Customs update

Enforcing intellectual property rights through Customs has always been, and for the time being will remain, difficult.

EuroCham arranged a luncheon with representatives of the Directorate-General of Customs & Excise on 27 January 2016.  Discussions were focussed on logistics and administrative issues, but there was a comment from Bapak Kukuh Sumardono (Director of Customs Facilities) that we thought was particularly interesting in the context of IP - that Customs & Excise is a revenue collecting arm of government and not a social service.  This reflects a key challenge in having intellectual property rights enforced - seizure of counterfeit product doesn’t feature in the KPIs that are set for Customs Officers.

It remains possible to seize incoming shipments based on ex officio powers of officers.  But the level of intelligence required (e.g. container number, copy of bill of lading) makes it very difficult.  An alternative strategy is to track shipments as they leave port, and arrange a seizure through police authorities.

IKEA v. Ratania Khatulistiwa - missing the point

This high profile decision from the Supreme Court has been receiving a lot of attention this week, and many commentators are missing the point.

According to Detik news (see here):

• Inter IKEA System B.V. obtained trademark registrations on 9 October 2006 and 27 October 2010;
• Inter IKEA System B.V. didn’t use its trademarks for a consecutive period of three years;
• PT Ratania Khatulistiwa filed a claim for deletion of Inter IKEA System B.V.’s trademarks; and
• the Supreme Court ruled in favour of PT Ratania Khatulistiwa and ordered that Inter IKEA System B.V.'s trademark IKEA trademark be deleted.

For the last few days, social media has been awash with criticism of the Supreme Court’s decision to delete Inter IKEA System B.V. s trademarks.  This has included remarks about Indonesia’s regulatory environment being stacked against foreign investors.  What many commentators have failed to acknowledge is that the requirement that a trademark be used (or risk deletion) is designed to prevent trademark squatting - registering a third party’s trademark with the intention of profiting from its goodwill (e.g. selling it).  Being able to ‘clean up’ the register by deleting trademarks can actually help foreign investors enter the market.  Further, deletion of a trademark on grounds of non-use is a concept regulated by international convention (the TRIPS agreement - see here) and is a feature of the trademark laws of all 162 World Trade Organisation member countries - it is not unique to Indonesia.

That’s not to say that the decision is a good one.  Commentary has largely focussed on the provisions of the Trademark Law governing use and deletion, but there is also a requirement that applications for registration of trademarks be filed in good faith.  On the origins of the trademarks in question, Detik news says that PT Ratania Khatulistiwa argues IKEA is an acronym for Intan (Industri Rotan) Khatulistiwa Esa Abadi (incidentally, Inter IKEA System B.V. s famous trademark IKEA is also an acronym - for the founder of the business, Ingvar Kamprad from Elmtaryd, Agunnaryd).  Now, when PT Ratania Khatulistiwa filed its application in December 2013, did it do so in good faith - maybe it didn’t know about IKEA (despite that both companies are in the furniture business!)?  Without the intention to ride on the fame of Inter IKEA System B.V. s famous trademark IKEA?  We were surprised to hear that the Court decided it was.  And think that this should be the focus of the public debate.

A full copy of the decision has not yet been made available on the Supreme Court’s website (see here).

Financial Assistance provisions in draft Bill on Creative Economy

Financial assistance provisions in the draft bill on Creative Economy reflect more progressive thinking from the Indonesian government, and could help creative economy businesses if implementation follows.

The Regional Representatives Council (Dewan Perwakilan Daerah) has proposed a Draft Bill on the Creative Economy to the House of Representatives (Dewan Perwakilan Rakyat) with the aim of enhancing the nation's productivity.  There is a provision in the draft anticipating financial assistance from government for creative economy businesses in the form of grants, international aid, or other legal forms of financing (Article 58).  The bill also recognises that intellectual property can be used as collateral in obtaining finance (article 59) and a fiduciary guarantee.  

If government does start providing financial assistance, and if a regulatory framework for use of the intellectual property as collateral can be established, the government will have succeeded in establishing useful resources for creative economy businesses.

(Authored by Bagus Lestanto, Associate)

ProLegNas 2016

The House of Representatives has published its National Legislation Program (ProLegNas) for 2016.

The list of laws that will be debated this year in the House of Representatives was decided on Monday 25 January 2016.  It includes two intellectual property laws - a new Trademark Law, and a new Patent Law.  Both were also included in last year’s National Legislation Program (see here) but have not yet been passed.  With the government pushing for development of Indonesia’s creative economy, sources at the Directorate-Genearl of Intellectual Property say they expect that these laws will be passed in the first semester of 2016.

A draft law that proposes to establish a national framework for research and development is also included in th list.  A complete list of the 40 laws included in the National Legislation Program (ProLegNas) for 2016 is published here.