RI to lose $4b in Davidoff trademark debacle

The Jakarta Post Jakarta

German cigarette company Reemtsma Cigarettenfabriken GmbH told the Indonesian government on Tuesday that the country would lose US$4 billion in tax revenues and more than 60,000 jobs over an ongoing court dispute invovling the Davidoff trademark.

"Thousands of jobs and millions of dollars in investment are at stake at a time when President Megawati (Soekarnoputri) declares 2003 as the "Year of Investment," said Reemtsma lawyer Gunawan Suryomurcito in a statement made available to The Jakarta Post

The statement said Reemtsma, which had been willing to commit a significant investment in Indonesia, was prevented from doing so because a local company, NV Sumatra Tobacco Trading Company, previously registered the Davidoff brand name.

The company claimed that the government stands to lose $4 billion in potential excise and sales taxes on Davidoff cigarettes over the next ten years if this trademark dispute scuttles their $70 million investment plan in a new cigarette plant here.

The planned joint venture would also have created 200 factory jobs, and work for 60,000 tobacco planters, Reemtsma claimed.

"This case has captured the attention of the media, public and international diplomatic communities and is likely to become a benchmark of companies facing similar situations," said Jim van Drunen Littel, director of business development for Reemtsma.

Jim added that the issue had significant implications for Indonesia's business climate as well as the confidence of potential foreign investors.

Last week Reemtsma appealed the case to Indonesia's Supreme Court after losing its right to use the Davidoff name in two of the country's commercial courts.

Reemtsma signed an agreement in November 2001 with Indonesia's leading cigarette producer PT Gudang Garam to jointly produce Davidoff brand cigarettes for the Southeast Asian market, but its venture has been stalled by a legal dispute over the ownership of the Davidoff brand.

Indonesian firm NV Sumatra Tobacco Trading Company, has already registered the name Davidoff as its own with the Trademark Registry of Indonesia.

Sumatra Tobacco is an Indonesian cigarette trading company that has allegedly registered hundreds of cigarette trademarks domestically.

Reemtsma, which purchased the license to manufacture Davidoff cigarettes worldwide in 1984, did not realize its famous brand had already been registered in Indonesia until April 2002 and has refused to pay Sumatra Tobacco for the right to use its own brand name.