Trademark registration in Indonesia: applications filed in bad faith and their consequences

  • By:Kelvin Wibawa
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Article 21 of Indonesian Trademark Law 20/2016 mentions an application for trademark registration is to be refused by the DGIP if it has been filed in bad faith. ‘Bad faith’ is however a broad and rather unclear term, which in trademark law often forms the core of cancellation lawsuits and demands for damages.

How does the law define ‘bad faith’?

The explanatory memorandum of Law 20/2016 explains ‘bad faith’ roughly as ‘having a mark registered with the intention to forge, imitate, or duplicate the mark of another party for the interest of his own business, which creates unfair competition or deceives or misled consumers’. The memorandum adds the example of a party filing an application for the registration of a trademark which is similar to another party’s registered mark or a well-known trademark. In this case the law assumes the applicant either knew or should have known his copying would lead to him illegitimately benefitting from the mark holder’s reputation.

When is an application for trademark registration considered to be filed in bad faith?

In many jurisdictions around the world, jurisprudence provides further guidelines where the law remains unclear. Indonesia knows plenty of cases in which questions such as ‘how famous a trademark should be’ played a role. Supreme Court verdict 160 K/Pdt.SUS-HKI/2019 for example describes how local entrepreneur Dewi Nilasari had her registered trademark NOVEC 1230 cancelled after American company 3M filed a cancellation lawsuit against it. 3M is a producer of healthcare and safety products and offers a fire-protecting liquid under the name NOVEC 1230 in 35 countries around the world, including the United States, the European Union and Japan. Nilasari defended her point of view with her own research regarding the mark and explained how she created her NOVEC 1230 trademark. The letters ‘NOVEC’, according to her, stood for New synthetic, Organic, Variable, Engineered and Chemical development. Nilasari furthermore stated the numbers ‘1230’ came from her favourite Bible verse, Mark 12:30.

The Central Jakarta Commercial Court ruled in favour of 3M, stating its NOVEC 1230 trademark is considered famous and Nilasari had filed her application in bad faith. Nilasari stuck with her declaration she had filed her application in good faith and filed an appeal with the Supreme Court. The Supreme Court decided to uphold the Commercial Court’s verdict, leading to the cancellation of Nilasari’s trademark registration of NOVEC 1230.

read also : Trademark Registration Common Problems in Indonesia

The strength of jurisprudence in Indonesian trademark conflicts based on bad faith

By far the largest part of the trademark disputes based on bad faith ends predictable as in the verdict above. If trademark A is substantially similar to a famous mark or a prior registered mark, trademark A will usually not be registered – or an existing registration will be cancelled. Indonesia however also knows a long list of court decisions with an opposite outcome, showing that there is no clear line in jurisprudence on similar matters. Probably the most famous example of this is Supreme Court verdict 264 K/PDT.SUS-HKI/2015, better known as the ‘IKEA-case’. In this case, Inter IKEA Systems B.V. – holder of the IKEA trademark in many countries around the world – held a registration of its trademark under various classes in Indonesia. It did however not use its registered trademark for the sale of goods under Classes 20 and 21 for a period of over three consecutive years. According to the previous version of the Indonesian Trademark Law, Law 15/2001, art. 61, this was sufficient ground for any relevant third party to file a cancellation lawsuit for the trademark in question. PT Ratania, an Indonesian furniture company from Surabaya, took this opportunity and managed to have the IKEA trademark registered on its own behalf.

The fact most readers will instantly think of minimalistic furniture, meatballs and the iconic yellow-and-blue logo when reading the word IKEA seems to be a strong indicator of the trademark’s international fame. This is no coincidence. The over 420 IKEA stores around the world were good for a revenue of USD 38 billion in 2018, placing Inter Ikea Holding S. A. among the 200 largest companies on earth in terms of annual revenue. However, the relevant Indonesian authorities held a different view towards IKEA’s fame. To begin with, the DGIP officials processing PT Ratania’s application for registration did not reject the application based on bad faith of the applicant. When Inter IKEA Systems B.V. filed a lawsuit to regain the rights over the IKEA trademark, the Central Jakarta District Court rejected its demands. The court went along with PT Ratania’s claim that he created the IKEA trademark himself, and that the letters ‘IKEA’ stood for Intan Khatulistiwa Esa Abadi. The judges also accepted PT Ratania’s evidence against the Swedish IKEA’s fame in Indonesia, which came in the form of questionnaires filed out by residents of five large Indonesian cities. The results showed that the majority of these residents had never heard of IKEA as being a furniture brand. After this decision, the Indonesian Supreme Court stated the Central Jakarta District Court had applied the law correctly. The Supreme Court added to this that it would not be up to judges to decide upon the question how well-known a trademark is. Process parties themselves would have to provide evidence for – or against – a mark’s fame. The verdict altogether confirmed once more PT Ratania had not acted in bad faith when applying for registration of the trademark IKEA on its own behalf.

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