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.
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.
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. A 2019 Supreme Court verdict, for example, describes how a local entrepreneur Budi had his registered trademark SEQAC 1127 cancelled after American company A1* filed a cancellation lawsuit against it. A1 is a producer of healthcare and safety products and offers a fire-protecting liquid under the name SEQAC 1127 in 35 countries around the world, including the United States, the European Union and Japan. Budi defended his point of view with his own research regarding the mark and explained how he created her SEQAC 1127 trademark. The letters ‘SEQAC’, according to him, stood for Synthetic, Environmental-friendly, Quality, Adequate and Chemically developed. Budi furthermore stated the numbers ‘1127’ came from his favourite Bible verse, Romans 11:27.
The Central Jakarta Commercial Court ruled in favour of A1, stating its SEQAC 1127 trademark is considered famous and Budi had filed his application in bad faith. Budi stuck with his declaration he had filed his 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 Budi’s trademark registration of SEQAC 1127.
By far the largest part of the trademark disputes based on bad faith ends predictably 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. One of the most famous examples of this is a 2015 Supreme Court verdict involving a world-famous chain of furniture warehouses, which we call MATA in this example. In this case, Inter MATA Holding B.V. – holder of the MATA 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 Agus Contoh, an Indonesian furniture company from Surabaya, took this opportunity and managed to have the MATA trademark registered on its own behalf.
MATA operates over 420 stores around the world, which were good for a revenue of USD 38 billion in 2018. This would place Inter MATA Holding B.V. among the 200 largest companies on earth in terms of annual revenue. However, the relevant Indonesian authorities held a different view towards MATA’s fame. To begin with, the DGIP officials processing PT Agus Contoh’s application for registration did not reject the application based on bad faith of the applicant. When Inter MATA Systems B.V. filed a lawsuit to regain the rights over the MATA trademark, the Central Jakarta District Court rejected its demands. The court went along with PT Agus Contoh’s claim that he created the MATA trademark himself, and that the letters ‘MATA’ stood for Mas Agus Toko Agung. The judges also accepted PT Agus Contoh’s evidence against the Swedish MATA’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 MATA 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 Agus Contoh had not acted in bad faith when applying for registration of the trademark MATA on its own behalf.
*All examples used in this article are based on real cases, though names of parties and trademarks have been replaced by fictional ones for privacy reasons