When a Trademark Licensee Faces Registration by Another Party in Indonesia

A licensee of a foreign trademark may encounter difficulties where the trademark it intends to use in Indonesia has already been registered by another party under an identical or highly similar name or logo.

The situation needs to be handled carefully because Indonesia's trademark system is based on registration and territorial protection.

A licence granted by the trademark owner outside Indonesia does not automatically override an existing registration in Indonesia.

The legal analysis should begin by determining the status of the registration, the identity of the registered owner, the classes of goods or services covered, the relevant filing date, and whether there are facts indicating that the registration was made in bad faith.

First-to-File and Territorial Principles

Trademark rights in Indonesia generally arise after registration.

A party that files first and successfully obtains registration therefore has a strong legal position as the registered trademark owner, provided that the registration is not subsequently cancelled or removed on grounds provided by law.

Trademark protection is also territorial.

Registration of a trademark in its country of origin does not automatically create exclusive rights in Indonesia.

This is consistent with the Paris Convention for the Protection of Industrial Property, under which trademark registrations in different countries are generally independent.

First Step: Verify the Trademark Status

Before taking legal action, the licensee should conduct a comprehensive search of Indonesia's trademark database.

The review should not be limited to the similarity of the trademark names.

The registration number, owner, class, covered goods or services, current status, application history, and registration date should also be examined.

The licence agreement with the foreign trademark owner should likewise be reviewed.

The licensee needs to determine whether the agreement gives it authority to manage registration, file objections, pursue legal action, or merely grants commercial use rights.

Where enforcement authority has not been granted, legal action will generally need to be coordinated with the trademark owner.

Registration by Another Party in Bad Faith

Indonesia's Trademark and Geographical Indications Law provides for the refusal of an application filed in bad faith.

Bad faith may be indicated where an applicant can reasonably be suspected of intentionally copying or following another party's trademark in order to take advantage of its reputation, mislead consumers, or obtain a benefit from a name that has already become known or used by another party.

The fact that a registered mark has exactly the same name and logo as a foreign trademark may constitute an indication, but it does not automatically establish bad faith.

Evidence of earlier use, prior business relationships, access to trademark information, reputation, correspondence, advertising, distribution, and the chronology of the registration may all become important.

Trademark Cancellation Proceedings

Where the trademark has already been registered, one of the principal legal avenues that may be considered is a cancellation action before the Commercial Court.

Article 76 of the Trademark and Geographical Indications Law allows an interested party to seek cancellation based on the grounds provided under Articles 20 and/or 21.

An owner whose trademark has not yet been registered in Indonesia may bring a cancellation action after first filing an application for the trademark with the Minister.

Where a trademark originates outside Indonesia, the Indonesian filing strategy should therefore be coordinated directly with the trademark owner or a party lawfully authorized to submit the application.

As a general rule, a cancellation action must be brought within five years from the trademark's registration date.

However, where bad faith or certain grounds relating to public order and other statutory norms are involved, a cancellation action may be brought without a time limit.

Well-Known Trademarks as a Basis for Protection

Where the licensed foreign trademark qualifies as a well-known trademark, that status may become an important factor.

Indonesian law includes substantial or overall similarity with a well-known trademark as a ground for refusal, both in relation to similar goods or services and, subject to the applicable requirements, goods or services that are not similar.

Determining whether a trademark is well known does not depend merely on subjective popularity.

Relevant evidence may include the degree of public recognition, sales volumes, geographic scope of promotion, duration of use, registrations in multiple jurisdictions, advertising investment, and other evidence of recognition.

Removal for Non-Use

In addition to cancellation, Indonesian trademark law provides a mechanism for removing a registered trademark that has not been used.

The relevant rule changed following Constitutional Court Decision No. 144/PUU-XXI/2023.

An interested third party may currently file a removal action before the Commercial Court where a trademark has not been used for five consecutive years in the trade of goods and/or services from the registration date or its last use.

The previous period was three years.

Non-use proceedings are different from cancellation.

Cancellation challenges the validity of the registration from the outset, while removal for non-use focuses on the failure to use a validly registered trademark for the prescribed period.

Position of the Licensee

A licensee should distinguish between its rights as a licence holder and the rights of the trademark owner.

A licence generally grants rights of use in accordance with the agreement. It does not automatically transfer ownership of the trademark.

Authority to register the trademark, seek cancellation, or pursue enforcement should therefore be assessed by reference to the law, the trademark's registration status, and the terms of the licence agreement.

For a trademark registered in Indonesia under a valid licence, the licensee of a registered trademark may have standing to bring an action against unauthorized use as provided under Article 83.

However, where the dispute concerns an earlier registration made by another party, coordination with the trademark owner remains important to avoid disputes concerning standing and litigation authority.

Practical Steps to Prepare

• conduct a search of the trademark's status and registration history at DJKI;

• collect evidence of use and reputation predating the other party's registration;

• review the licence, power of attorney, and enforcement authority in Indonesia;

• coordinate the Indonesian trademark application with the trademark owner;

• assess available grounds for cancellation, including similarity, well-known trademark status, and bad faith; and

• where relevant, assess the possibility of a non-use removal action after five years.

Closing

A licensee of a foreign trademark should not immediately use the trademark in Indonesia where the same mark is already registered in another party's name.

The existing registration should first be addressed through an appropriate legal strategy, particularly where use could potentially infringe the rights of the registered owner.

Where there are indications of bad-faith registration, similarity with a well-known trademark, or non-use for the required period, cancellation or removal proceedings before the Commercial Court may be available.

The strength of the evidence, the legal standing of the owner and licensee, and the terms of the licence agreement will be central in determining the appropriate course of action.