How to deal with IP enforcement challenges in Indonesia

The Government of Indonesia has proven that it takes IP crimes seriously by devoting resources to a national task force, but it is still in need of strong cooperation with IP owners and enterprises, IP stakeholders and associations, along with close coordination between agencies (courts, public prosecutors, Customs, the Supreme Court and the police). Strong IP protection is crucial to protecting and stimulating business and fostering a creative economy.

As TRIPs recognises the importance of effective IP border measures, Customs controls the importation of infringed goods and Customs ex officio enforcement. Therefore, the effectiveness of law enforcement and border measures also depend on a functioning judiciary and close coordination between agencies (Customs, the Supreme Court and the police). This close coordination is not functioning efficiently, and the Government has not been successful in tackling this. Lack of proper and effective coordination and cooperation between government agencies is a problem for enforcing IP rights, which frequently relies on close links. The establishment of a national task force should help remedy this situation.

Indonesia has acceptable legal frameworks largely in line with the WTO TRIPs Agreement, that contain strong penalties for infringement, although some issues of concern remain. The legal frameworks are as follows:

• Law17 of 2006 concerning the amendment of Law 10 of 1995 concerning Customs

• Law 19 of 2002 concerning copyright

• Law 15 of 2001 concerning trade marks

• Law 14 of 2001 concerning patents

• Law 32 of 2000 concerning layout of integrated circuits

• Law 31 of 2000 concerning industrial design

• Law 30 of 2000 concerning trade secrets

• Law 8 of 1999 concerning consumer protection

• Law 5 of 1999 concerning anti-monopoly and unfair competition

• The Supreme Court directive number 4 of 2012 concerning temporary seizure

• The Supreme Court directive number 5 of 2012 concerning temporary injunction

Examples of strong IP protection in Indonesia can be seen in the following:

From the policy perspective, there is no weakness or lack of regulation underlying any challenges. To ensure effective enforcement of IP rights, not only police investigators, but also civil service investigators (PPNS) from the Directorate General of Intellectual Property Rights (DGIPR) have authority to investigate IP issues. In terms of law enforcement, the establishment of the Directorate of Investigation (under the DGIPR) is one of the realised efforts in the area. A significant role of the Directorate of Investigation is that civil servant investigators have the authority to conduct investigations on criminal IP cases. The process of the investigation under the Directorate of Investigation is more focused due to the uniformity of the whole system, including investigative procedure, data collection and administration. The Directorate of Investigation has its own duty and function as it works independently under the Directorate General of Intellectual Property Office. Since its establishment in March 2011, until December 2012, the Directorate of Investigation has received 72 cases (see table 1 and 2).

Statistics report on IP infringement (2011 - December 2012)

Status report on IP infringement (2011 - 2012)

The establishment of the Directorate of Investigation has significantly increased activities aimed at combating IP infringement in Indonesia. The majority of complaint cases reported to the Directorate of Investigation up to November 2011 concerned counterfeit automotive spare parts of the Honda trade mark for canvas brakes, water pumps and generators bearing the trade mark Honda, and screw drivers bearing the trade mark NGK.

On February 1 2013, the greatest raid was conducted in three located shops in Glodok Plaza, Hayam Wuruk, in central Jakarta, by the National IP Piracy Prevention Team together with a combined team consisting of PPNS of the DGIPR, a politics, law and security team, and a PPNS team from the regional office of law and human rights of DKI Jakarta. They seized 479 sacks and 421 boxes of pirated optical discs (DVD, CD, VCD) with a combined weight of 56 tons, which were brought to the DGIPR office in 15 trucks. The suspect may be subject to imprisonment of five years and/or a fine of at most Rp500 million ($52,000), based on Article 72.2, and is liable to imprisonment of seven years and/or a fine of at most Rp5000 million based on Article 72.1 of Law 19 of 2002 concerning copyright.

In July 2012, a raid against the counterfeiting of the trade mark Exam Grade for Faber Castell pencils, sharpeners and erasers was conducted by PPNS of the DGIPR, together with the Team of Supervising Coordinator (Korwas) of PPNS of the Special Criminal Detective Agency (Bareskrim), and the Indonesia Police Department. This took place in three different locations in Bandung, West Java, namely in the storage and two shops owned by Kwe Hook Siong, as a result of the report made by Ardhiyasa. The total loss suffered by the trade mark owner amounted to Rp3000 million. Examinees suffered as a result of these counterfeited pencils and sharpeners bearing the trade mark Exam Grade, as the counterfeit pencils and sharpeners used were unreadable by computer.

The Directorate of Investigation also handled complaints based on public information concerning an infringement of a simple heat insulator patent. Following the complaint, the Directorate of Investigation conducted a raid on the factory site (located in the village of Babakan, near the Sentul International Circuit, West Java) and confiscated 15 aluminum rolls, each measuring 1.5 metres in diameter with a height of 1.2 metres and a molding unit for printing. The team transported the evidence to the DGIPR Office. Following this raid, the DGIPR Office and the police expect that the public will pay much more attention to government policy against IP infringement and the national anti-piracy campaign.

On March 27 2006, the National IP Piracy Prevention Team was established by Presidential Decree number 4 (coordinating with the legal institutions for IP law enforcement: the police, the judiciary, Customs, PPNS at the Ministry of Law and Human Rights, and other related institutions), to formulate and decide policy strategy. The national team is directly responsible to the President. It has been given a wide range of duties, all linked to the tackling of IP infringements: formulating national policies and measures on how to tackle IP infringements, studying and proposing solutions to strategy issues hampering effective enforcement, coordinating socialisation and education in IP within government agencies and the public, and fostering cooperation at a bilateral, regional and multilateral level.

The establishment of specialised units of the Directorate of Special Criminal Detectives in regional police departments whose function, among others, is to handle IP cases, coordinate operations, and control the administration of PPNS, is a fundamental duty in accordance with the provision in Chief of Police Regulation number 22 of 2010. In carrying out their duties, the police officers do not only face conventional crimes but also other crimes that harm society, including IP infringement cases.

The establishment of a commercial court to handle IP civil disputes has already been provided in IP law. As trade mark, patent and other IP issues are closely related to the economy and to trade, there is a strong incentive for civil cases to be settled efficiently and in a relatively short time. Except for trade secrets, civil disputes are under the competency of the district court. IP law also recognises arbitration, or any other alternative dispute resolution for dispute settlement.

The Government of Indonesia issued two Supreme Court Directives on July 30 2012, namely Directive number 4, concerning temporary seizure, and number 5, concerning temporary injunction. By the issuance of these Supreme Court Directives, the Government has shown its seriousness in supporting law enforcement. The Supreme Court Directive number 4 regulates the requirements and procedures for the suspension of the release of imported or exported counterfeit trade mark or pirated copyright goods, by Customs. Therefore, the provisions of Article 54 to 64 of Law number 17 of 2006 concerning the amendment of Law number 10 of 1995 concerning Customs could be applied. Directive number 5 of 2012 regulates the request for temporary injunction; therefore, the Directorate of Customs has the legal power to prevent and detain the entry of imported counterfeit products into the channels of commerce in the Indonesian territory without waiting for the process of judiciary ends.

Since the suspension provision in the Customs Law is limited only to the importation of counterfeit trade mark or pirated copyright goods, it will lead to issues in practice. Article 125 (a) of Patent Law number 14 of 2001 regulates the provisional injunction to prevent the continuation of infringement of patents and the rights pertaining to patents, particularly to prevent the entry of infringing products into the trade channel, including importation. The issuance of the Supreme Court Directives concerning temporary seizure will reduce infringing goods from entering Indonesia, since the Customs seizure provisions provide practical solutions to many of the issues commonly faced by copyright and trade mark owners when goods are confiscated at the Indonesian border, as well as ArtIcle 49 of Law number 31 of 2000 concerning industrial design, which stipulates the same.

In the Trade mark Law number 15 of 2001, there is no protection for non-traditional marks, sound, three dimensional marks and holograms, and there are no criminal sanction provisions against those whose criminal conduct threatens public health and safety (trade mark counterfeiting). Therefore, in practice, this will impact the effectiveness of law enforcement. Since the draft of the Trade Mark Law has already been finalised, there will be a new criminal provision of strong penalties: five years of imprisonment at the most, and/or a fine amounting to Rp2500 million at the most. Once the amendments to the Trade mark Law come into force, the additional criminal provisions for trade mark infringement will act as a major deterrent to counterfeiters (hopefully there will be no more counterfeit products that threaten public health and safety circulated in the market).

In practice, the Judiciary usually imposes the minimum punishment in the case of IP infringement, and the basis of this decision is not reasonable or appropriate. Therefore, law enforcement does not run as hoped and expected by IP owners.

In terms of well-known marks cases, the commercial court should take relevant factors into account when deciding on well-known trade marks, namely the general knowledge of the consumer on whether the mark is well-known or not in a particular kind of business; the reputation (the recognition of the mark by the public generally) and the goodwill of the trade mark owner; expenses for the international and national advertisements and promotions; any investment in other countries conducted by the owner of the mark; and the certificate of the marks owned in other countries. If the court finds that those evidences are still not enough, it may order an independent institution to conduct a survey to establish how well known the mark is. However, in practice, a survey has never been conducted to know how far there is likelihood of confusion.

Actions against IP infringement (trade mark, patent and industrial design) can only be conducted if there is a complaint (warrant complaints) made by the party who suffers; while for copyright piracy, the legal enforcers can take action directly against the pirated copyright.

Stimulant factors of infringement or counterfeiting are as follows:

• Technology progress in the field of industry

• Hard to control production activity

• Non-availability of producer data due to lack of control of machinery importation and the weak control of importation of raw material

• Significant price difference between legal products and illegal products

• Legal enforcement is not effective yet, even though government commitment is sufficiently high

• Goods shipped from Indonesian harbours

• Indonesia has a distinct geographical nature consisting of more than 17,000 islands, which creates another challenge to control its borders for potential IP infringement.

Article 25 of TRIPs stipulates that the protection of an independently created industrial design is given to the ornamental or aesthetic aspect of a useful art. It must be new or original; the design should not be dictated by functional considerations and includes the protection of textile designs. Article 26 of TRIPs governs the right to prevent others from applying (making, selling or importing) the protected design for commercial products for a period of 10 years.

There is a lack of public awareness, especially of legal enforcers, industries and trading businesses, alongside a lack of intensive socialisation. A conceptual weakness in the Industrial Design Law is the criteria of novelty and similarity of feature. The criteria of novelty raise technical and substantive questions. Novelty should be examined and proven by referring to the data of use or the sale. Cases decided by commercial court show that the validity of industrial design has been cancelled due to not being novel. The very limited or non-availability of related prior art documents related to disclosure impacts the limit and accuracy of the novelty. In terms of proving an offence, in practice it is difficult to distinguish between the manufacturing of a product with the exact same industrial design, or similar or only partially resembling the component elements.

IP rights are still a concern in Indonesia, and strong commitment and consistency on IP enforcement from all agencies involved is needed. In parallel, those efforts must be intensified to increase public awareness of IP rights and the seriousness of IP infringements, as counterfeiting risks consumers' health and safety. Therefore, education and awareness strategies require further attention, to develop enforcement initiatives and best practice. Greater coordination is required with police, stakeholders or institutions (Customs departments and officials, the DGIPR, rights owners, public prosecutors, the police, civil investigators, and the judiciary) to support better IP enforcement. Pre-emptive and preventive efforts should be conducted through organisations related to IP enforcement such as associations, the Indonesian Chambers of Commerce (KADIN), exporters and importers, business people and investors, and NGOs. Efforts must be made to improve the rules, procedures, and the capacity of law enforcers, to strengthen the monitoring (and communication to manufacturers and retailers) of counterfeit sales

Cita Citrawinda Noerhadi