Has the new President's 'shock therapy' tactics improved

Has the new President's 'shock therapy' tactics improved
intellectual property rights?

Gunawan Suryomurcito
Jakarta

During his election campaign last year, Indonesian President
Susilo Bambang Yudhoyono promised to deliver a dose of 'shock
therapy' to shake the country out of its pattern of corruption
and legal ambiguity.

Investors are still looking for signs of another kind of shock
therapy, particularly in the area of judicial reform.

Despite assurances made to foreign investors by President
Susilo during the Infrastructure Summit held in Jakarta on Jan.
17 and Jan. 18 that their investments in the country were safe,
many are waiting for signs that the government is taking serious
steps to resolve two long-running issues: Legal uncertainty and
rampant corruption.

During the summit, the government offered 91 infrastructure
projects with a total value of US$22.5 billion. As the projects
may well involve new and patented technologies involving
intellectual property issues, investors are tending to be
cautious before committing to new operations in the country.

Indonesia has been included on the priority watch list of the
U.S. Trade Representative for four consecutive years for
trademark violations.

Many foreign investors have had bad experiences with weak
intellectual property protection in Indonesia. The battle over
the Davidoff cigarette brand, which was successfully won on
Supreme Court appeal last year after a questionable Commercial
Court decision, prompted Swiss Ambassador to Indonesia Georges
Martin to express his government's hopes that the Indonesian
government would pay closer attention to the creation of a clean
court system, judges and prosecutors.

Indonesia is in fact well equipped to provide adequate
intellectual property protection, with an Intellectual Property
Rights Law that has been revised several times, a Patent Law, and
revised Trademark Laws. Nonetheless, reports of trademark
violations committed by local companies without retribution have
become all too commonplace.

Inordinate amounts of money, time, and effort have been spent
by legitimate trademark owners on legal suits to protect their
rights to use their own brands, or to cancel trademarks filed by
local trademark pirates who have registered the trademarks at the
Directorate General of Intellectual Property Rights.

A high-profile case occurred several years ago between U.S.
food producer Nabisco Inc. and local company PT Perusahaan Dagang
dan Industri Ceres (Ceres).

The source of the dispute was that Ceres produced and marketed
biscuits under the Ritz brand, which had been a well-known
Nabisco brand in the U.S. and several other countries since 1941.

However Ceres, which registered the brand in Indonesia in
1960, also considered itself the legal owner of the brand. In
addition, the previous Trademark Law Number 21/1961 stated that
the first party to register a trademark in Indonesia was the
owner of the trademark.

Trademark Law Number 21/1961 was based on the principle of
stelsel deklaratif, or "first to register", which means that
whichever party acted fastest in registering a trademark, whether
it was a well-known brand or not, would obtain the rights to the
trademark. That is why Ceres won the trademark battle against
Nabisco in 1996.

A more recent hot legal battle over a trademark took place
over the use of the Ri Sheng trademark by Indonesian producer
Halim Kho. Chinese company Zhongshan Rishen Electrical Product C.
Ltd (ZREP) has possessed the exclusive rights to that particular
trademark since 1997.

When ZREP tried to register its Ri Sheng trademark in August
2004 in Indonesia, it was surprised to discover that the Ri Sheng
trademark had already been registered in September 2002 by Halim
Kho.

The surprise quickly turned to anger, culminating in a lawsuit
against both Halim Kho and the Director General of Intellectual
Property Rights, demanding the revocation of the trademark
registration. This case is still being decided in court.

The existing Trademark Law has experienced several revisions.
Trademark Law Number 15/2001 is based on the principle of stelsel
konstitutif with a special protection for well-known trademarks,
which prohibits a person from registering a well-known trademark
even for dissimilar goods.

Another trademark case that has reached the Supreme Court is
that of the well-known tire brand Goodyear. U.S.-based tire
producer The Goodyear Tire & Rubber Company (GTRC) has been in a
tussle with local tire producer PT Banteng Pratama Rubber (BPR)
for over a decade.

The disputed issue is that Banteng continues to produce
bicycle tires using the Goodyear trademark even though its
agreement with GTRC expired in 1993. Banteng even created its own
brand "Goodyear-Luckystone" and uses the Goodyear winged foot
logo on its products and letterhead.

After 10 years of written notices and attempted negotiations,
Goodyear eventually brought its case to the Jakarta Commercial
Court, which decided in August 2004 that GTRC was the legitimate
owner of the Goodyear trademark in Indonesia and that Goodyear is
a well-known trademark.

However, the court did not issue an injunction against Banteng
to stop the production of bicycle tires and tubes with the
Goodyear trademark, which is a violation of Trademark Law Number
15/2001 protecting well-known trademarks. Therefore Goodyear
appealed to the Indonesian Supreme Court to instruct Banteng to
stop using the Goodyear trademark without authorization. The
final decision is expected at the end of January.

The government is currently preparing a Government Regulation
on well-known trademarks in order to give the authority to the
Directorate of Trademarks to reject any registration for a
trademark that has similarities with a well-known trademark.
There is a great need for the issuance of the government decree,
as without it, the law on well-known trademarks is powerless.

However, the Chairman of the Intellectual Property Alumni
Association (IIPAA), Insan Budi Maulana, says that the weakness
in intellectual property protection in Indonesia was also due to
the fact that few judges are intellectual property experts.

The seriousness of the Susilo government in improving the
investment climate depends to a great degree on whether judges
are given adequate intellectual property rights training and
whether the legal system can be free of the accusations of
payoffs in exchange for decisions.

The writer, an observer of legal issues particularly
concerning intellectual property rights is a patent consultant
from Suryomurcito & Co, an intellectual and industrial property
attorneys office.
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