The scope of the concept of intellectual and artistic work is defined as "all kinds of intellectual and artistic works that bear the characteristics of their author and are considered as works of science and literature, music, fine arts or cinema" in Art. 1/B of the CIAW. Pursuant to Art. 6 of the CIAW, "works and compilations that are created on the condition that they do not harm the rights of the author and that bear the characteristics of the author" are also considered as works.

Industrial property rights include "rights relating to trademarks, designs, geographical indications and traditional product names, patents and utility models and similar models".

Intellectual and industrial property rights and the intellectual and industrial products subject to the right are different from each other. Intellectual and industrial products are the subject matter of intellectual and industrial property rights. Intellectual and industrial property right is the right holder's legal interest in these intellectual and industrial products.

I) INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS AS CAPITAL IN KIND

Art. 342 of the TCC, which is a special provision, specifies the characteristics that intellectual property rights that may be contributed as capital in kind to joint stock companies should have. According to this provision, all kinds of intellectual and industrial property rights cannot be brought as capital to a joint stock company. The capital in kind to be provided must have "material act characteristic", "transferability feature" and "the ability to be evaluated in cash".1

The material act characteristic refers to the fulfilment of the subject matter of an debt directly with the assets of the debtor. From this point of view, it is concluded that "performance obligations", which are personal obligations to be fulfilled by the debtor through physical or intellectual labor, cannot be brought as capital to joint stock companies.2

Since the shareholder who makes a capital in kind commitment undertakes the obligation to transfer the asset value related to the commitment to the joint stock company, this asset element must also be transferable; since it will not be possible to fulfill the capital commitments that do not have the transferability feature, it will not be possible to transfer them to the assets of the joint stock company. For example, according to Art. 49/I of the TCC, the trade name cannot be transferred separately from the business. For this reason, the right on the trade name alone cannot be brought as capital in kind to the joint stock company, but can be brought as capital in kind together with the joint stock company.

Pursuant to Art. 339/II-e of the TCC, the value of the rights and real property, other than money, to be contributed as capital must be included in the articles of association, and since values that cannot be valued in cash cannot be included in the articles of association, they cannot be contributed as capital in kind to joint stock companies. For this reason, intellectual works such as "letters, diaries, etc." cannot be brought as capital to joint stock companies since they do not carry a monetary value.

Art. 342/I of the TCC also stipulates that the intellectual property rights to be included as capital in kind should not be subject to "limited real rights, attachment and injunction". In addition to those listed in the Law, "license agreements" are also established for intellectual and industrial property rights. In practice, license agreements are frequently encountered in the limitation of intellectual property rights; therefore, license agreements should also be evaluated in terms of Art. 342 TCC.

In a license agreement, the licensee has the right to use the intellectual product subject to the license in exchange for a fee. The right to use arising from the license agreement may be subscribed as capital to joint stock companies.

There is no consensus in the doctrine on the legal nature of license agreements. If the right arising from the license agreement is accepted as a limited real right, it is not possible to bring the intellectual property rights on which there is a license agreement as capital to the joint stock company. If this right is accepted as a personal right, the intellectual property rights in question may be subscribed as capital in kind.

In the case of joint authorship; according to Art. 9/I of CIAW, each author may bring the part of the work created by him/her as capital to the joint stock company, if it is possible to divide the work they have created together into parts. Pursuant to Art. 10 CIAW, in the case of joint authorship, it is accepted that there is joint ownership of the work. In this case, since the authors do not have the authority to dispose of the work independently, they can only act together and bring the work as capital to the joint stock company.

In terms of industrial rights, in some industrial rights, it is possible to transfer not only the right itself but also the right to apply.3 It is possible for persons who have the right to apply for "trademarks, patents, utility models, industrial designs, etc." to bring these rights as capital to a joint stock company.

In case there is more than one industrial right holder, if there is an agreement between the right holders, the provisions of this agreement shall apply first. If there is no agreement, the provisions of common ownership apply, therefore, in case there is more than one industrial right owner, it is possible to commit industrial rights to joint stock companies as capital in kind.

Bringing Know-how and Unregistered Distinctive Names and Signs to a Joint Stock Company as Capital in Kind

The nature of know-how in Turkish law is under discussion. According to the prevailing view, know-how is the actual control over knowledge and experience. Such knowledge and experience are considered as intangible property and are transferable. Since they have the material act characteristic, transferability feature and the ability to be evaluated in cash, know-how can be brought to joint stock companies as capital in kind. This applies to "confidential know-how". Since non-confidential know-how is not protected as an object of rights in the legal system, it is not possible to bring them as capital in joint stock companies. In practice, the obligation to transfer know-how may be in the form of providing the necessary information and documents, as well as technical assistance and services. Know-how in the form of technical assistance and provision of services cannot be brought to the joint stock company as capital in kind, since they do not have the material act characteristic.

Unregistered industrial intellectual property is broadly defined as know-how. 4 In this context, rights to inventions, unregistered industrial designs, rights on plant varieties, etc. can be brought to joint stock companies as capital in kind. These rights cannot benefit from the legal protection provided by registration. However, these rights may be protected under the unfair competition provisions of the TCC.

Unregistered trademarks, trade names and business names that have not yet been registered are considered as "unregistered distinctive names and signs". Since the rights on these have the characteristics of tangible performance, transferability and cash consideration, they can be brought to joint stock companies as capital in kind. These, just like know-how, may be protected by the unfair competition provisions of the TCC.

In order for unregistered distinctive places and signs to be brought as capital to joint stock companies, the same name or place sign must not be used by someone else as registered. In the event that these are legally registered by someone else, the person who uses them without registration will lose the right he has under the provisions of unfair competition. With the loss of this right, since it will not be possible to transfer the distinctive place and sign used without registration, it will no longer be possible to commit them as capital.

II) COMMITMENT OF INTELLECTUAL AND INDUSTRIAL PROPERTY RIGHTS AS CAPITAL IN KIND TO A JOINT STOCK COMPANY AND PERFORMANCE OF THE COMMITMENT

Intellectual and industrial property rights are brought to the joint stock company as capital in kind through the realization of "commitment" and "disposition" transactions.

A) Commitment

Pursuant to Art. 128/II of the TCC, "intellectual property rights and other assets shall be accepted as capital in kind if they are registered in their special registries, if any, in accordance with this provision". This record includes the fact that the intellectual and industrial property right valued by the expert is pledged to the joint stock company as capital in kind. In order for the said transfer to be valid, the transferor must also make a declaration of transfer to the relevant registry and annotate this declaration to the registry. If intellectual and industrial property rights are not registered, they cannot be brought in as capital in kind.

Industrial property rights have special registries. Trademarks, patents, designs and integrated circuit topographies, which are industrial property rights, have a special register kept by the TPI. For intellectual and artistic works, a similar situation exists for works that are required to be registered under the CIAW (e.g. productions including cinematographic and musical works). In order for the rights on these works and industrial intellectual products to be brought as capital to joint stock companies, they must be registered in special registries.

Regardless of the nature of the capital in kind in joint stock companies, the tangible or intangible good to be contributed as capital must be expressed in cash in the articles of association. For this reason, the intellectual and industrial property rights committed to be subscribed as capital must be valued by experts appointed by the competent court. The value indicated by the expert must be stated in the company's articles of association.

B) Performance of the Commitment

Pursuant to Art. 128/IV of the TCC, in the event that "an economic value other than money or a movable is borrowed as capital", the company may directly dispose of these as the owner from the moment it becomes a legal entity. Pursuant to Art. 131/II of the TCC, "unless otherwise agreed in the articles of association or the articles of association, the ownership of the real property contributed as capital shall belong to the company and the rights shall be transferred to the company". As a result of these articles, the transfer of the intellectual and industrial property rights pledged as capital in kind to the joint stock company is automatically realized upon the registration of the joint stock company. As soon as the company becomes a legal entity, the intellectual property rights undertaken are acquired by the joint stock company without the consent of the transferor.

CONCLUSION

Turkish law regulates that intellectual and industrial property rights may also be brought as capital to joint stock companies and stipulates certain conditions for this purpose:

  • This right must be transferable, cashable and have a material act characteristic.
  • There should not be any limited real right, lien or injunction on this right.
  • This right must be valued by an expert appointed by the competent court.
  • This right must be registered in a special register, if there is one.

Confidential know-how, unregistered distinctive names and signs are not recognized as intellectual and industrial property rights. However, if they are transferable, cashable and have material act characteristic, they can also be brought as capital to joint stock companies.

Intellectual and industrial property rights may be subscribed as capital in kind to joint stock companies through capital increases from external sources not only during the establishment phase but also after the establishment. As soon as the company becomes a legal entity, the intellectual property rights undertaken are acquired by the joint stock company without the consent of the transferor.

Footnotes

1. S. Dal, "Fikri Mülkiyet Haklarının Anonim Şirkete Ayni Sermaye Olarak Konulması", Marmara University Faculty of Law, Symposium on Waiting for the New Turkish Commercial Code No. 6102, May 10-11-12, 2012, vol.18, Turkey, 2012

2. Aslan, Fikri Mülkiyet Haklarının Anonim Şirkete Sermaye Olarak Getirilmesi, p.76

3. Aslan, Fikri Mülkiyet Haklarının Anonim Şirketlere Sermaye Olarak Getirilmesi, p.100

4. Aslan, Fikri Mülkiyet Haklarının Anonim Şirketlere Sermaye Olarak Getirilmesi, p.106

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