidence can be submitted after this period. If no proof of use is submitted, the TPTO will not further assess the subject trademarks within the opposition.

The Guide states that evidence should be explicit, clear and reliable enough to enable the parties to evaluate them and reach an opinion without further inquiry. It should include information on the nature, manner, place, time and scope of use in relation to the goods and services the trademark in dispute is registered for, should be included.

The Guide outlines examples of evidence of use as including.

– Sales invoices.

– Catalogues.

– Price lists.

– Product codes.

– Product samples.

– Packaging.

– Shop signs.

– Commercial videos.

– Advertisement images.

– Invoices for promotions and attended fairs.

– Market research and surveys.

– Information on business activity.

– Statements from experts or involved people, such as suppliers and customers.

The Guide explains the types of use which can form the basis for opposing a trademark registration:

– Use by the owner themselves, or by an authorized third party.

– Use within the five years before the date of the disputed application or priority right.

– Use in a distinctive manner (for example, on the product itself or on the packaging).

– Use as the trademark was originally registered: Using the trademark with different elements may also suffice as proof, provided the trademark’s distinctiveness is not compromised. However, the trademark’s use does not necessarily need to match how it was registered.

– Genuine use: Extensive use of the trademark in a manner to make it recognized in the market, as well as to distinguish it from other enterprises’ goods or services, either in the market or places which may influence the market.

– It is not necessary to use the trademark across all of Turkey. Use in a very limited part or region is sufficient, provided the use is genuine.

– Proof of non-use: If some obstacle hindered use of the trademark during the relevant period, the owner may prove non-use for good reasons. The obstacle must be independent of the trademark owner’s will and beyond their control, as well as also not be attributed to the owner’s behaviour.

Please see this link for the full text of the Guide (only available in Turkish).

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Turkish Constitutional Court: Including Interest and Court Expenses in Fine for Bounced Cheques Violates Constitutional Rights to Certainty and Predictability

The Turkish Constitutional Court recently considered calculation of judicial fines for bounced cheques. It decided to remove interest and court expenses from the calculation on the basis that this violates the constitutional principle that no crime or punishment should occur without law (Article 38). An individual’s right to certainty and predictability is contained within this constitutional right.

The matter was escalated from a First Instance Court, within a case based on Article 5 of the Law of Cheques. The provision regulates criminal responsibility for cheque drawers, as well as restrictions on drawing cheques and opening cheque accounts. The lower court claimed the provision contradicted a variety of constitutional rights.

The Constitutional Court rejected the majority of the lower court’s arguments, but ultimately decided to revoke part of Article 5. The revoked aspect stated that judicial fines imposed on parties who cause bounced cheques cannot be less than the sum of:

– The cheque’s amount.

– Interest (as per the default rate for commercial transactions).

– Court expenses.

The Constitutional Court held that considering court expenses and interest while determining a judicial fine causes unpredictability. The court decided that this violates the constitutional principle that no crime or punishment should occur without law (Article 38). An individual’s right to certainty and predictability is contained within this constitutional right.

Please see this link for the full text of the Constitutional Court decision (only available in Turkish).

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