Indonesia, with a population of over 270 million, is the most populous country and has the largest economy in ASEAN. It should therefore be a key market for SMEs. For SMEs looking to expand their reach into Southeast Asia, understanding and navigating the complexities of trademark law in Indonesia is essential. Many trademark owners are confronted with this harsh reality too late: only when their branding has been already copied by or registered to local parties. This blog aims to provide practical insights and advice on protecting your trademark in Indonesia, ensuring that your brand remains secure as you explore new business opportunities in this vibrant market.
Understanding the First-to-File Principle
Indonesia operates under a “first-to-file” system for trademark registration. Under this system, the rights to a trademark are granted to the first person that files a trademark application with the appropriate government authority. In other words, registration with the trademark office is the primary determinant of ownership.
The fact that you have been using your trademark long before registration is not sufficient to establish rights in the country. It’s all about who files first, not who used the trademark first in business. In contrast, countries like Canada and the United States follow a “first-to-use” system. First-to-use trademark systems prioritize the actual use of a trademark in commerce in providing rights.
The rights go to the person who can prove they used the trademark first in business. In these systems, the date of first use carries significant weight. This means that even if someone else files a trademark application before you, your prior use may allow you to challenge their application and protect your brand. In a first-to-file system, it is crucial for SMEs to act swiftly in filing their trademarks. Delays can lead to significant legal and financial repercussions, as explained below.
Potential Consequences of Delayed Registration
Inability to Register the Trademark or Legal Battles
First-to-File Principle means that even if you have been using the trademark for a more extended period, the entity that successfully files the application first is likely to receive the legal rights to the mark. If another party files for your trademark before you do, you may find yourself unable to register it.
Trademark Hijacking
Trademark hijacking occurs when someone else registers your trademark, typically in bad faith. If your trademark is hijacked, you may face significant challenges in reclaiming it. The hijacker may demand a substantial payment to transfer the trademark back to you, a process sometimes referred to as “buying back” the trademark.
This issue is especially problematic for SMEs, which may lack the financial resources to engage in prolonged legal disputes. One notable case involved a fashion designer who had to pay a substantial sum to buy back his trademark from a third party who had registered it in Indonesia. Despite owning the trademark in several other countries, the designer was compelled to negotiate and pay the hijacker to regain rights in Indonesia.
Filing an Opposition
If the trademark you want to challenge is not yet officially registered, you can file an opposition during the opposition period after the trademark is published by Directorate General of Intellectual Property Right/DGIP and prepare supporting documents and clear reasons why the trademark should not be registered, such as its similarity to your already-registered trademark.
Filing a Cancellation Lawsuit
Lawsuit in Commercial Court: If the trademark is already registered, you can file a cancellation lawsuit in the Commercial Court.Legal Grounds: Legal grounds for cancellation can include arguments that the trademark was registered in bad faith or is similar to an existing and registered trademark. A similar case in Indonesia is the Starbucks coffee trademark dispute where an Indonesian tobacco company registered Starbucks trademark as a cigarette. The Starbucks Corporation won in the Indonesian Commercial Court and Judicial Review because its trademark is well-known.
Protecting Your Unregistered Trademark Can be Challenging
A trademark can only be protected if it is registered in Indonesia. However, Indonesian trademark law provides protection for well-known unregistered trademarks, against bad faith attempts to apply for registration. Under Indonesian law (Law No. 20 of 2016 on Trademarks and Geographical Indications), a bad faith applicant is one who files a mark with the intent to copy another party’s mark for unfair business competition, misleading consumers, or gaining an undue advantage.
While the law provides some protection for well-known unregistered trademarks, proving bad faith can be challenging. For SMEs, demonstrating the well-known status of their trademark is particularly difficult without significant presence in Indonesia through sales or distribution channels.
The criteria for what constitute “well-known” trademarks are not clearly defined, adding to the complexity. Recent Supreme Court decisions have clarified that proving bad faith does not necessitate the official use or distribution of the mark in Indonesia. In Supreme Court Decision No. 1313 K/Pdt.Sus-HKI/2021, the court ruled that the defendant’s knowledge of the “SUPREME” mark was established through its accessibility on the plaintiff’s website, which was launched before the defendant’s mark registration. Similarly, in Supreme Court Decision No. 1051 K/Pdt.Sus-HKI/2023, the court recognized the “JOLLIBEE” mark as well-known due to its global presence on various websites.
In both cases, the plaintiffs’ marks were not officially used or distributed in Indonesia. However, their online presence was deemed sufficient to establish the defendants’ knowledge of the marks.
Although the recent decisions may be seen as a positive development, the required level of fame for a website to establish a well-known trademark remains unclear. As best practice it is always advisable for foreign trademark owners to secure trademark registrations prior to entering the Indonesian market.
The Importance of Engaging a Local Lawyer
Registering Your Trademark
Foreign SMEs typically need a local agent to complete trademark registrations in Indonesia. A local lawyer can navigate the intricacies of the Indonesian legal system, ensuring that your application is correctly filed and processed.
Dealing with Trademark Hijacking
A local lawyer can also assist in negotiating the buyback of a hijacked trademark, potentially reducing costs and complications. Generally, using a locally based lawyer may allow the SME to buy it back cheaper than by going directly to the seller themselves because such lawyers can combine the negotiation with administrative filings based on local practice.
Cancellation of Bad Faith Trademarks
Local legal expertise is crucial in challenging bad faith trademarks. While criteria for what constitutes a “well-known” trademark remain unclear, local lawyers can help you establish evidence to prove the defendant’s knowledge of your trademark at the time of filing. A knowledgeable lawyer can gather the necessary evidence and present a compelling case to the authorities, increasing your chances of a successful outcome.
Conclusion
Engaging a local lawyer is a vital step in this process, ensuring that your trademark rights are robustly defended. Act now to secure your brand’s future in the dynamic Indonesian market. Don’t wait until it’s too late. Protect your brand in Indonesia by registering your trademark today. For expert legal assistance, find a trusted local lawyer on Trustiics to guide you through the process and help secure your business’s future in the dynamic Indonesian market.
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