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COVID-19’s impact on the Indonesian IP ecosystem is minimal so far

Despite the widespread social, health, and economic devastation caused by COVID-19, it has largely been business as usual at the Indonesian IP Office (DGIP) since the start of the pandemic. While there certainly have been some minor disruptions and corresponding adjustments, overall the impact so far appears to have been minimal.

This is due to a variety of factors, but primarily is a result of previous investments made in digital infrastructure so that the vast majority of tasks could continue to be completed exclusively through the IP office’s online system. For the few that could not immediately be carried out online, a separate online portal was built and became functional in mid-May 2020. The acceptability of electronic documents in lieu of originals, as well as notarisation/legalisation only being required in certain circumstances, has also helped keep things moving, thereby avoiding some of the bottlenecks and/or backlogs that may have affected other jurisdictions.

On the other hand, it does appear that substantive examination of trademark applications has slowed considerably, particularly for those older applications filed before November 26 2016 under the previous Trademark Law (No. 15/2001). Further, deliberations on various legislative proposals have been severely disrupted, thereby delaying the removal of a controversial provision in the Patent Law, while much-needed revisions to the Industrial Design Law remain in limbo. Finally, while not ignoring the incalculable human suffering caused and unfortunately most likely yet to come, the economic fallout across Indonesia is already being felt, with growth forecasts for 2020 repeatedly being revised downwards.

Prior to COVID-19, Indonesia – as Southeast Asia’s largest economy, a member of the G20 grouping, and the fourth most populous country in the world – was projected to grow at a rate of around 5% in 2020. Now, the International Monetary Fund predicts that Indonesia’s economy will contract by 0.3% overall in 2020, with positive growth not expected to return until the first quarter of 2021. While undoubtedly bad news, it could be much worse and compares relatively favourably to 2020 growth predictions for the world economy (-4.9%) and the G20 economies (-4.6%).

Despite these dire economic predictions, interest in Indonesia as a trademark jurisdiction appears to remain strong. Recently released statistics from the Indonesian IP Office show that from a filing standpoint, the numbers for the first half of 2020 compare relatively well with those from the first half of 2019, which is quite remarkable considering the havoc wrought by the novel coronavirus. Total trademark applications actually increased by 7% in the first six months of 2020 when compared to January–June 2019, while simple patent/utility model applications likewise increased by 10%; ‘standard’ patent applications on the other hand decreased by 17%, with industrial design applications falling by 7%.

The trademark numbers offer the best opportunity to further examine the IP impact of the novel coronavirus in Indonesia. While other jurisdictions may have seen their trademark numbers fall off in February or March, Indonesia appears to have been hit starting in April. Based on information compiled by the author (excluding designations under the Madrid Protocol), on average approximately 6,438 trademark applications were filed in Indonesia per month in the three month period from January–March 2020. In April, that number fell to approximately 4,572 applications, falling further still in May to approximately 3,657 new applications. In June however, the numbers rebounded remarkably, totalling approximately 7,197 new trademark applications, or an increase of almost 200%.

Even with such robust June numbers, for the three-month period of April–June 2020, total new applications fell by 20% when compared to the first three months of the year. Still, given the huge month-on-month increase from May to June, it will be interesting to see what happens in July and the coming months. It would be even more interesting to know who is–and is not–filing these applications. As Southeast Asia’s largest trademark jurisdiction by volume, Indonesia historically sees around 80% of its approx. 75,000 annual applications filed by local entities. Unfortunately, the publicly available numbers at this time do not show us where these increases or decreases are coming from.

Up and downs aside, that applicants were still able to file almost over 15,000 trademark applications exclusively through the IP office’s online system after the physical counter was closed in mid-March 2020 is a positive story in and of itself. Likewise, trademark renewals, recordals, objections, and oppositions have long been able to be filed online and the transition to 100% online has been very good. Once the IP office’s physical counter closed, the only trademark task that was not immediately possible to perform online was the submission of appeals to the Trademark Appeal Commission. This was fixed by mid-April 2020 and such appeals can now be filed online.

An additional and highly useful option that has been recently added to the online system is the ability to delete goods or services from the specification of an already filed application. Previously, this was not possible at all during the application stage and such deletions had to wait until a mark was registered, even if it would have assisted in the registration process by deleting a good or service that conflicted with a prior cited mark. Now, via the online system, such deletions can be made at any time, though it should be noted that this does not apply to modifying items or adding limitations; instead, only deletions are currently being allowed, but this is still a welcome step.

While publications for newly filed marks continue apace – under the current Indonesian Trademark law, newly filed marks are published almost immediately for a two-month opposition period, which is then followed by substantive examination – publications of older applications (filed before November 26 2016 under the previous Trademark Law of 2001) have slowed to almost nothing. These ‘older’ marks must be substantively examined first before being approved for publication, and perhaps this process has been slowed down due to the work from home situation faced by trademark examiners since mid-March. Whatever the reason, only 314 marks have been published under the old law during the first six months of 2020; by comparison, 1,289 marks filed under the current Trademark Law were included in just one recent Gazette publication. While certainly there are fewer applications left under the old Trademark Law to be examined, that alone does not explain the numbers. If this discrepancy continues, it could further delay prosecution of these older marks, many of which have already been in the system for years.

On the patent side, the transition to 100% online activity has likewise been smooth, but perhaps with more give and take than for trademarks. That is, in the early stages of the pandemic, the closure of the physical counter in the IP office meant that patent annuity payments as well as excess fee payments made during substantive examination could not be made as there was no ability to make them via the online system. That functionality was added in May 2020 through the establishment of a separate ‘online counter’. On the other hand, patent examination seems to be continuing apace, with the patent office already used to sending formality examination and substantive examination letters via email to local agents. This has increased during the pandemic, which has allowed patent prosecution to continue to move forward. This positive development is all the more important since the Indonesian Patent Office has made great strides recently under director of patents Mrs Dede Mia Yusanti to reduce the pendency of patent applications from 4-5+ years to 2-3+ years, with many patents now being granted in under three years.

The pandemic has also delayed a widely anticipated change to the Indonesian Patent Law that had been the subject of intense lobbying from foreign governments, business chambers, and the private sector as well. Article 20 of the current Patent Law (No. 13/2016) requires a patent to be practised in Indonesia within three years of its grant date; if no such use takes place, the patent is then vulnerable to a compulsory licence provided certain conditions are met. While a formal though confusing system was set up to allow for owners to apply for postponement of the requirement, the Indonesian government finally relented and agreed to scrap the provision altogether. The deletion of Article 20 was then rolled into one of President Joko Widodo’s four omnibusbills, which were designed to eliminate red tape and improve the business/investment climate in Indonesia by collectively revising over 1,000 laws and regulations.

Originally targeted for passage in the first half of 2020, deliberation of the bills by the Indonesian House of Representatives (DPR) has been delayed by the ongoing pandemic. As such, it is now uncertain if/when any of these bills will be passed, meaning that for the time being, the Article 20 requirement remains in place, which is something that patent owners must keep in mind given the potential vulnerability that is created by non-compliance.

Likewise, the pandemic appears to have also delayed – again – consideration of a revised draft bill to the Industrial Design Law of 2000. While the Copyright Law was amended in 2014 and the Patent and Trademarks Laws amended in 2016, the Industrial Design Law has remained unchanged despite needing to be updated and augmented. While a final draft revision appears to be close to final, it was not included in the revised 2020 National Legislation Programme (Prolegnas) decided on July 2 2020. As a result, it is not expected to be considered or passed during this calendar year.

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