Indonesia’s Long Road to Effective Protection of IP Rights

Following its 1994 ratification of the Agreement Establishing World Trade Organization (WTO), including its four major agreements (GATT, GATS, TRIMS and TRIPs), Indonesia has taken steps to develop and issue new intellectual property laws, create a better framework for IP protection, and provide a more conducive environment for the development of intellectual property and inventions by intellectuals, investors , and researchers working in all fields.

As a results of such steps, many changes have been seen on Indonesia’s intellectual property landscape. In the area of patents, for example, major improvements include extending the term of patent protection to 20 years (from 14 years), implementing import restrictions on goods under protection, introducing the reversal of the burden of proof onto the defendant in IP infringement cases, broadening the definition of “novelty” and permitting the granting of patents for inventions relating to human or animal needs or consumption and for new varieties of animals and plants, including those resulting from a chemical process. Further, Indonesia now acts as both a receiving and designating office for Patent Cooperation Treaty (PCT) applications.

With respect to trade marks, recent developments include expanding the scope of registrable marks to include service marks, allowing multiple classes on a single application, recognizing well-known trade marks and developing a registry of international well-known trade marks for goods not only of the same kind, but also in different classes. There have also been developments in the areas of local use and bad faith use.

In the field of Copyright, Indonesia has, among other things, broadened the definitions relating to the holder of unknown creations and neighboring rights, extended the copyright protection period and made better provision for the granting of interim

injunctions or temporary restraining orders in limited cases.

In addition, Indonesia has broadened the protection of intellectual property in the areas of geographical indications, industrial designs, layout designs of integrated circuits, trade secrets and plant varieties.

All these amendments to intellectual law and practice took at least five years following Indonesia’s ratification of the WTO agreement in 1994.

Legal restructuring : Local, regional and international

As economies and trade become increasingly open and globalized, the Indonesia government understands that restructuring its legislation is a logical step if it wishes to enjoy the respect of the international community as a credible and dependable regional and global destination for investment. The country has had little choice but to increase its integration with other markets and adopt common international standards, not least as a way of remaining competitive as compared with other countries at a similar stage of development, particularly members of ASEAN, as regards the serious legal protection of intellectual property rights.

As a consequence of and in line with the major revisions to its domestic legislation (most notably, in 1997 and 2001), Indonesia has also moved forward with recognizing international IP agreements and treaties. Indonesia has now ratified, among others, the Paris Convention for the Protection of Industrial Property, 1883, and its 1967 Amendment (formerly only Articles 1–12 reserved) and the Berne Convention for the Protection of Literary and Artistic Works, 1886, and its 1971 Amendment (formerly on Article 33.1 reserved), as well as several WIPO treaties, including the PCT and the Regulations under the PCT, the Trademark Law Treaty and the Copyright Treaty (1996–2002). In addition, the country will soon ratify WIPO’s Rome Convention for the


Protection of Performers, Producers of Phonograms and Broadcasting Organizations. Indonesia is also the founding member of the ASEAN Framework Agreement on IP Cooperation and the ASEAN IP Association.

All these international agreements provide the basis for developing and interpreting the provisions and terminology of local IP laws. If Indonesia fails to uphold its undertakings with respect to such agreements, its attractiveness as a location for international investment will diminish, which will have serious economic consequences.

However, while Indonesia has a fairly well developed legislative framework in place, as with many other countries in Asia, it continues to struggle with the problems of poor enforcement and dispute resolution mechanisms. The structures are in place but do not yet operate satisfactorily.

Intellectual property dispute resolution

As of 2002, most intellectual property rights disputes, excluding those involving trade secrets and plant varieties,¹ are referred to the commercial court in the competent jurisdiction.

Cases will initially be heard at the commercial court in one of the five areas of jurisdiction that have been established, i.e., central Jakarta (for Jakarta and the surrounding area), Semarang (central Java), Surabaya (east Java), Medan (Sumatra) and Makasar (Sulawesi). Intellectual property dispute cases heard at the commercial courts are subject to a specific procedural law, under which submissions for and completion of each phase of the process is subject to a specific time frame. In theory , this expedites the proceedings and shortens the completion of the first hearing of the case to no more than 180 days. However, this change in proceedings is a relatively recent one, and commercial litigations have traditionally seen a large gap between procedural theory and procedural practice.

Records of legal proceedings show that a surprisingly low number of IP-related cases reached the Supreme Court in 2003. Numbering 44, mark-related disputes accounted for the largest number of cases, while only three patent suits and three
industrial design suits were filed. All were civil cases and were heard under the old procedure. It can be arguably inferred from this that many IP-related lawsuits must have been settled before reaching the Supreme Court. There are currently a few cases in process at the commercial courts which have not yet reached the Supreme Court. There are also a number of criminal cases in progress. According to records at Indonesia’s police headquarters, between 2001 and 2003 there were less than 400 copyright cases, less than 100 mark cases and less than 10 patent cases heard under criminal proceedings.

Legal enforcement of IP rights

The ultimate goal in the legal enforcement of all commercial litigations involving IPR rights is the deregistration of the illegal right or the ceasing of the illegal action. An interim injunction for a period of 30 days may be provided under the new legal process, but greater pressure may help expedite the process or provide greater incentives for disputing parties to negotiate a settlement.

In Indonesia, copyright is currently the focus of much attention as, despite the existence of a strong legal framework under which severe legal penalties for copyright infringement have been provided since 2002, effective enforcement remains a significant problem.

Serious problems with trade mark infringement in Indonesia has driven international companies including LVMH Fashion Group, International Pharmaceutical Manufactures Group (IPMG), Microsoft, Philips Electronics, Procter & Gamble, Unilever,



Sara Lee, Grundfos and Aqua Danone to establish the Indonesian Anti-Counterfeiting Society. Set up in 2003, the society functions as an alternative to pressure groups, with stated aims including greater cooperation with government bureaucrats and politicians to fight piracy and counterfeiting in the commercial sphere. The Directorate General of Intellectual Property Rights in Indonesia has undertaken play to a greater role in these efforts as problems with IP infringement become more complex.

Effective enforcement
The Indonesian government has been relatively candid with regard to acknowledging its limited ability to combat counterfeiting, piracy and other types of IP infringement. In particular, it has noted the problems of a low level of awareness of IP rights in Indonesian society, even at a government level, and the lack of adequate means and resources to facilitate the proper monitoring, protection and enforcement of IP rights.

However, while acknowledging the problems, the government has been less quick to assume some level of responsibility for the weaknesses of the current system. Government officials generally note that the legal and administrative structures are in place, but that the judiciary is failing to vigorously and consistently undertake legal enforcement without such enforcement, all legislative protections for IP rights are dead-letters.

Reference to the weaknesses of other official institutions, such as the judiciary, will not help improve protection for IP in Indonesia. More effective strategies would include, for example, facilitating a more active role for the police in the protection and enforcement of IP rights – given their powers of arrest, the greater involvement of the police may prove a more effective deterrent to potential IP infringers than the threat of a court action. However, this would entail strengthening the human resources of the police force and raising their general awareness of the importance of IP rights. Indonesia’s police force is currently overstretched and much of its efforts are therefore targeted at what it believes to be more serious crimes.

With respect to effective legal enforcement, there is still a long way to go in Indonesia. There needs to be a raising of awareness among the general population, as well as stronger political will to improve the situation by building greater synergy between judicial institutions and the government, including the police force, Customs Office, the Trade Ministry, the Justice Ministry, the Attorney General and the Supreme Court. The Indonesian government formed a task force in this regard in January 2003 but the results of its efforts are yet to be seen. Without such synergy, the present unacceptable situation will continue indefinitely.

There have, however, been some signs of positive development. Although lower courts remain unpredictable in their decisions, the Supreme Court has a better record, particularly with regard to cases involving well-known trade marks, wherein the court has generally found in favour of the trade mark owner. Disseminating more predictable, fact-based decision-making down through the court system is vital, particularly if Indonesia is to be removed from the priority watch-list of the US Trade Representative’s Special 301 Annual Review, which it re-entered in 2003 with the US claiming that IP violations in Indonesia cost US businesses at least US$253 million in 2002.

However, the Supreme Court process is not without its problems, in a dispute over the well-known trade mark owned by Davidoff of Brazil, the case was decided in the plaintiff’s favour by the Supreme Court, but the whole process took 14 years (1989-2003), even though the Indonesian registrant had never used the mark, It is high time that Indonesia legally recognized and enforced the internationally understood criteria applicable to well-known marks, as raised and discussed at the APEC-Intellectual Property Expert Group.

Challenging trade mark registrations
In 2002/2003, new applications for trade mark registration in Indonesia increased by 50% and there were more than 40,000 renewal applications. This large volume is partly a reflection of the fact that Indonesia follows the “first to file” system to establish rights over a mark. This has caused many people to file applications in the hope of retaining the mark right at the earliest possible opportunity. At present, those disputing a trade mark application or registration heavily depend on the judiciary to establish their rights over a mark, since the Appellate Commission at the Mark Office, which was established in 2001, currently functions largely to rubber stamp the decisions made by its lower agency. Thousands of appeal claims are on the wait-list of the Mark Office, waiting for examination by the Appellate Commission. The backlog, which is largely the result of government delays in establishing the commission, may partly explain the commission’s less than satisfactory functioning to date.

Under the legal framework for marks, claimants have the option to challenge rights over a mark by filing either an opposition or an appeal at the Mark Office. Further, if the supporting evidence is sufficient, a claimant may file criminal charges with the police. If the results of such action is unsatisfactory, the claimant can take its case to the Commercial Court or, in criminal cases, to the Public Prosecutor or the Attorney General, (as the case may be), and then, if necessary, to the criminal courts. Any decision by each instance of the lower court may be challenged at the Supreme Court for cassation and, thereafter, for judicial review. Thus, the whole process for obtaining a final court judgement may involve two administrative processes, including the Appellate Commission, if any, and three judiciary stages, excluding the police process. In cancellation proceedings, the court judgment must be then submitted to the Mark Office, which will use the judgement as the basis for canceling the mark registration at issue.

Endnote
¹ Disputes over trade secrets and plant varieties are treated as civil disputes and referred to the ordinary district court.