1. Introduction
The monetization of intangible assets such as trademarks, patents, designs, copyrights, and software codes has become a central pillar of modern commercial law. In the digital economy, intellectual property (IP) rights constitute a substantial portion of corporate value, often exceeding tangible assets. Yet, when enforcement and liquidation proceedings arise—particularly under Turkish law—the conversion of such intangible assets into cash raises complex procedural, valuation, and jurisdictional challenges.
This article explores the legal structure surrounding the paraya çevrilmesi (conversion into money) of intellectual property rights in Turkey, analyzing both voluntary monetization (sale/licensing) and compulsory enforcement (execution and bankruptcy proceedings) contexts. The analysis integrates relevant provisions of the Turkish Execution and Bankruptcy Law (İcra ve İflas Kanunu – İİK), Industrial Property Law (Sınai Mülkiyet Kanunu – SMK), and established Court of Cassation (Yargıtay) jurisprudence, while also aligning with comparative European and international practice.
2. Nature of Intangible Rights and Their Legal Qualification
2.1. Definition and Classification
Under the Turkish legal system, trademarks, patents, industrial designs, utility models, and geographical indications are categorized as “sınai mülkiyet hakları”—a subset of intangible movable assets (gayri maddi mallar). Pursuant to Article 3 of the Industrial Property Law No. 6769, these rights grant the owner an exclusive and transferable economic entitlement, which may be subject to licensing, pledge, attachment, or sale.
2.2. Property Aspect and Transferability
Although intangible, these assets bear property-like characteristics, allowing them to be treated analogously to tangible movables for execution purposes. According to Article 148 of the Industrial Property Law, IP rights can be transferred, pledged, or otherwise disposed of through written agreements registered with the Turkish Patent and Trademark Office (TÜRKPATENT). This registration is crucial, as it confers publicity and enforceability against third parties, similar to the registration principle under the Land Registry Law for real estate.
2.3. Economic Function
The economic value of IP rights derives not from their physical existence but from their exclusive exploitation potential. Therefore, during liquidation or execution, their valuation depends on the market power, brand recognition, licensing income, and potential for future economic use, rather than physical condition or depreciation.
3. Voluntary Monetization of IP Rights
3.1. Sale and Assignment
Voluntary monetization refers to transactions where the right holder transfers ownership or grants economic rights for consideration. Under Article 148(2) of the Industrial Property Law, such transfer must be made in writing and registered. The transfer agreement must clearly define the scope, term, and territorial extent of the rights being transferred. Common structures include:
- Outright sale (assignment) – full transfer of ownership.
- Partial transfer – restricted by geography or class of goods/services.
- Franchise or license agreements – granting use rights while retaining ownership.
3.2. Licensing as an Alternative Monetization Tool
Licensing serves as an ongoing income stream for IP owners. The license can be exclusive, non-exclusive, or sole, and must also be registered with TÜRKPATENT to be opposable to third parties. The license fee may be structured as a lump-sum payment, royalty-based percentage, or hybrid structure.
Under Turkish contract law (Articles 26–28 of the Turkish Code of Obligations), the parties have freedom of contract, provided that the terms do not violate competition law or public order. The Turkish Competition Authority has intervened in licensing cases where anti-competitive clauses restricted innovation or parallel imports.
3.3. Tax and Accounting Considerations
The sale or licensing of IP rights generates corporate income or capital gains, subject to taxation under the Turkish Income Tax Law and Corporate Tax Law. For R&D-intensive companies, the Technology Development Zones Law (No. 4691) and Patent Box regime (Article 5/B Corporate Tax Law) provide significant exemptions, allowing 50–100% corporate tax deductions for income derived from registered IP.
4. Involuntary Monetization: Enforcement and Liquidation of IP Rights
4.1. Attachment (Haciz) and Seizure Procedures
When a debtor’s assets include registered IP rights, these can be subject to attachment (haciz) under Article 85 et seq. of the Execution and Bankruptcy Law (İİK). The creditor may request that trademarks, patents, or designs be seized, recorded in the Execution File, and notified to TÜRKPATENT.
The attachment is effective upon registration in the IP registry, ensuring public notice. This process prevents any subsequent sale or license that would prejudice the creditor’s rights.
4.2. Judicial Sale and Conversion to Cash
Once the attachment becomes final, the İcra Müdürlüğü (Bailiff Office) proceeds with the sale under İİK Articles 106–115. The sale of intangible assets differs from tangible goods due to the need for valuation expertise and market-specific auctioning. The enforcement officer usually requests a court-appointed expert report to determine the fair market value, considering:
- Brand reputation and goodwill;
- Current licensing agreements;
- Historical revenues from exploitation;
- Remaining protection term of the IP right.
4.3. Auction Procedure
The auction (ihale) of IP rights follows the general principles of İİK but is conducted electronically via the UYAP e-Sale Portal. Notice must be published in both the official auction bulletin and, if necessary, in specialized media to reach potential buyers. Since IP assets require a niche buyer base, marketing efforts and valuation transparency are essential to attract fair competition.
4.4. Distribution of Proceeds
The funds obtained are distributed according to the priority rules in İİK Articles 206–207. Secured creditors (pledge holders) have priority over general unsecured creditors. For IP rights pledged before attachment, the pledgee’s rights prevail up to the collateral value. The remaining surplus is distributed to other creditors on a pro-rata basis.
5. Pledge and Security Interests in IP Rights
5.1. Establishment of Pledge
A pledge (rehin) over IP rights is established via a written and registered agreement. The Industrial Property Law, Article 148(5), explicitly recognizes the pledging of registered rights. The pledge must be recorded in the TÜRKPATENT registry to be enforceable against third parties. This public registration protects the creditor’s ranking in enforcement.
5.2. Enforcement of Pledge
When the debtor defaults, the pledgee may either:
- Request sale through execution under İİK Article 150/c, or
- Appropriate proceeds from voluntary sale if authorized.
The pledged IP right can thus be liquidated directly through judicial sale. In such proceedings, the pledgee has priority over other creditors, even if the IP right is later attached by others.
5.3. Pledge over License Rights
A more complex scenario arises where the licensee’s contractual rights (not ownership) are pledged. Such pledges, while not explicitly regulated, are accepted under general provisions of movable pledges. However, since license rights are contractual in nature, their enforceability against the licensor depends on the consent of the original right holder.
6. Valuation of Intangible Assets in Execution
6.1. Principles of Valuation
Unlike tangible goods, IP rights lack a clear market benchmark. Valuation requires economic and legal expertise. Commonly used methods include:
- Income approach – based on discounted future royalties;
- Market approach – comparison with similar IP transactions;
- Cost approach – reproduction cost minus obsolescence.
Turkish enforcement practice generally adopts the income-based approach, particularly for trademarks generating licensing or franchise revenues.
6.2. Role of Expert Reports
Under Article 87 of the İİK, the bailiff may appoint experts to assess the asset’s value. The report must include objective data such as brand value, recognition score, historical income, and current market conditions. Disputes regarding valuation may be challenged before the Enforcement Court (İcra Hukuk Mahkemesi) under Article 16 of the İİK.
6.3. Yargıtay Jurisprudence
The Court of Cassation has affirmed that the lack of proper valuation or publication may invalidate the auction. For instance, in its 11th Civil Chamber decision (E.2018/2345, K.2019/4723), the Court held that “the enforcement officer must ensure the publication of the auction in a manner accessible to the relevant market participants, especially when the subject is an intangible right with limited buyer audience.”
7. Bankruptcy and Liquidation Context
7.1. Inclusion of IP Rights in Bankruptcy Estate
Upon the declaration of bankruptcy, all assets including intangible rights enter the bankruptcy estate under Article 184 of the İİK. The bankruptcy administration must identify, register, and if necessary, continue exploitation (e.g., licensing) of IP rights until sale.
7.2. Sale by the Bankruptcy Administration
Pursuant to Article 241 of the İİK, the administration may sell IP assets through public auction or private sale with the approval of the creditor committee. Given the complexity of intangible rights, private negotiation sales often achieve better results than standard auctions.
7.3. Cross-Border Bankruptcy Implications
If the debtor owns foreign-registered IP rights, their monetization depends on recognition of the Turkish bankruptcy proceedings abroad (based on reciprocity or treaties). Conversely, if a foreign bankruptcy estate includes Turkish IP assets, enforcement requires recognition of the foreign judgment under Law No. 5718 (MÖHUK). Courts generally require proof of reciprocity and compatibility with Turkish public order before allowing such sale or transfer.
8. Digital and Emerging Forms of IP
8.1. Software and Digital Assets
Under Turkish law, software is protected both as a copyrighted work (Law No. 5846) and as a potential patentable invention if it meets technical criteria. The monetization of digital IP follows similar rules, but in execution contexts, seizure requires identification of the code repository, licensing platform, or domain.
8.2. Domain Names
Domain names, while not formally included in the SMK, are recognized as intangible commercial assets. Yargıtay has accepted that domain names can be subject to attachment and sale, provided that control (registrar access) can be transferred to the buyer. The TRABIS Regulation (2022) now provides a legal mechanism for domain transfer, enabling their inclusion in liquidation.
8.3. NFTs and Blockchain-Based IP Rights
With the emergence of non-fungible tokens (NFTs), digital ownership certificates have entered the enforcement debate. While Turkish legislation lacks explicit rules, general principles of movable enforcement apply. However, practical enforcement is limited unless the private key or platform account can be accessed by the enforcement officer.
9. Comparative and International Perspective
9.1. EU Practices
The EU Enforcement Directive (2004/48/EC) encourages member states to ensure effective seizure and sale of IP rights. Many EU jurisdictions, such as Germany and France, allow specialized IP auctions or court-appointed trustees to handle sales, ensuring market transparency and protection of goodwill.
9.2. United States Practice
Under U.S. Bankruptcy Code §363, intangible assets can be sold “free and clear” of liens, often generating significant recovery for creditors. U.S. courts prioritize value maximization and public bidding, leading to robust IP auction markets, especially for patents and software portfolios.
9.3. Lessons for Turkey
Turkey’s current framework is functionally sufficient but lacks specialized enforcement expertise. Introducing dedicated IP enforcement units or specialized auction platforms could increase efficiency and market confidence. Collaboration with TÜRKPATENT and TÜBİTAK in valuation and sale processes would enhance accuracy and compliance.
10. Challenges and Practical Issues
10.1. Registration and Notification Delays
The time required to record seizure and sale at TÜRKPATENT often leads to procedural stagnation, diminishing asset value. A more integrated digital registry system could shorten these timelines.
10.2. Valuation Disputes
Disagreement over brand or patent valuation is common. Courts increasingly rely on independent IP valuation experts with financial and legal background. However, uniform standards are still lacking.
10.3. Confidentiality and Trade Secrets
Enforcement against trade secrets raises delicate issues, as disclosure during proceedings could destroy their commercial value. Courts may need to impose confidentiality orders or appoint trustees to manage such rights confidentially during sale.
10.4. International Recognition
Where IP portfolios extend across multiple jurisdictions, Turkish enforcement decisions may not automatically be recognized abroad. Therefore, multinational creditors must consider cross-border enforcement strategies and possibly mirror proceedings in foreign courts.
11. Recommendations for Practitioners
- Early Identification of IP Assets: Creditors should perform pre-enforcement asset searches at TÜRKPATENT to identify registrable IP owned by the debtor.
- Preemptive Pledge Agreements: Before extending credit, securing IP pledges provides a first-rank claim in liquidation.
- Expert Valuation Before Sale: A certified IP valuation maximizes sale proceeds and reduces annulment risks.
- Auction Publicity: Publishing sales beyond official bulletins (industry platforms, IP marketplaces) enhances visibility.
- Cross-Border Enforcement Planning: For multinational IP portfolios, coordinate with foreign counsel for recognition and parallel actions.
- Tax Structuring: Use available R&D incentives and Patent Box exemptions for monetized income streams.
12. Conclusion
The conversion of intangible rights such as trademarks and patents into cash is no longer a theoretical or secondary issue—it is a practical necessity in an economy dominated by intellectual capital. Turkish law provides a comprehensive, albeit fragmented, framework under the Industrial Property Law, Execution and Bankruptcy Law, and related regulations.
However, the effective monetization of such rights requires interdisciplinary coordination among enforcement officers, IP attorneys, valuation experts, and market professionals. Strengthening procedural efficiency, valuation standards, and transparency mechanisms will transform these rights from static intangible assets into dynamic sources of liquidity, serving both creditors and the broader innovation ecosystem.
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