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January 17, 2023

Indonesia’s New Criminal Code and Intellectual Property

Indonesia’s new Criminal Code was passed by Parliament on December 6, 2022, and ratified by the president and promulgated on January 2, 2023, as Law No. 1 of 2023. The new Criminal Code will take effect after three years (i.e., January 2, 2026) and is a complete overhaul of the previous version, much of which was based on Dutch law drafted during the colonial period. The Criminal Code currently in effect (sometimes referred to by the initials KUHP after its Indonesian name), dates from 1918 and was codified and unified in 1946 following Indonesia’s independence the year before.

Much of the news surrounding the new Criminal Code has focused on certain controversial passages in the new code, including articles that criminalize insulting the president, cohabitation, blasphemy, and sex outside of marriage, and limit the right to protest. Under the new Criminal Code, anyone found to have violated these provisions could be imprisoned for a period ranging from a few months to a few years.

Apart from the more controversial provisions, several articles in the new Criminal Code relate to intellectual property (IP). IP owners should be aware of these provisions in order to avoid committing punishable acts and to understand the criminal enforcement options for their IP rights. The most relevant parts of the law are discussed below.

Trademark and Branding Infringement

Under the new Criminal Code, the misuse of marks on goods or packaging is punishable by up to four years in prison or a maximum fine of IDR 500 million (approx. USD 612,800), possibly including indemnity. This misuse covers various acts of wrongfully affixing marks on goods or packaging—such as when a counterfeiter makes use of fake or unauthorized branding to falsely imply that goods are genuine. Prosecution of these criminal acts can only commence based on a complaint from the owner of the trademark at issue.

These new offenses under the Criminal Code are in addition to existing prohibitions on unauthorized use of another party’s trademark, which are found in Law No. 20 of 2016 on Trademarks and Geographic Indications. Under this law, use of a mark that is identical or substantially similar to the registered mark of another party for similar goods or services is punishable by a fine of up to IDR 2 billion (approx. USD 24.5 million), imprisonment for up to four or five years (depending on the degree of similarity between the marks), or both.

While these existing provisions enable enforcement against trademark infringement through criminal proceedings, many trademark owners avoid filing criminal complaints against infringers and instead prefer to pursue alternative dispute resolution methods because it is less costly. However, if parties cannot reach an agreement during settlement negotiations, the case may progress to criminal proceedings in court.

Falsely Asserting Ownership of IP

Under the new Criminal Code, knowingly giving false testimony under oath (or otherwise of legal consequence) is punishable by imprisonment for up to seven years. Being convicted of this criminal offense may also result in revocation of various civil and political rights—including the right to vote.

This prohibition may apply to both IP prosecution and in IP-related court proceedings. For example, signing a declaration of ownership (for IP registration purposes) if the IP is similar to or copies the IP of another party may be deemed giving false testimony. Similarly, signing a declaration of use (for trademark renewal purposes) when the owner has not actually made use of the trademark may also expose the owner to accusations of giving false testimony.

Disclosure of Trade Secrets

Disclosure of an employer’s specialized information is a punishable criminal offense under the new Criminal Code, and a complaint from a company’s management is the starting point for prosecution of such an act. Those who are found to have disclosed secret specialized matters regarding a company where they work or have worked may face imprisonment for up to two years or a fine of up to IDR 50 million (approx. USD 612,800).

These provisions are intended to prevent unfair competition in the business world. Thus, the disclosure of specialized matters mentioned in the code can be interpreted as referring to dissemination of things that could lead to unfair business practices. This includes information that is not supposed to be publicly disclosed, such as company secrets and trade secrets.

Law No. 30 of 2000 on Trade Secrets states that something can be categorized as a trade secret (and thus can be used as the basis for a criminal report) if the information:

  • is not known by the public;
  • is in the field of technology or business;
  • has economic value; and
  • is kept confidential by the owner of the trade secret.

These provisions in the new Criminal Code are inseparable from provisions of Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition. These stipulations prohibit business actors from conspiring with others to obtain competitors’ company secrets that can enable unfair business competition. However, these provisions specifically discuss competing “business actors” who try to obtain competitors’ confidential information rather than the individuals who disclose it, while the relevant provisions of the new Criminal Code expand criminal liability to individuals who provide or distribute such information to competing business actors.

Integration with Indonesian Law

Both the current Criminal Code and the new version stipulate that specific statutory provisions (e.g., those found in the Laws on Trademarks, Trade Secrets, Unfair Business Competition, etc.) prevail over the Criminal Code if there is any discrepancy. This means that if a criminal act is regulated by multiple laws, the applicable provisions in the specific laws take precedence over the Criminal Code’s provisions that apply to that same act. However, the provisions discussed above add some important clarity and expand some criminal offenses, so IP owners should take them into consideration when deciding on IP prosecution or enforcement strategy. This can help with anticipating risks of criminal punishment, as well as understanding the tools available for IP enforcement or litigation.

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