You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 30, 2022

Indonesia’s Ongoing Struggle Against IP Infringement Offline and Online

Subscribe to Updates
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.

Related Professionals

Practices

Intellectual Property

Location

RELATED INSIGHTS​ 

August 30, 2024
As in many other countries, registered trademarks in Indonesia that are not used for a given period of time can be canceled. A recent decision (Decision No. 144/PUU-XXI/2023) from the country’s Constitutional Court has extended the non-use cancellation period from three years to five years, applicable from July 30, 2024. This ruling could have a major impact on trademark holders in the country. Background of the Case Article 74 of Indonesia’s Trademark Law of 2016 specifies that trademarks can be canceled if they go unused in the trade of goods or services for three consecutive years from the date of registration or last use. This provision is aligned with the Paris Convention and the TRIPs Agreement. On October 27, 2023, an Indonesian individual named Ricky Thio asked the Constitutional Court to examine the constitutionality of Article 74, arguing that it opened a pathway for third parties to eliminate trademarks owned by small and medium-sized enterprises (SMEs), and did not provide certainty to his registered trademark in terms of the period of protection. Additionally, he argued that the period of three consecutive years was burdensome for SMEs, and asked the court to void Article 74 and add force majeure circumstances—such as Covid-19—as an exemption to non-use cancellation. Mr. Thio submitted this request while he was defending his trademark registration from a non-use cancellation request filed by Zhejiang Dahua Technology Co., Ltd. In his defense to that cancellation request, Mr. Thio explained that the non-use of the trademark was due to the Covid-19 pandemic. The cancellation case followed a different judicial pathway, and was under appeal before the Supreme Court at the time Mr. Thio filed his request for judicial review with the Constitutional Court. Mr. Thio’s case also attracted the submission of an amicus brief—a relatively new trend in Indonesia—from
Read More
August 30, 2024
In 2023, Vietnam’s Intellectual Property Rights Infringement Prevention Cooperation Program reported that 776 cases of IPR infringement were resolved nationwide. Of these, 546 were addressed through administrative measures, while criminal proceedings were initiated in just five cases. These statistics clearly show that administrative measures overwhelmingly dominate the response to counterfeit goods, with criminal actions being relatively rare. This raises an intriguing question: Why do IPR holders prefer administrative routes over criminal measures in Vietnam? And what challenges and obstacles make criminal enforcement less commonly pursued in these cases? Overlapping legal provisions Under Vietnam’s Penal Code, two key offenses address counterfeit goods: Manufacturing and trading in counterfeit goods under Article 192. Manufacturing and trading in industrial property rights-infringing goods under Article 226. Both provisions regulate counterfeit goods, yet they suffer from a lack of clear definitions and guidelines for application. Article 192 does not explicitly define “counterfeit goods”. Instead, authorities refer to Article 3.7 of Decree No. 98/2020/ND-CP, as amended, which outlines several categories of counterfeit goods, including: (i) utility counterfeits (goods not meeting normal expectations of usage or function), (ii) substandard goods, (iii) counterfeit goods based on misrepresentation, and (iv) counterfeit stamps, labels, and packaging. Meanwhile, Article 226 specifically deals with counterfeit goods that infringe trademark rights. These “trademark-counterfeit goods” are defined under Article 213.2 of the IP Law as goods or packaging bearing trademarks or signs that are identical or confusingly similar to protected trademarks for the same goods, used without the trademark owner’s permission. In this regard, “counterfeit goods” and “trademark-counterfeit goods” are treated as distinct, non-overlapping concepts, each corresponding to a separate offense. However, in practice, there is often a gray area where the two overlap. Many cases involve infringing goods that meet the criteria for both categories, allowing authorities to apply both regulations simultaneously. For
Read More
August 30, 2024
With the emergence of online marketplaces and e-commerce platforms, consumers have transformed their ways of engaging in transactions, gaining unprecedented convenience and access to a vast array of products. These platforms allow small businesses and individual entrepreneurs to reach a wider audience in an increasingly competitive market. Challenges in Tracing Online Infringers The growth of these online marketplaces and e-commerce platforms has also given rise to challenges, particularly in locating the actual identity of online infringers and combating intellectual property infringement activities. Online infringers often take advantage of anonymity to offer counterfeit products for sale on their platforms. Not only do these online infringing activities violate the rights of IP owners, but they also involve the sale of counterfeit products that are often manufactured with inferior quality and may pose significant risks to consumers’ health and safety. In today’s modern world, tracing the actual identity of online infringers proves challenging, as infringers adopt numerous methods to conceal their identity. The most frequently used method is using a fake name and address when dispatching parcels to consumers, making it difficult to verify the seller’s identity and the location of the sender on the parcel package. Some infringers exploit cash-on-delivery logistics services to prevent the disclosure of their identity, such as bank account numbers and bank account owner names, which would typically be required for direct payments. Instead, the shipping company collects the payment on their behalf, allowing the infringers to remain anonymous and making it more difficult to find their actual identity. Thailand’s New Regulations on Cash-on-Delivery Logistics Services Recently, the Committee on Contracts of Thailand’s Consumer Protection Board announced the Notification regarding Stipulation of Cash-on-Delivery Logistics Services as a Controlled-Receipt Business B.E. 2567 (2024) under the Consumer Protection Act B.E. 2522 (1979) in the Thai Royal Gazette dated July
Read More
August 7, 2024
A recent case at the Myanmar Competition Commission has set a significant precedent in the country’s approach to unfair competition practices. The case, involving a Thai manufacturer of cement grout and tile adhesive products and a local Myanmar producer, highlighted the Commission’s willingness to address issues of deceptive marketing and unfair competition. Background The case centered around a Thai manufacturer who has been distributing their cement grout and tile adhesive products in Myanmar for many years through local distribution agents. The company had established a well-known brand and a strong reputation for quality in the Myanmar market. In recent years, the Thai company discovered that a local individual in Myanmar was manufacturing and selling similar products with packaging nearly identical to their own. The local producer was using the same mark device, color, and packaging design themes, and the products contained deceptive information. Legal Proceedings After an initial cease-and-desist letter failed to resolve the issue, a complaint was submitted to the Myanmar Competition Commission. The case was notable because the Commission typically does not address issues of copying designs, marks, colors, or packaging themes. However, the complaint emphasized that the local individual was misleading customers and competing unfairly by using deceptive information and copying distinctive designs and themes. Lawyers from Tilleke & Gibbins, representing the Thai manufacturer, provided extensive documentation proving their client’s long-standing presence in the Myanmar market and the local individual’s deceptive practices. The Commission’s Investigation Committee conducted a thorough investigation, including market surveys and hearings involving both parties. Commission’s Decision After nearly a year of deliberation, on July 4, 2024, the Decision-Making Committee of the Myanmar Competition Commission ruled in favor of the Thai manufacturer. The decision required the local individual to: Immediately cease the production and distribution of cement grout and tile adhesive products bearing
Read More