Beems on Bosphorus
Richard and Rebecca Beem on the Bosphorus

Greece and Turkey are in the news. I visited both countries in May. Both are pleasant. Of the two, Turkey seems to be the more serious candidate for new business investment and related patents and intellectual property (IP).

Greece notoriously has defaulted on its debt and is in danger of exiting the European Union (EU). Economically, the nation is not a major power, with 11 million people and much malaise.

Rather than dismissing any single country, however, it may suffice for purposes of IP and business strategy for Europe and beyond, to observe that many of the 28 member countries of the EU are less significant economically than certain other countries.  Conspicuously, yet unnoticed by many,Turkey is a member of the broader 38-member European Patent Convention (EPC) administered by the European Patent Office (EPO), but it is not a member of the EU.

I.  The new European unitary patent: You will pay for Greece but you won’t get Turkey

The coming European unitary patent will, for the first time, provide a single patent enforceable throughout the EU. This is of great interest to U.S. applicants for European patents, whether unitary or national. Trade between the U.S. and the EU is huge, and the U.S. is the single largest user of the EPO.

A primary concern for applicants and the EPO alike is the setting of fees for the unitary patent. The subject is complicated by the fact that the EPO has agreed to share its revenues with its member countries, essentially to compensate them for lost revenues of the national patent offices. The EPO has proposed that fees be set based on the assumption that any applicant willing to pay for national patents in four countries, say, Germany, France, U.K. and Netherlands, should be willing to pay the same amount for a unitary patent that will cover all 28 EU countries. Filing fees and renewal fees are both substantial, i.e., a long term commitment on the part of applicants is assumed by the EPO, yet fees might be adjusted up or down, depending on several factors including volume. Perhaps time will tell if the original fee schedule, to be finalized and announced soon, is set properly, but applicants will have to make filing choices before all the data comes in.

The new unitary patent will not be enforceable in the non-EU countries that are members of the EPC, the case in point being Turkey. As a result, those who pay the high fees for the unitary patent will automatically gain patent coverage in countries like Greece and Cyprus (and the EPO fees will be shared with those countries), while trade powers like Turkey will not be covered by the unitary patent. An imbalance exists—and will grow—as between the built-in cost of covering numerous smaller EU countries within the unitary patent, on one hand, and the non-inclusion of larger non-EU countries for which separate steps and fees will be required.

In connection with European patent filings, some applicants will choose to pursue the unitary patent. Others will choose to prioritize and make only one to three national filings, say, in Germany, and possibly in the UK and France. In either course, additional timely steps and payments are and will be required to obtain a patent in Turkey. Many applicants are now losing sight of the Turkish opportunity, to their detriment, and the number of the lost and confused is likely to grow as the unitary patent comes on line. Each and every patent filing comes at a cost, of course, but failure to file also has consequences, sometimes resulting in irretrievable loss of potentially valuable patent rights.

II.  Let’s talk Turkey

Turkey recently held national elections, and the former ruling party is now in need of forming a coalition. Turkey’s economic engine and its strategic location make it a key ally for the West. Turkey has strong ties to the U.S. and Western Europe on one side and to Russia and Asia on the other. Turkey has been considered for membership in the EU, though that step is probably a few years away at the earliest. Differences of religion, language, culture, politics and geography are obstacles. Unrest in the Middle East and the presence of large numbers of Syrian refugees are complications. But trade marches on.

Meanwhile, as noted above, Turkey is a member of the European Patent Convention (EPC). Diverging interests between the EU and the EPC, particularly with the unitary patent in the works, create an image of a person standing with one leg in Europe and the other leg in Asia. Tectonic shifts can be hazardous to such a person, such a country, and such companies as do business there. Yet avoidance is no substitute for thoughtful analysis and execution.

Turkey is a country of almost 80 million people, about the same size as Germany, and growing much faster, with mostly young, enterprising people. Turkey is a member of G20, the summit of which it will host this year, and it is among the top 20 countries of the world by several criteria, including the number of billionaires.

III.  The City on the Bosphorus

Istanbul, a city of almost 20 million people, is the largest urban agglomeration in Europe and, at the same time, a major city of Asia. It bustles with energy. It is the hub of several major trade routes by air, land and sea. It has been prominent for most of the last 2,400 years, even before the Silk Road and the spice trade, and certainly before Istanbul became a hub for international air transportation. Already Ataturk Airport alone is among the top 10 or 20 airports in the world—the top handful in Europe—and it is to be replaced soon by the New Airport, which will be the largest in the world. Shipping is huge on the Bosphorus, which runs through Istanbul and between the Black Sea and the Aegean and thence the Mediterranean. Bridges exist and tunnels are being dug under the Bosphorus for additional, higher capacity, land routes between Europe and Asia. All roads lead through Istanbul. Turkey is a major center for manufacturing, trade, and engineering. Engineering is a highly regarded profession in Turkey, fed by top engineering schools including Istanbul Technical University, Bogazici, Middle East Technical University (METU), and Bilkent, among others.

5 engineers Istanbul
Richard Beem with four Turkish engineers

If you’re still with me, you’re probably either (1) doing business in Europe and Asia and interested in business in Turkey or (2) interested in visiting Turkey. If you’re in the second camp, by all means, go! Plan your trip now for November 2015 or later. Any sooner and you’ll be hot and crowded.

If you’re in the first camp, go sooner! Fly business class and stay in air-conditioned hotels. Any company doing international business is almost certainly under-invested in Turkish IP.

If your business is international, and if your products are branded or they compete with brands, trademarks in Turkey are important to you: Register your marks in Turkey. With massive trade shipments moving through Turkey, registrations can be enforced with the aid of Turkish Customs at the border.

IV.  Are Turkish patents for you?

Let’s consider the question of Turkish patents in a larger international framework. The following approach is for companies that are already fully investing in patents in the U.S., Europe and/or Asia. If you’re not at the level, move back three spaces (as in the Monopoly game) and invest in patents in your own country and/or the very largest IP/patent offices, such as the U.S. Patent and Trademark Office (USPTO), European Patent Office (EPO), Chinese State Intellectual Property Office (SIPO), Japan Patent Office (JPO), and Korean IP Office (KIPO). These five offices constitute the IP5, and together they account for about 90% of the patent applications filed in the world. The Patent Cooperation Treaty (PCT) is a key “trade route” for international patents, just as the Silk Road established a key trade route.

As stated above, Turkey is a member of the European Patent Convention (EPC) but not of the European Union (EU). As a result, the coming unitary patent, which will apply only in the EU (including Greece), will not provide patent protection in Turkey. Yet a Turkish patent might have, say, twenty times the value of patent protection in Greece.

V.  Quick and easy ways to get a Turkish patent

A preferred route for many applicants will be to validate an EPO patent in Turkey. Yes, that will cost extra—and it will require timely decision, instructions, and payment—but the additional cost will be small compared to the basic EPO fees. Alternatively, of course, an applicant can file directly in Turkey under the Paris Convention (typically also relying on the PCT).

Patents in Europe are in flux. There’s the EPO, and there are the national patent offices, such as those of the Germany, France and the United Kingdom. As the details of the new unitary patent are being worked out—including a high price tag—sophisticated filers of patent applications are weighing national patents versus the new unitary patent. You may wish to consider Turkey in your thinking.

By the way, here’s a suggestion for the Turkish Patent Institute: Abandon the requirement for a Turkish translation. Europe is moving away from translation requirements. Turkey may wish to follow Europe’s lead to avoid being left behind, because nobody wants to pay for any more translations than absolutely necessary.

VI.  Should Turkey be in your Top 10 list for patent filings?

Here are a few rough figures for gross domestic product to put Turkey in perspective in comparison to the two continents it joins, viz., Europe and Asia.

Recent annual GDP for the countries of the European Union is about $18 trillion. Combined GDP of key countries of Asia (China, Japan, India, and South Korea) is roughly equal to that of the EU. That’s a total of about $36 trillion for EU and top Asian economies, accounting for almost half of the world’s GDP of about $78 trillion.

GDP of the U.S. also is roughly equal to that of the EU. In other words, the U.S., the EU, and the combined largest economies of Asia each account for about 1/4 of world GDP, with all the other countries of the world combining for the remaining 1/4 of the world’s economic production.

Recent annual GDP of Turkey is about $800 billion. That’s about five percent (5%) of the $18 trillion GDP of EU. It’s also about five percent (5%) of the GDP of certain key countries of Asia. In baseball parlance, Turkey is a “switch hitter”—its patents are useful in Europe and Asia. So one arguably could justify adding the value of a Turkish patent in Europe to the value of that same Turkish patent vis-à-vis Asia—which would result in a larger investment in Turkish IP—though I stop short of making such a Turkey-bullish recommendation.

VII.  Beem’s Rule for Turkish IP Delight

Here’s Beem’s rule of thumb for American business investment in Turkish IP. Add up your investment in European IP. That’s likely to be a large part of your international IP investment. As a starting point, you should invest about five percent (5%) of that sum in Turkish IP. Otherwise, you might miss the very best in Turkish IP delight! To be sure, that may not provide a very large budget for Turkish IP: Five percent (5%) of a $500,000 budget for European IP is only $25,000 for Turkish IP. Even that relatively modest level of investment may be prohibitive for all but large multinational companies.

If you’re going through the EPO, and if you validate your patents in Germany, U.K. and France (or in all of the EU under the new unitary patent), consider Turkey next, even over other European countries. Because if you hold the Big 3 in the EU (arguably if you even hold Germany), you might dominate the EU already. (Similarly, if you have patents in China, Japan and Korea, you might dominate Asia.)

Turkey might be among your next countries of choice for patent protection. Basically, what this means is that for many or most patents you obtain through the EPO, you should validate such patents in Turkey. It won’t cost that much more, and Turkey will rank favorably as the next country of choice after the Big 3 of the EPO.

If you’re coming out of an EPO allowance without validating in Turkey, you’re missing an important strategic country.

For the sake of comparison, China is already prominent among the BRIC countries, the others, viz., Russia, India, and Brazil, also being of interest. China has risen quickly to the top for patent filings. Enforcement and prosecution are challenging in the other three countries.

Beems at Blue Mosque
Rebecca and Richard Beem at Blue Mosque

     A.  Turkey is the biggest country that nobody thinks about

Why Turkey? If your products, or your competitor’s products, go from Asia to Europe, or vice versa, they’re likely to go through Turkey. Turkish IP can go a long way to establishing control at the borders, and, as noted, Turkish Customs is willing to enforce Turkish IP rights to stop transport of infringing goods. In addition, Turkey’s strong capabilities in engineering and manufacturing, combined with its large market of 80 million consumers, makes Turkish IP valuable even inside Turkey’s borders.

If your view of the world focuses on the Americas, Western Europe, and the Pacific Rim, you’re probably not thinking much about Turkey, or about Russia and other former Soviet republics, or their brainchild—their answer to the EPC—the Eurasian Patent Convention, largely coextensive with the former Soviet Union. The Turks do think about that part of the world, which is close to them in geography, politics, and trade. Turkish IP can give you leverage over parts of the world into which you might not otherwise venture.

As a nation, Turkey missed out on many important innovations in mechanical and chemical technologies and the patents that apply in those fields. Now Turkey is proceeding directly into the modern fray of computers and telecom, including research and development in 4G and the coming 5G. Automobile manufacturing and pharmaceuticals are important there. For all of these reasons, Turkish patents and other IP may prove to be important. Remember that your filing decisions will have ramifications for 20 years, thus, the question isn’t so much whether Turkey is dominant today as whether it is likely to become more significant in the coming years.

A few technical points regarding patent filings in Turkey: Searches and opinions of EPO and Russia are accepted. The Turkish Patent Institute (TPI) outsources search and examination to the following offices: Russia, Austria, Denmark, and Sweden. For those international patent classifications (IPCs) for which Turkish technical examiners are capable (the number of technical  staff will increase in the next 3 to 5 years through training by EPO and WIPO), examination will be performed internally by the TPI. For PCT applications filed by Turkish nationals, only the EPO can be elected as search authority.

     B.  Turkish IP today

In intellectual property law, Turkey is a fast-rising power. The Turkish National Group of the International Association for the Protection of Intellectual Property (AIPPI) boasts about 200 members, comparing favorably with the U.S. National Group’s membership of about twice the number of IP professionals in a country of four times the population. For the first time, Turkey will host an AIPPI World Congress, in Istanbul, in 2019. I have met with the Young Turks, and I am impressed with their vision and plans. Don’t miss AIPPI-Istanbul!

In sum, you may wish to add Turkey to your short list of countries to consider for patent and IP protection. Let me know if I can help.

Thank you.