Tips on protecting trademarks

By James B. Lumenta

JAKARTA (JP): The Trademark Law has undergone significant changes in the last few years in a bid to catch up with international standards of protection, particularly with the requirements of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement.

Some main features of the new system introduced by the recently concluded draft legislation toward year 2000 could be outlined as follows:

* the purely "first-to-file" principle shall remain a prerequisite for establishing trademark rights;

* more relaxed formalities and relatively shorter time frame in the process of trademark prosecution, -- it would only take 14 months to have a trademark registered, if there was no opposition from a third party;

* registration of a trademark license with the Directorate General of Intellectual Property (DGIP) is mandatory;

* all civil proceedings in relation to trademark cancellation, invalidation and infringement actions shall be subject to the jurisdiction of a commercial court, instead of the current general district court (except in the case of criminal counterfeit actions), and with a faster process to conclusion through a specified period of time provided under the specifically established judicial procedure;

* adoption of unprecedented alternative dispute resolution system, such as by arbitration for a more professional and speedier settlement of trademark disputes, will be possible,

* stricter penalties, including a maximum seven-year jail term and a maximum Rp 300 million fine for trademark counterfeiting.

While on paper it all sounds pretty good, in practice things could work out to be far beyond our expectations. Since enforcement has always been the most crucial issue in this country, special monitoring is an absolute need. And to secure an optimum protection for your trademarks, this article seeks to provide some recommendations on measures of crucial importance to be taken by a trademark proprietor.

In Indonesia, unlike the United States and other common law countries, registration is a prerequisite to the establishment of rights of a mark. Therefore, businesses should file an application for trademark registration as early as possible before introducing a product or service here.

Registration is critical not only in establishing rights, but also in protecting and enforcing such rights against any third parties and other unscrupulous traders who may attempt to register the mark as theirs and use the mark, or one closely resembling it, on identical or even related products and services. Under no circumstances could one initiate any legal action against someone infringing on the mark, unless there was a valid registration or at least a pending application of the mark in question.

Under the prevailing system, there is special treatment and wider protection for well-known marks, though the criteria remains unclear and has given rise to much controversy. Neither is there any distinction between "famous" and "well-known" marks in Indonesia as recognized in many other countries.

Nevertheless, one could establish a well-known status for a mark in Indonesia by simply getting the mark recorded with the trademark office, following an application submitted along with the supporting documents, as pointed out below:

* an authenticated or legalized copy of the registration certificate of the corresponding mark one has deposited for a minimum three years in at least three other countries outside of Indonesia;

* certifying documentary evidence that the mark is still in use in Indonesia and overseas;

* a statement issued by one's embassy in Indonesia or the Indonesian embassy in one's own country certifying that the mark is well-known.

Such a record is entirely different from "defensive trademark registration", which is generally recognized in other countries, such as Japan. Defensive recordal is simply an administrative record for limited use within the jurisdiction of the trademark office per se. It is referred to as "defensive" since it serves as an alternative for the mark to being qualified for broader protection in the absence of clear criteria to determine whether a trademark is well-known.

The benefit of having the defensive recordal is that it may be used by the registry (the trademark office) as reference to reject unauthorized applications, and thus to prevent any other parties, without the owner's consent, from at least registering or renewing identical or a similar mark, even for goods or services which are not identical or similar to those of the trademark. As often as not, such references do also have -- to a certain extent -- some influence upon decisions handed down by the judiciary, despite the facts that inconsistency among the judges was sometimes unavoidable.

Another issue of no less importance is the maintenance of the registered mark through proper use. Failure to use the trademark in commerce for three consecutive years from the registration date or the date of last use, or use of the mark in relation to goods or services which are not consistent with those for which the trademark is registered, would lead to the registration being vulnerable to deletion for "nonuse".

While notice of trademark registration in the form of a registration symbol is not mandatory under Indonesian law, use of such a symbol does have a deterrent effect on other parties who might otherwise adopt a confusingly similar mark. Above all, businesses should make sure that use of the mark on goods or services must be exactly the same as that shown on the registration certificate, otherwise they risk losing their right to the mark!

All trademark licenses must be validly recorded with the DGIP. What would be the legal consequences if a trademark license agreement is not recorded?

Under the current legislation, unregistered licenses shall remain valid and binding upon the parties to the agreement on contractual basis as provided under the general provisions of contracts under Article 1338 of the Civil Code.

Things appear to be quiet different and somewhat tougher under the new system as introduced by the latest draft legislation and if it is passed into law, the consequences of an unregistered license would be deemed null and void; it would not have any legal effect upon the contracting parties, let alone all other third parties! In this case, therefore, if infringement occurs, neither the licenser nor the licensee is entitled to take any legal action against the alleged infringer.

Worse yet, such an unrecorded license mark would be vulnerable to attack by third parties for nonuse, since use by the licensee here does not inure to the benefits of the licenser.

As prohibited by the current law, the draft statute rules that all license agreements "shall not contain clauses which might either directly or indirectly be prejudicial to the Indonesian economy or might otherwise hinder the potentialities of the Indonesian people for acquisition and development of technology in general".

In other words, clauses deemed to be harmful to the country's national economic interest or to the process of technology transfer must be avoided from trademark license arrangements, in that it is one of the main prerequisites for the government approval of a license to be recorded.

Unfortunately, both the present and the draft laws do not make any further reference to what specific acts may be considered as falling within the category of being "prejudicial" to the national economy or "hindering" locals from technology acquisition. It seems to be based on subjective interpretations by referring to the common standards of fair business practices.

Also worth noting is that a trademark license, under the legislation, is an exclusive license for the whole territory of the Republic of Indonesia, and the validity of which shall not exceed the term of protection of the registered mark in question. This implies that at no time could an unregistered mark be the subject of a license under the Indonesian law. Should it happen, such a license would be considered void ab initio.

The writer is the chief executive partner of Amroos & Partners, a senior intellectual property law firm in the country.