Legal Briefing

Well-known trade mark protection in Indonesia

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Technology, Media and Telecoms | 01 December 2010

The concept of well-known trademarks has a long pedigree, going back to the Paris Convention for the Protection of Industrial Property (1883). Since then, protection has expanded and this has been reflected through additional dilution protection (against misuse of marks with a reputation in dissimilar goods) in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1995 and the World Intellectual Property Organization (WIPO) Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks of 1999. However, more recently, there has been resistance to offering too much protection. Nowhere are the inconsistencies between international obligations and local resistance more obvious than Indonesia, a country where trade mark protection is inherently weak and the legal system uncertain. This article briefly summarises many issues that arise when well-known foreign marks are copied – one of the most common intellectual property (IP) violation situations in Indonesia.

Protection

Indonesia has a ‘first-to-file’ trade mark system. This has been widely abused by most local trade mark pirates, who register well-known foreign marks. The growth of the internet means that new brands are widely known in Indonesia long before sales start. Such pirate applications usually proceed to registration without obstacle unless the genuine owner has diligently filed early in Indonesia. Sometimes they circumnavigate marks in other classes because the trade mark office search systems are not robust. Some pirate registrations are used on lookalike products; others are squatted until the real owner buys the mark. More so than ever, IP holders have to face up to and deal with them as the Indonesian economy expands rapidly with its consumer market, driven by the world’s fourth largest population of 230 million people. IP owners wishing to enter the market have two choices when blocked by a pirate registration – to litigate or to do deals with pirates. Often there is extra value in a court declaration that their mark is well-known.

The now-defunct recording system for well-known marks was meant to counteract the problem of pirate trade mark registrations. Marks recorded as well-known under that system were meant to gain influence and protection beyond the goods and services with which they are regularly associated. However, this system was discontinued in 1996.

This recent responsibility to determine well-known status, in practical terms, rests on the Commercial Court when deciding whether to cancel a registration on well-known mark and bad faith grounds.

A successful cancellation on well-known mark grounds usually entails an ancillary declaration that the successful plaintiff’s mark is well known. The declaration is helpful in protecting against the dilution of the mark – such as third-party filings for dissimilar goods or services that do not come within the core goods or services of the well-known mark. The trade mark office, in practice, follows such declarations.

Opposition

The first line of attack is to file an opposition against a pirate mark at the application stage. This means using watch services to monitor it. It is worth pointing out that pirate trade marks are commonly applied for in relation to different goods, eg adidas cigarettes, Guinness jeans, Playboy footwear; Alba electronic goods, other than watches; Panerai for class 25 goods, such as clothing; or Avatar for furniture.

Oppositions can be filed at the trade mark office by interested parties on the following grounds:

  1. similarity to prior registration(s);
  2. similarity to a well-known mark for similar and dissimilar goods or services;
  3. the application is filed in bad faith;
  4. contradicting with the prevailing rules and regulation, morality of religion, or public order;
  5. not distinctive;

  6. has become a public domain;
  7. the applied mark is descriptive;
  8. resembles the name of a famous person, photo or name of a legal entity; or
  9. similar to a well-known geographical indication.

It is normally recommended to file significant evidence to prove well-known status – otherwise the trade mark examiners, who may not be familiar with foreign brands, have nothing to go on (see adjacent box).

Where the well-known mark is used in relation to goods or services similar to those in respect of which the pirated mark has been registered, there is no difficulty. However, although the trade mark law provides that the protection afforded well-known marks extends to dissimilar goods and services, detailed provisions have been left to be included in a government regulation, which, unfortunately, has yet to be issued. As a result, the trade mark office is reluctant to consider a mark well-known if it is used in relation to dissimilar goods or services.

Cancellation actions

IP holders who lose oppositions (which are comparatively simple proceedings), or who discover pirate marks after they are registered must, unlike in many other countries, go to court to apply for invalidation.

Grounds for invalidation of trade marks are:

  1. deletion for non-use; and
  2. cancellation due to the following:
  3. similarity to a prior registration;
  4. similarity to a well-known mark for similar or dissimilar goods or services;
  5. bad faith; and/or
  6. similarity to a legal entity name.

Both are handled by the Commercial Court, but the two grounds cannot be combined into one action. The sub-grounds for cancellation can be, and therefore cases against famous marks should be filed based on both bad faith and well-known mark.

There is no deadline for filing a cancellation action. However, the grounds are limited after the expiry of the five-year period from the registration date. After that, the available grounds are ‘against the religious morality, decency or public order’, and this has been interpreted to include bad faith.

When the plaintiff relies on a well-known mark and bad faith, substantial evidence of the fame of its mark needs to be submitted. As this is court litigation, certified extracts (for trade mark registrations), original evidence or notarised copies need to be submitted in court. Typical evidence relates to promotion, extensive use and sales. Documents are widely used and overseas evidence needs to be legalised. IP holders need to take great care to provide sufficient and relevant evidence. Too many cases fail when plaintiffs file thin evidence bundles that do not support a well-known mark claim. In other cases, plaintiffs have failed to properly support arguments, or failed to claim bad faith, so restricting their appeal prospects. Bad faith should be specifically supported by extensive investigative evidence clearly demonstrating the mala fides of the applicant.

One example is Diageo’s cancellation action against a Smirnoff trade mark registration in class 25, in the name of Stefen Rudy. The claim was filed on 9 September 2009 at Central Jakarta Commercial Court and was decided on 26 January 2010. The court ordered cancellation of Stefen Rudy’s registration, and declared Smirnoff to be well-known internationally and in Indonesia.

Other examples in 2009 include, Ferrari in classes 16 and 25, cancelled by Ferrari, and Chitty Chitty Bang Bang, owned by United Artists Corporation (the pirate registered the mark in class 32 for beverages). Earlier successful cancellation cases include, in 2008, Li-ning in class 18, cancelled by the owner Lining Sport of Shanghai, and IKEA in class 20, cancelled by Inter IKEA Systems. A clear pattern of success is evident.

Cases at the Commercial Court are generally fair and most plaintiffs with good cases succeed. However, poorly prepared cases are a recipe for disaster, which is why expert IP litigators need to be involved. Cases that have insufficient evidence, or where only one ground is pleaded, are much harder to overturn on appeal. Care must be taken when the defendant is a major serial infringer. For example, in the Davidoff and Reemtsma cigarette litigation with the Sumatra Tobacco Trading Company (STTC) in 2002-04, extensive PR and lobbying took place to support those cases, given STTC’s reputation for trade mark piracy.

Trade names

There is no system for registration of trade names in Indonesia, only trade marks can be registered. Company names are registered at the Directorate of General Law Administration. However, it is not uncommon for well-known trade marks to be used by third parties as trade names. The Companies Register has no system to cross-check and refuse company names similar to trade marks.

The Indonesian Company Law 40 of 2007 prevents the use and registration of a company name that is similar in principle to another company name. A company name cannot be used if it similar to a well-known mark and if is contrary to public order and morality (public order is a term that is often used to mean consumer confusion). The Company Law is subject to further implementing regulations. The general notes to this regulation explain that a company name should be consistent with the regulation on well-known trade marks under the Trademark Law. However, that well-known trade mark regulation has never been put in place.

The forum to challenge a registered company name is by filing a complaint at the Administrative Court against the Directorate of General Law Administration, on the grounds that they failed to adhere to the Company Law and its implementing regulation in issuing a conflicting company name. However, cases are very rare and it remains unclear whether the court would decide a case in the absence of the regulation, so several recent company names disputes have been settled through negotiation.

Dilution protection: dissimilar goods

There are no laws in Indonesia that specifically prevent registration of trade marks that have the effect of making a third party’s mark less distinctive (blurring), inviting unwelcome associations (tarnishing), or causing a mark to become generic. The dissimilar goods regulation referred to above has not been drafted. However, in practice there are some simple strategies that brand owners can implement to address the issue of trade mark dilution. These include:

  • adapting trade mark prosecution strategies to ensure that distinctive elements are separately registered – labels and logos;
  • filing applications for registration of defensive trade marks – for classes that may not have use;
  • monitoring the register of trade marks, and aggressively challenging third party trade mark applications through oppositions (at the Trade Marks Office) and registrations, through cancellation and/or deletion proceedings (at the Commercial Court);
  • ensuring that public relations strategies involve clear use of the mark as a trade mark, and frequent communication with Indonesian customers; and
  • maintaining a comprehensive catalogue of evidence of use of the trade mark.

Marketplace infringements are a problem. Few infringement cases make it to trial in Indonesia so jurisprudence on infringement is thin and there is none on the protection of well-known marks specifically. Trade mark law itself is unclear when it comes to well-known mark dilution protection. The infringement provisions only provide only that there must be similarity of the marks, but do not refer to the similarity of the goods and services. Nor does it provide any specific detail on what dilution protection is provided (eg use that indicates a connection to the well-known mark owner or harms its interests (Art 16(3) of TRIPS). In respect of use in relation to dissimilar goods or services, an IP owner is unlikely to bring an action based on dilution unless it is a very serious case of infringement.

Some practical matters

With the levels of piracy and counterfeiting high in Indonesia, a multiple strategy of registering marks along with oppositions and cancellations protects the register. Strategies should be carefully planned to deal with product counterfeits. However, enforcement remains difficult and uncertain, although criminal raids can be used to some effect.

It is important to conduct an investigation to gather information about well-known mark infringers. This helps to create other options. These can include:

  • if unused, non-use invalidation court litigation is possible;
  • a smaller target might sell the mark openly or perhaps covertly to an investigator posing as a buyer;
  • larger companies may be susceptible to pressure through a PR-supported negotiation (Indonesian infringers often dislike bad press and so a PR campaign is a means of applying pressure to settle); or
  • if they are copying other famous brands, bad faith evidence is improved.

It is always critical in a country where publicly available information sources are very limited, to learn:

  1. who the infringer is;
  2. the size of the business;
  3. how the IP concerned is being used;
  4. if the infringer is a manufacturer, or importer, or distributor of goods bearing the IP in concern; and
  5. the extent of the infringement.

Local investigators have on-the-ground knowledge and can penetrate ‘closed targets’ who don’t like to deal with outsiders. The investigators must be proficient at developing evidence that can be used in court cases. Finally, the best investigators are capable of conducting covert acquisitions, where they negotiate and buy the mark from the infringer themselves, before returning it to the client.

From the information gathered during the investigation, the level or impact of the infringement may be low. If this is the case, it may be more cost-effective to send a cease and desist letter to the target. Although the commercial court is fast and fairly effective, it is always lower for costs to negotiate and recover the mark this way. Good IP lawyers will be effective at convincing IP infringers to give up pirate marks in some cases.

Conclusion

Copying foreign well-known marks is very easy, due to the prevalence of brand information on the internet and the inevitable slow pace of registration of trade marks around the world by brand owners. Indonesia has, in the past, been a low-priority country for trade mark registration, unless the IP holder had a significant investment. Those who sold through distributors often failed to register in time. Add to this the awareness of international brands due to Indonesia’s historical openness to foreign investment and you have a recipe for frequent trade mark piracy, as local infringers register first. Now that investment is increasing, as the world’s fourth largest country goes through a significant economic boom, the number of IP cases is increasing rapidly too. Although not always easy, nowadays the legal system provides some tools to assist, and when combined with practical experience of dealing with these problems by experienced investigators and IP lawyers, it is now possible to solve many of the well-known mark disputes that have littered Indonesia’s IP history.

By Nick Redfearn, partner, and Kin Wah Chow, senior manager, Rouse, Indonesia; with contributions from the following Rouse staff in Jakarta: Gita Moerad, Nidya Kalangie, Tania Lovita, Aditya Rahman, Andrew Conduit, Arif Rochman, Ismeilia Suardi, Winuriska.E-mail: nredfearn@iprights.com; kchow@iprights.com.

additional guidance

Well-known mark evidence might include:

  • A list of worldwide registrations.
  • Certified copies of registration certificates for key markets, such as the US, Europe (including major member states such as the UK, France, Germany and Italy), Switzerland, China, India, Hong Kong, Japan, Malaysia, Philippines, Singapore and Thailand. This shows global and local Asian regional coverage.
  • Worldwide sales income, and advertising figures for revenue or expenditure associated with the mark for the previous three years. A separate figure for Indonesia or Asia generally would be helpful. This information, however, will not be kept confidential. If this is a concern, an approximate amount can be indicated, eg ‘revenues exceeded $XXXX in 2002’.
  • Samples of advertisements and other documents showing use of the prior mark. Those published in Indonesia or Asia generally would be most helpful. A selection of geographies is recommended.
  • The history of the mark or brand and its creation.
  • Decisions or authorities from other jurisdictions stating that the mark is well known.
  • Copyright registrations for any logo in the mark.