Good news for IP rights owners: Indonesia in final stage of setting up IP border protection system

Indonesia
  • Ministry of Finance has passed Implementing Regulation 40/2018, which sets out procedures for customs recordal and seizures
  • IP rights owners with local business entity domiciled in Indonesia can now apply for customs recordal
  • Recordals are valid for one year and are renewable
     

After Government Regulation 20/2017 on Control of Import and Export of Goods under the 2006 Customs Law came into effect on 2 August 2017, the Ministry of Finance finally passed Implementing Regulation 40/2018, which sets out the procedures for customs recordal and seizures. The Implementing Regulation took effect on 16 June 2018.

Recordal for trademarks and copyrights

Trademark and copyright owners with a local business entity domiciled in Indonesia can now file customs recordal applications. In addition to the usual proof of trademark certificates or copyright and information on genuine goods, the application must include documents relating to the local business entity, importer/exporter information and a statement of liability from the IP rights owner. The IP rights owner must also appoint an examiner who can verify genuine products, as well as understand the distribution and marketing of the products.

Once the application is submitted, Customs will review the application and approve/reject the application within 30 days. Recordals are valid for one year and are renewable.

Restraint – confirmation by IP rights owner in two days

Once Customs notifies the IP rights owner of the restraint of a shipment, the latter will need to send confirmation of its decision to either apply for a court detention order or otherwise to Customs within two days.

Detention order

The IP rights owner or its proxy must then apply to court within four working days and provide to Customs a bank or insurance guarantee of Rp100 million ($7,200), which is valid for 60 days. The application is to the Commercial Court in the jurisdiction of the port where the goods were seized.

Customs then holds the goods and provides the IP rights owner with a detailed summary of the shipment. The court must deliver its detention order decision within two business days from the filing of the court application and send its decision to Customs within one business day.

Examination of detained goods

Upon receipt of the court detention order, Customs will detain the goods for 10 business days. Within two business days of Customs’ receipt of the court detention order, the IP rights owner will need to send its request to Customs, which will arrange a time for all parties - including the appointed examiner - to examine the detained goods.

If more time is required, the IP rights owner can apply to court for an extension of 10 business days, but there will be an additional security.

Legal action/settlement

After the 10-day detention period, if the goods are confirmed as infringing and if there is no settlement, the IP rights owner can take legal action. The 2017 regulation provides that this means civil or criminal action or settlement. This is problematic, as it is not clear how it is possible to file legal cases in such a short period - and, of course, lawsuits are expensive.

Comment

While it is positive that Indonesian Customs has introduced a system to record IP rights, this recordal system is currently limited to IP rights owners with a local subsidiary. The author believes that the Indonesian government’s desire to encourage foreign investment is its rationale behind this requirement, as it hopes that many more foreign IP rights owners will set up local presences in Indonesia. The process for the court detention order and examination looks relatively clear, but this needs to be tried to see how it works, and the timelines are very short. Finally, if parties are unable to settle following the expiry of the detention order, they may have to choose to proceed with either civil or criminal action, which will be expensive.

Nick Redfearn, Rouse, Jakarta

Unlock unlimited access to all WTR content