Instances of Unfair Competition in Electronic Environments

Generally

The fundamental laws related to unfair competition are the Turkish Commercial Code No. 6102 and the Turkish Code of Obligations No. 6098.

In the Turkish Code of Obligations, the sole regulation concerning unfair competition is found in Article 57.

As understood from the wording of Article 57 of the Turkish Code of Obligations, these provisions on unfair competition can only be applied to non-commercial relationships. Thus, it can be said that the scope of this provision is narrow.

The most significant regulations regarding unfair competition are organized between Articles 54-63 of the Turkish Commercial Code. These provisions are the sole general regulation encompassing the instances of unfair competition also regulated by the TCC and the Law No. 6502 on Consumer Protection.

According to Article 54/2 of the TCC, unfair competition can be defined as "deceptive or other non-compliant behaviors and commercial practices affecting the relationships between competitors or suppliers and customers." The purpose of unfair competition is stated in Article 54/1 of the TCC as follows: The purpose of the provisions of this Part related to unfair competition is to ensure honest and uncorrupted competition for the benefit of all participants.

The characteristics of unfair competition include the necessity for the parties to be competitors, the offender gaining benefit, the offender's fault not being necessary, and the sufficiency of the danger of harm.

Categories of unfair competition can be listed as:

1. Non-compliant advertising and sales methods and other unlawful behaviors

2. Leading to the breach or termination of a contract

3. Unauthorized utilization of others' business products

4. Unlawful disclosure of production and business secrets

5. Non-compliance with business conditions

6. Non-compliance with transaction conditions contrary to honesty rules

It should be noted that these categories are provided as examples and are not limited (numerus clausus).

Types of Unfair Competition in Electronic Environments

A) Unfair Competition by Sending Unsolicited Electronic Mail (Spamming)

Spam refers to sending a message to a large number of recipients who have not requested to receive such messages via the internet. In Turkish law, spamming is regulated under Law No. 6563 on the Regulation of Electronic Commerce and the Commercial Communication and Commercial Electronic Messages Regulation prepared based on this Law.

According to Law No. 6563, a commercial electronic message is defined as "data, voice, and image content messages sent for commercial purposes using means such as telephone, call centers, fax, automatic calling machines, smart voice recording systems, electronic mail, short message service."

As per Article 6 of the Law, commercial electronic messages can only be sent to recipients with their prior consent. According to Article 7, the content of the commercial electronic message must be consistent with the consent obtained from the recipient. According to Article 8, recipients can refuse to receive commercial electronic messages at any time, without needing to provide any reason.

Regulation Article 6 states that prior consent is not required for commercial electronic messages sent to the electronic communication addresses of traders or craftsmen. Regulation Article 9 stipulates that the recipient can refuse to receive commercial electronic messages at any time, without needing to provide any reason.

As an example of how unfair competition through spamming can occur in electronic environments, sending continuous advertisement content messages to a trader, despite them refusing to receive electronic messages, can constitute unfair competition as an aggressive selling method under Article 55/1/a-8 of the Turkish Commercial Code (TCC).

B) Unfair Competition Related to Internet Domain Names

One of the elements of internet domain names is the second-level domain (SLD). For example, in "http://www.abc.com.tr," "abc" is the second-level domain name. Unfair competition cases in the electronic environment can occur in these second-level domains because the distinctive and registrable part of domain names is this section. A distinction should be made here: Unfair competition cases should be evaluated based on whether the sign used in domain names belongs to a registered trademark or an unregistered commercial name.

1) Use of a Registered Trademark in Domain Name

When a trademark is registered as an internet domain name by someone else, there might be a misconception by internet users that the domain name belongs to the real trademark owner, leading to them purchasing goods or services from that site, dissatisfaction with the product or service, or encountering defamatory content on the website (e.g., sexual content). Especially for globally operating large companies, such adverse situations can result in significant damages. In this case, trademark infringement occurs. Provisions of the Industrial Property Law come into play to prevent such infringement, allowing the trademark owner to prevent the infringement and recover any damages.

2) Use of an Unregistered Commercial Name in Domain Name

nternet domain names can also be unregistered commercial names. In such cases, the use of a commercial name similar to an unregistered commercial name by someone else, leading to confusion, can give rise to unfair competition. According to Article 55/1/a-4 of the TCC, taking measures that lead to confusion with another's goods, business products, activities, or affairs is considered unfair competition.

C) Unfair Competition through the Use of Meta Tags (Directive Codes – Meta Add-ons)

Meta tags are identification cues located within a page written in HTML format, often used by search engines to correctly categorize the relevant internet site and also implement various directives to the browser.

Website owners have the freedom to select the keywords constituting the content of these directive codes. However, in practice, rather than choosing words relevant to their websites, owners often select unrelated popular keywords to mislead users and increase their website's visitor count and popularity. This can lead to unfair competition.

Unfair competition through meta tag use can manifest as exploiting another's recognition or as trying to advance in competition through defamation of others. For example, placing a competitor's business name or brand as a directive code on a website containing harmful or illegal content would constitute unfair competition under TCC Article 55/1/a-8.

The lawmaker recognized the use of another's trademark or sign as a directive code on internet sites as trademark infringement for the first time in the Law No. 5853, which amends the Decree-Law on the Protection of Trademarks.

Also, according to Article 7/3-d of the Industrial Property Law (IP Law), unauthorized use of the same or similar sign in an internet environment in a manner that creates commercial effect, such as domain name, directive code, keyword, or similar forms, is sufficient for the existence of trademark infringement if the person does not have the right or legitimate connection to use the sign. The trademark owner can demand the prevention of these acts. Besides the provisions of IP Law, the trademark owner can seek protection under the provisions related to unfair competition in TCC.

"Search Engine Optimization (SEO)" and "spamdexing" are concepts that can be mentioned as examples of unfair competition. SEO involves technical procedures to appear at the top of search engine results without a direct advertising relationship with search engines. Spamdexing, similar to SEO, is a method employed to ensure that results related to searched concepts in internet search engines are listed at the top. For instance, selecting the keyword "worst car" for optimization work regarding a competitor's brand so that when users search for "worst car" in a search engine, it adversely affects the competitor's firm. This constitutes unfair competition, and provisions of TCC related to unfair competition apply in this case.

D) Unfair Competition through Providing Hyperlinks (Linking)

In Turkish, a link, which means connection or relation, refers to HTML codes that connect websites to each other. A link can be given to a site's homepage (surface link) or a sub-page accessible from the homepage (deep link). Additionally, a link on a website's homepage can lead to another page's website (external link). In such cases, unfair competition can sometimes arise.

For example, let's say Carbonara Olive Oil is a small Italian company selling olive oil, and Castagnetta Olive Oil is a Spanish company selling olive oil. Suppose Carbonara creates a hyperlink on its website saying "more expensive elsewhere" and underlines "elsewhere," linking it to Castagnetta's website. In this case, Carbonara has not only made comparative advertising but also created a link with unfair content. Thus, unfair competition through hyperlinking arises. TCC Article 55/1/a-1 can be referred to. According to the relevant provision, "defaming others or their goods, business products, prices, activities, or commercial affairs with false, misleading, or unnecessarily hurtful statements" will constitute unfair competition.

E) Unfair Competition through the Use of Website Design and Visuals

In today's world, competitors are moving towards creating websites in the virtual world to gain strength. In these cases, unfair competition can sometimes arise.

To evaluate this issue from the perspective of unfair competition, a dual distinction is necessary:

1)Each Component Constituting the Site Being of Artistic Quality

The Law on Intellectual and Artistic Works defines the concept of a work. According to Article 1/B-a of the Law, a work is defined as "all kinds of intellectual and artistic products considered as literature, music, fine arts, and cinema works that carry the characteristics of the owner." According to the text of the article, the term "work" has two conditions. Firstly, the work must carry the characteristics of the creator, meaning it should be unique to the creator. The second condition is that it must fall into one of the four work groups defined in the law, namely literature and science, music, fine arts, and cinema.

It should be noted that the categories of works are limited (numerus clausus).

For example, the owner of the "Turkish Odyssey" website sued and won against an individual who copied and emailed to others the "Touristic Turkey Map," which is an original work featured on the site (Supreme Court 11th Civil Chamber, File No. 2002/8275, Decision No. 2002/8839, Date 11.10.2002).

In another case, the first-instance court ordered a person who had unlawfully broadcast a documentary titled "Atatürk" from another person's website on their own website to pay material and moral damages. The Court of Cassation only overturned the first-instance court's decision on the grounds that it did not explain the reasons for the moral damages (Supreme Court 11th Civil Chamber, File No. 2003/14384, Decision No. 2004/9074, Date 30.09.2004).

2)Site Components as a Whole Constituting a Work

While individual elements of a website may each have artistic quality, it is also possible for the website as a whole to qualify as a work. For example, the layout of a website can be recognized as a work of fine art. If an individual uses this work on their website identically or in a very similar manner, it is unlawful. In this case, the owner of the work can seek protection by invoking the provisions of Article 6/11 of the Law on Intellectual and Artistic Works or Article 54/1/a-4 (confusion) of the Turkish Commercial Code.

In all, unfair competition through the use of website design and visuals can occur when individuals or entities replicate or closely mimic the artistic components or overall artistic integrity of another's website without permission, potentially confusing or misleading consumers or diminishing the original owner's rights and market presence. The law provides remedies for such infringements to protect the original work and its owner's rights.

F) Unfair Competition through Advertising in the Internet Environment

Nowadays, traditional advertising methods have been largely replaced by internet advertising. Advertising in the internet environment has become a preferred method for businesses to reach customers, promote their products, enhance brand value, and similar purposes. This is due to the advantages of online ads. Perhaps the most advantageous feature is that internet advertisements are measurable. It is possible to determine how many people and which demographic viewed the advertisement. Additionally, internet advertising is more cost-effective. Online advertising allows businesses to reach their target audience more easily. The 24/7 broadcasting capability of the internet is another significant feature.

The widespread use of internet advertising, due to these advantages, has also brought about some legal problems, one of which is unfair competition. One of the manifestations of unfair competition in the internet environment is advertisements.

There are many types of ads in the internet environment, including keyword ads, ad banners, pop-up ads, etc.

A keyword ad allows relevant content to appear when a user searches for a word in search engines. When someone advertises using the keyword method, their ad appears at the top when a user searches for that keyword. The ad does not need to be the same as the natural content of the keyword. This is where unfair competition can arise.

Using this method, a business may aim to show its own brand to a user searching for a competitor's brand. For example, coding or making the necessary adjustments to show "Nikon" results in Google AdWords ads when someone searches for the "Canon" brand in a search engine.

In such a case, if the keyword is a trademark, the provisions of the Industrial Property Law can be applied. Additionally, provisions related to unfair competition in the Turkish Commercial Code can also be invoked.

Another internet advertising method, ad banners, allows businesses to promote their products or brand outside their own websites. Visitors to another website can click on the ad banner to go to the website where the ad is hosted. Unfair competition can also arise through ad banners. For example, if an ad banner contains content that unnecessarily defames another's products for customer acquisition or is misleading, it may constitute unfair competition.

Legal Consequences of Unfair Competition in the Electronic Environment

A) Types of Lawsuits That Can Be Filed 

• Declaratory Lawsuit: This is filed to determine whether an act of unfair competition has occurred. No claim for performance can be made in this type of lawsuit.Injunction Lawsuit: If the act of unfair competition is ongoing or there is a danger of it continuing, this lawsuit should be filed.

• Rectification Lawsuit (Restitution Lawsuit): According to Article 56/1-c of TCC, those affected by the act of unfair competition can demand the elimination of the material situation resulting from unfair competition, correction of false or misleading statements made during the unfair competition, and if inevitable for the prevention of the infringement, the destruction of the instruments and goods used in committing the unfair competition. It is important to note that in the mentioned lawsuits for declaration, injunction, and rectification, the fault of the perpetrator (defendant) is not sought.

• Material Damages Lawsuit: If the victim of unfair competition has suffered damage and the perpetrator is at fault, compensation for material damages can be awarded.

• Moral Damages Lawsuit: Here, TCC refers to the provisions of Article 58 of the Turkish Code of Obligations (TCO). According to TCO Article 58, those who have suffered harm to their personality rights can demand a sum of money as compensation for moral damages. The judge can decide on another form of redress or add it to the compensation; particularly, the judge can issue a verdict denouncing the attack and order its publication. Thus, in cases where the conditions of TCO Article 58 are met, compensation for moral damages can be awarded.

 B) Parties in the Lawsuits That Can Be Filed

1) Plaintiffs

 i) Persons Affected by the Act of Unfair Competition: According to TCC Article 56/1, those whose customers, credit, professional reputation, business activities, or other economic interests have been harmed or may face such a threat due to unfair competition have the right to file a lawsuit.

ii) Customers: According to TCC Article 56/2, customers whose economic interests have been harmed or may face such a threat can also file the lawsuits mentioned in the first paragraph, but they cannot demand the destruction of the instruments and goods.

iii) Professional and Economic Unions, Publicly Qualified Institutions, and Consumer Organizations: According to TCC Article 56/3, chambers of commerce and industry, artisan chambers, exchanges, and other professional and economic unions authorized to protect their members' economic interests, as well as civil society organizations protecting consumers' economic interests and publicly qualified institutions, can file lawsuits mentioned in sub-paragraphs (a), (b), and (c) of the first paragraph.

2) Defendants

 i) Perpetrators of the Act of Unfair Competition: The aforementioned lawsuit types can be filed against the person who commits the act of unfair competition.

ii) Employers: According to TCC Article 57, if the act of unfair competition is committed by employees or workers while performing their services or tasks, the lawsuits mentioned in sub-paragraphs (a), (b), and (c) of Article 56 can also be filed against the employers.

iii) Media, Publishing, Communication, and Information Institutions: Unfair competition lawsuits can be filed against media, publishing, communication, and information institutions if conditions of unfair competition are present.

According to TCC Article 58/1, if unfair competition is conducted through various media, publishing, communication, and information enterprises, or institutions that will become operational due to future technical developments, the lawsuits mentioned in sub-paragraphs (a), (b), and (c) of Article 56 can only be filed against the owners of the content, program, or advertisers in the media; however, if the published content, program, image, sound, or message in the written media is published without the knowledge or against the consent of its owners or advertisers, or if the owner or advertiser of the published content, program, image, sound, or message avoids being identified, or it is impossible to identify them or file a lawsuit against them in a Turkish court due to other reasons, the aforementioned lawsuits can be filed against the editor-in-chief, general publication director, program producer, person who placed or had the image, sound, message placed in the publication, communication, and information medium, or the head of the advertisement service; if these cannot be identified, against the owner of the business or institution.

According to the related article, the individuals against whom a lawsuit can be filed are, in order:

1. Content owners and advertisers.

2. The person who places or has the content placed in the information medium and the head of the advertisement service.

3. The business and institution owner.

TCC Article 58 adopts a tiered approach to liability. In other words, if the persons listed first are responsible, then the others listed later will not be responsible.

According to TCC Article 58/2, regardless of the order, a lawsuit can be filed if any of the individuals listed in the first paragraph are at fault, except in the cases provided for in that paragraph. For example, content owners and advertisers are at the first level of responsibility. If one of them is found to be at fault, a lawsuit can be filed against that individual.

According to TCC Article 58/3, the provisions of the Turkish Code of Obligations apply to lawsuits for material and moral damages mentioned in sub-paragraphs (d) and (e) of Article 56.

C) Statute of Limitations in Unfair Competition Lawsuits

According to Article 60 of the Turkish Commercial Code (TCC), the lawsuits mentioned in Article 56 are subject to a statute of limitations of one year from the day the entitled party becomes aware of their rights and, in any event, three years from the day those rights arose. However, if the act of unfair competition also constitutes an act that warrants a longer duration of legal action under the Turkish Penal Code No. 5237, dated 26/9/2004, that longer period will also apply to the legal lawsuits.

Note: This article was written utilizing Ahmet Galip Kaplan's work titled "Instances of Unfair Competition in Electronic Environments.