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May 30, 2022

Indonesia’s Ongoing Struggle Against IP Infringement Offline and Online

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Managing Intellectual Property

The Indonesian government has launched a number of strategic initiatives aimed at getting the country removed from the Priority Watch List in the US Trade Representative’s annual Special 301 Report on Intellectual Property Protection. In trying to leave behind this ignominious status—which has been stubbornly persistent for over 30 years—Indonesia’s Directorate General of Intellectual Property (DGIP) is leading an IP Operations Task Force consisting of five ministries and agencies, including the National Agency of Drug and Food Control (BPOM), Customs, the State Police, and the Ministry of Communications and Information (MOCI).

According to statistics from the task force, 554 infringement cases were handled by the police and the IP Office in 2019–2021, with trademark infringement and copyright infringement being most prevalent. Year on year, the number of trademark infringement cases increased from 90 in 2020 to 137 in 2021, while copyright infringement cases over the same period decreased slightly, from 42 to 38.

While the cases occurring in physical markets remain high, the battleground has now expanded to online platforms and social media. Indonesia has embraced digital technology with enthusiasm, and the country’s citizens are among the world’s most avid users of e-commerce, social media, and other mobile apps. Research from Google, Temasek, and Bain & Company indicates sizable growth in Indonesia’s digital economy, from USD 47 billion in 2020 to USD 70 billion in 2021—a digital marketplace that now includes more than 158 million e-commerce customers.

Separately, the MOCI reported suspension of 1,745 websites and other infringing online content from 2017 to 2019. Meanwhile, the DGIP banned hundreds of problematic e-commerce portals related to trademark infringement during 2019. There is no official report on recent online infringement cases; however, the numbers are predicted to rise in tandem with the increasing use of online platforms.

Aside from these enforcement actions, authorities in Indonesia have been taking other steps to strengthen IP protection. For example, the Indonesian National Police joined various online platforms in signing a memorandum of understanding that enables greater cooperation in fighting online IP infringement. The government has also prepared a forthcoming technical regulation addressing online copyright infringement, and has instituted a program to issue IP-based certifications to both physical and online shops.

Several laws and other measures that manage the growth of electronic platforms also include provisions on online IP infringement, such as Law No. 11 of 2008 on Electronic Information and Transactions, Government Regulation No. 71 of 2019 concerning the Implementation of Electronic Systems and Transactions, and MOCI Regulation No. 5 of 2020 concerning Electronic System Operators in the Private Sector.

Safe Harbor Policy vs. “Landlord Liability Doctrine”

In 2016, the MOCI issued a circular letter on the limitations and responsibilities of e-commerce platform providers and merchants in relation to user-generated content. This became known as the “safe harbor policy.” In summary, the policy states that platforms are not liable for failure to comply with the country’s safe harbor policy in the event of force majeure, error, or negligence on the part of a user. Under the policy, a platform is only held responsible for prohibited content if they are unable to prove that a user was responsible for uploading the content. The policy also obliges platforms to include a mechanism that allows users to report illegal goods and services, after which the platform must take down the offending pages or content as soon as possible.

The takedown request system, however, has been found lacking against repeated or large-scale infringement, as IP owners need to proactively check each platform for infringing content and file takedown requests with detailed URLs when instances are found. Moreover, there is no significant action to ensure that infringers who have been previously punished are permanently banned from creating new accounts once their user access is blocked. In addition, a takedown will only be completed if the IP owner holds an Indonesian IP registration certificate.

Frustrated by continuous infringement, IP owners and related parties have increasingly demanded that platforms be more proactive in tackling infringement instead of passively waiting for complaints.

In line with these concerns, the IP Operations Task Force has proposed the “landlord liability doctrine,” a system whereby e-commerce and other platforms would be certified as marketplaces containing genuine and authorized goods. Under the landlord liability doctrine, the task force asserts that online platforms, as “landlords,” have equal responsibilities to their users and are thus accountable for any infringement conducted by their users. This would also require individual sellers to own IP registration certificates before they are allowed to sell anything. The goal of this scheme would be to ensure that hosted products and content are authentic and do not infringe the IP of any authorized entity; however, this certification process would seemingly render third-party sellers unable to sell genuine products, meaning that only the official accounts would remain.

The task force, which has so far held several meetings on the proposed program, expressed that the platforms, as the landlords, bear responsibilities equal to those of their users. Thus, platforms are also accountable for any infringement conducted by their users. The plan has not yet been implemented as there is no formal regulation issued to accommodate this idea.

At the moment, it appears that the safe harbor policy and the proposed landlord liability doctrine contradict each other, and that the task force may not take the existing safe harbor policy into account in its development of the landlord liability doctrine. While there have not yet been any court rulings on this apparent discrepancy, there are two ongoing cases in which local IP holders filed lawsuits against platforms, which are alleged to bear more responsibility than the users for copyright infringement on their platforms. The results of these cases could indicate whether the so-called landlord liability approach will overturn the existing safe harbor policy.

Conclusion

While Indonesia’s fight against infringement is making progress, the government’s desire to be removed from the Priority Watch List seems to be a long way off. The challenges facing the IP Operations Task Force are still considerable—especially when it comes to online infringement.

Nevertheless, there are some practical approaches that could make a real contribution to IP enforcement in Indonesia—as suggested by the US Trade Representative during a meeting with the IP Operations Task Force in November 2021. The Indonesian government would do well to first focus their efforts in these areas, which include increasing raids of counterfeiters’ premises, stepping up their confiscation of goods, and disposal of evidence (e.g., confiscated goods) in enforcement proceedings. On the online front, it would be helpful to follow the shutting down of websites or online accounts with indictments to enable further prosecution and combat repeat infringement.

This article first appeared in Managing Intellectual Property.

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