The IP Court of Istanbul recently dismissed a copyright infringement action involving compensation claim, on grounds that the plaintiff has not implemented the procedural requirement to apply for meditation before filing the court action.
The Court's decision is based on the recent legislation (Law No: 7155) which entered into force on January 1, 2019. The Law requires the implementation of the mediation procedure before instituting the court action. This means that the plaintiff should submit the mediation minutes indicating the outcome of the mediation proceeding together with the motions for instituting the court action. In the absence of the minutes, the Court shall grant 1 week to the plaintiff to submit the minutes and if it is determined that the action is filed without implementing the mediation procedure; the court action shall be dismissed on procedural grounds due to the lack of condition enabling to file the court action.
We aim to provide the context of the new legislation concerning the mandatory mediation as follows:
Which type of disputes will be effected?
According to the newly enacted Law No. 7155, the mediation became mandatory for all types of commercial disputes involving the collection of receivables or compensation claims.
How will this affect the IP disputes?
IP disputes with monetary compensation claims; such as trademark, patent, industrial design, geographical indication, copyrights infringements involving compensation claims, disputes with regard to the payment or calculation of remuneration of employee inventions and employee designs, disputes with regard to license agreements will be effected by this change.
Will the mediation be mandatory for all IP disputes? If no, what are the exceptions?
No. There is an exemption for the actions of which both parties are non-merchants in copyright lawsuits only. In other words, if both parties of a copy-right dispute are non-merchant real persons, the plaintiff will be able to institute the action without commencing the mandatory mediation.
Actions for determination of evidences, actions involving preliminary injunction and/or permanent injunction, seizure and destruction of infringing products and/or machinery where there is no separate compensation request claimed within the context of the same action will not be effected by the mandatory mediation requirement.
Mandatory mediation procedure would not be applied if arbitration or other ADR methods are required as per the special laws or if the parties in a dispute have already agreed to an arbitration agreement.
How will the mandatory mediation procedure work?
- Mediators will be appointed from a list of registered mediators according to the specialization of the mediators.
- A mediator from the list can be selected upon 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 established within the jurisdiction of the competent Court.
- Mediation proceedings shall be concluded within 6 weeks as of application. This time period can be extended for only two weeks if necessary.
- Unless agreed to the contrary by the parties, the mediation proceeding will be kept confidential. The mediator, parties and third parties attending to the mediation proceedings can neither disclose the requests and proposals made by the parties, suggestions or acknowledgement of an act/claim, documents prepared only for mediation purposes nor use these as an evidence in a court action,
- The minutes of the first meeting can only disclose the information of the parties and their intention for having the matter resolved through mediation.
- A party that fails or refuses to attend the first meeting in mediation proceedings 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 or if the other party does not attend the mediation proceedings or if it attends but refuses the settlement.
The Ministry of Justice highly recommends and encourages parties to seek a resolution through mediation proceedings. The Mediation Act which entered into force on June 22, 2013 introduced the mediation procedure as an ADR method. Settlement Agreements received at the end of the mediation have the effect of a court verdict upon their certification by the Court. The mediation first became mandatory for labor disputes which achieved an outstanding interest and reached a considerable number of out of court settlements in 2018. This new legislation for mandatory mediation concerning commercial disputes will certainly encourage the out of court settlements in this area as well.