Indonesia considers unorthodox approach to trade mark examinations

Currently, Indonesia’s Directorate General of Intellectual Property Rights (DGIP) conducts a substantive examination of trade mark applications and publishes the accepted applications, like most trade mark registrars around the world. Under the proposed law, applications would first undergo a short formality examination and if no problems arise, be published in the Official Trademark Gazette. After the 90-day publication period, the application proceeds to substantive examination.

Brand owners can file objections during the publication period. However, under the draft provisions, there is no method for raising an objection after the 90-day publication period has closed, even if the substantive examination is not complete.

A flow chart of the proposed examination procedure from the new draft Trademark Law, courtesy of Tilleke & Gibbins

Practitioners suggest that one reason behind the system is to help lighten the increasing workload faced by the trade mark office. Indonesia had nearly 63,000 trade mark applications in 2013, the most among the ASEAN countries.

“Actually, this proposed publication-first system is what we used before the current law,” explains Daru Lukiantono of Baker & McKenzie’s Indonesian member firm Hadiputranto, Hadinoto & Partners. “Perhaps the idea now is to have publication first so that the public acts as a filter first to help the examiners.”

Somboon Earterasarun of Tilleke & Gibbins also suggests that efficiency the change may be designed to speed up the examination process: “The trade mark office has said that efficiency is one of the reasons for the proposed change. Under the current system, if something comes up during the publication period, the examiner will have to go back and substantively re-exam the mark, so they would have to do it twice. So why not publish the mark first so that the office can just exam it once?”

However, Earterasarun warns that there can be some significant problems with the system. He notes that while this may help ease the burden at the trade mark office, the workload is in some ways shifting to the rights holders, now that all applications that clear the initial formalities hurdle will be published rather than just those that pass substantive examination. This means that rights holders must be prepared to monitor what may be a much higher volume of applications.

“I am hoping that they will back off on this idea, he says. “If this passes, Indonesia might be the only country in the world to use this system.”

Given the concern about trade mark squatting in Indonesia, changes to the opposition procedures may have a big effect on international rights holders. This is especially true because it is relatively difficult to cancel trade marks in Indonesia. One reason for this is that there is no administrative option for cancelling marks; the only way to attack a registered mark is to file a court case, which can be expensive.

Earterasarun says that marks such as this one recently published in the Official Trademark Gazette, which uses a font and styling very similar to ones used by  the Japanese manufacturer Brother, are very common in Indonesia

“From my experience, Indonesia might be one of the top three jurisdictions in terms of trade mark squatting, along with China and Vietnam,” Earterasarun explains. “One of the reasons is that the examiners in Indonesia seem to have relatively less knowledge of international brands.”

Thus, local trade mark squatters have been relatively bold in their attempts to register exact copies of international brands as well as their own brands which imitate established marks.

Despite concerns about the proposed changes to the examination system, the draft also has provisions which should be helpful to rights holders. For example, the draft revision allows for the registration of non-traditional marks, specifically sound, scent, hologram, and 3D marks. The draft also shifts the renewal period from one year before a mark’s expiration to six months before and six months after, providing for a grace period.

Another encouraging development is a significant increase of the criminal penalties for infringement. In the draft revision, the maximum fine in instances where the infringer copies the entirety of another’s registered mark is Rp 2.5 billion ($213,000), more than double the current law’s maximum fine of Rp 1 billion. The fine for using a similar mark where the essential part infringes upon a registered mark is capped at Rp 2 billion, again more than twice the current maximum of Rp 800 million.

The draft also proposes shortened timelines for the examination process. However, it is unclear whether this would have much immediate practical effect, especially if there are mechanisms for enforcing the deadlines.

“The draft proposes a shorter term of substantive examination, six months. Even with the current timeline of nine months for a substantive examination, there is already a pretty big backlog and a delay can sometimes be up to a year,” explains Lukiantono. “That said, I would think that there are some internal plans at the trade mark office on how to speed up the process.”

The new draft also requires that where rights owners transfer more than a mark to another party, it must also transfer marks that have similarities and cover similar goods and services to that same party. Assignments of only some, but not all, of these associated marks, will not be accepted.

Though the purpose of this provision is to prevent consumer confusion as to the owner of the mark, Earterasarun says that he has concerns about the system. Because the issue of whether marks are associated with each other is seemingly based on the subjective analysis of the examiner, this requirement may become a considerable hurdle for rights holders to deal with. For example, he notes that if a company is selling off one of its lines of business, the deal can be at least temporarily blocked (perhaps at great cost) if the trade mark office decides that not all the associated marks are being transferred to the buying company.

Lukiantono on the other hand is looking for hopefully more guidance on already existing requirements that have not been fully implemented.

“One thing that I am expecting is the implementing regulation on trade mark licensing recordal procedures in Indonesia,” he explains. “We think it is important, because right now, the current law has a requirement to record licence assignments but there are no implementing regulations on how this is to be done.”

There is no timeline for the revision to the trade mark law. Earterasarun suggests that given the recent election and the progress that has been made thus far, the bill may be finalised by early next year.

Indonesia, like other countries in the region, is revising itsIP laws in preparation for the ASEAN Economic Community, which has among other things a number of IP-related goals set for the end of 2015. For Managing IP’s coverage of Myanmar’s progress on this front, click here.