Turkey: IP Centric Joint Ventures Head To Face Questions Under Turkish Law

Joint ventures are commercial partnerships that are formed under a separate legal entity or by an agreement by two or more independent entities for the purpose of performing a specific work under the same objective. They are typically established when an entity's resources are not enough to fund the ventures by itself and need to collaborate with another entity. Entities may contribute to the joint venture in equity or non-equity form.

Because Research and Development (R&D) projects may be costly for the technology firms, especially for the start-ups, the firms may choose to conduct R&D activities under a joint venture. In addition to financial burden of R&D, lack of know-how or other IPs may also make creating a joint-venture an attractive idea. In most cases, intellectual property contribution matters as much as an equity contribution for IP centric joint ventures.

Joint Ventures under Turkish Law

Turkish law does not stipulate joint ventures although they have been widely used in practice. There are two types of joint ventures: (1) an agreement based joint venture that does not have a legal personality; and (2) an equity joint venture that has a separate legal personality. Agreement based joint ventures are deemed as ordinary partnerships in legal doctrine and in Court of Appeals decisions. Provisions of the joint venture agreement are subject to the ordinary partnership provisions of the Turkish Code of Obligations numbered 6098 and dated 4.02.2011. Agreement based joint ventures are generally established for the purpose of performing a specific work. Partners of the joint ventures are jointly liable for the debts of the joint ventures. A joint-ownership of partnership is established on the assets of the joint venture. Any business transaction conducted by a partner on behalf of the joint venture would result in the liability of all partners. Rules regarding the management of the company may be stipulated under the joint venture agreement; such rules are generally stipulated for internal management. Rules also may be prescribed in the joint venture agreement however such rules, most of the time, do not bind the third parties (especially for the joint liability). Agreement based joint ventures do not have the capacity to sue or to be sued for any dispute arise in connection with the joint venture, partners of the joint venture is going to be sued or partners would have file a lawsuit on behalf of the joint venture. A formal liquidation process is not required for the joint venture following the fulfillment of its purpose or the partner's decision to end the venture; termination of the joint venture agreement would serve the purpose of the liquidation.

Equity joint ventures, on the other hand, have separate legal personalities and partners of the joint venture are the shareholders thereof. Such joint ventures are generally established as a limited liability company and a joint stock company in accordance with the Turkish Commercial Code numbered 6102 and dated 14.02.2011 ("TCC"). Equity joint ventures have separate assets independent from the shareholders and for that reason a joint-ownership of joint venture's assets is not possible. Most of the time partners of equity joint ventures are only liable for the unpaid amount of their equity contributions. Transactions conducted with third parties are performed under the separate legal entity of the joint venture and joint liability does not arise except for the existence of a suretyship. Partners may stipulate rules regarding internal affairs in articles of association of the company or other agreements independent of articles of association. Nevertheless, such rules can not violate the mandatory provisions of the TCC. Equity joint ventures have the capacity to sue or to be sued. Such joint ventures are established for larger ventures. A formal liquidation process is mandatory to end the venture; liquidation process can be lengthy depending on the structure of the joint venture.

Technology Firms

Technology firms or non-technology firms intend to conduct R&D activities and manufacture the products as a result of such R&D activities may establish joint ventures. Most recent and largest joint venture established in Turkey is "Türkiye'nin Otomobili Girişim Grubu Sanayi ve Ticaret Anonim Şirketi", established as an equity joint venture in the form of a joint stock company consisting of 6 partners (shareholders). The purpose of this joint venture is to develop and manufacture Turkey's first locally developed and manufactured car. Globally, with 14 partners, Sematech Inc., a technology joint venture, is considered one of the largest equity joint ventures.

Need to establish a joint venture comes from the need of equity to fund the venture. In addition to equity needs, firms choose to collectively fund an R&D activity by establishing a joint venture rather than funding it individually. Intellectual property, especially patents and know-how, is also profoundly important for the R&D activities for the joint ventures. Joint ventures may be established to connect those who have equity needs but have the know-how and other intellectual property with those who have the equity but lacking the intellectual property to perform a specific activity1 and for that very reason, joint ventures are a great legal tool.

As per the TCC, intellectual property may be contributed as an equity to limited liability companies and joint stock companies. To achieve this, monetary value of an intellectual property must be determined and such monetary value is contributed to the equity of the company. However, intellectual property contribution would result in the transfer of the intellectual property rights to the company. That transfer should be structured diligently, especially when the joint venture formed for a specific task and for a temporary period of a time, because transferring intellectual property rights to a joint venture may create disputes as to the ownership of the intellectual property for the post liquidation period. Transferring ownership rights to the joint venture is also a crucial issue which should be structured on contractual rights basis for limited purposes and specific period of a time. Moreover, a non-competition agreement between the partners of the joint venture is crucial for the protection of intellectual property rights for post liquidation of a joint venture.

An agreement based joint venture and an equity joint ventures are subject to different rules under Turkish law. Persons who intend to establish a joint venture must be very diligent before establishing a joint venture. To maximize the benefits of a joint venture, partners should stipulate a thorough joint venture agreement and other additional agreements. Deciding on the scope of the right of use of an intellectual property is also highly important.

Footnote

1 Kamien, Morton I., Eitan Muller, and Israel Zang. "Research joint ventures and R&D cartels." The American Economic Review (1992): 1293-1306.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Ketenci & Ketenci Hukuk
Kolcuoglu Demirkan Kocakli Attorneys at Law
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Ketenci & Ketenci Hukuk
Kolcuoglu Demirkan Kocakli Attorneys at Law
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions