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January 24, 2023

Intellectual Property License Agreements and Copyrights in Indonesia

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Indonesia’s current Trademark, Patent, Industrial Design, and Copyright Laws require all intellectual property (IP) license agreements to be recorded in order to have binding force for third parties. Since the enactment of Government Regulation No. 36 of 2018 on Recordation of IP License Agreements (GR 36/2018), recordation of IP license agreements has been carried out by Indonesia’s Directorate-General of Intellectual Property (DGIP).

Even before the issuance of GR 36/2018, the DGIP had started receiving applications for recordation of IP license agreements after the Ministry of Law and Human Rights (MOLHR) issued an IP recordation implementing regulation under MOLHR Regulation No. 8 of 2016 on Requirements and Procedures for Recordation of IP License Agreements. However, as the mechanism for processing such applications had not been determined by the DGIP, the department left the requests unprocessed until the issuance of GR 36/2018. Prior to that, the preferred alternative was to file a letter of intention to record the license agreement with the DGIP so that related parties could rely on the letter in the absence of a regulation.

This article outlines the general requirements for IP license recordation in Indonesia and considers how the current system works with the country’s laws and regulatory environment for copyrights—particularly the necessity to obtain proof of copyright ownership prior to recording a copyright license agreement.

Overview of IP License Agreements

As noted above, IP license agreements must be recorded in order to be binding for third parties. License agreements that are not recorded will not have legal effect against third parties, although they are still legally binding for the contracting parties. For an IP license agreement to be eligible for recordation under GR 36/2018, it must meet the following main requirements:

  • The licensor must not grant a license if the term of protection of the relevant IP has lapsed or if the relevant IP registration has been withdrawn;
  • The license agreement must be written in Indonesian language or accompanied by a translation for the DGIP; and
  • The agreement cannot include provisions that may harm Indonesia’s economy or national interests, result in unfair business competition, or conflict with prevailing laws, religion, morality, or public order.

The regulation also specifies that IP license agreements should include the following elements:

  • Date, month, year, and location of the signing of the license agreement;
  • Name and address of the licensor and licensee;
  • Object of the license agreement;
  • Provision on whether the license is exclusive or nonexclusive, including whether sublicensing is permissible;
  • Duration of the license agreement;
  • Territorial scope of the license agreement; and
  • For patent licenses, which party will make annuity payments.

If the licensor or licensee is a foreign national or a foreign entity domiciled outside Indonesia, the recordation application has to be filed through a local registered IP consultant.

Copyright Protection and Recordation in Indonesia

Like in most countries, copyright protection in Indonesia arises automatically as soon as a work exists or is created, in accordance with the Copyright Law. Although it is not mandatory to record copyright, a certification of copyright recordation can be useful for establishing preliminary proof of copyright ownership (i.e., prima facie evidence) in the event of enforcement and disputes.

Proof of copyright ownership—in the form of a copyright certificate—is also required for recording a copyright license agreement, in accordance with the requirements of GR 36/2018. This means that if a copyright work has not yet been recorded at the DGIP, it is necessary to record the copyright work before recording a copyright license agreement referring to that work.

Fortunately, obtaining such a certificate has become considerably easier in recent years. On December 20, 2021, the DGIP issued a decision with the aim of accelerating the copyright recordation process. Decision No. HKI-05.TI.03.02 of 2021 on Implementation of Automatic Approval in Copyright Recordation System officially established the POP-HC (from the Indonesian name Persetujuan Otomatis Pencatatan) system, which reduces processing time for an application for recordation of copyright from 14 working days to 10 minutes. The system simplifies the recordation application process by automating the usually lengthy bureaucratic process, and it issues a copyright certificate in electronic form.

POP-HC makes it easier for the public to obtain protection for a copyright work, in line with the principle of copyright protection arising automatically from the moment the work comes into existence. The system also makes it possible for licensors and licensees to file a registration for a copyright that has not been recorded—plus the license agreement recordation application—in just one day. Previously, the licensor and licensee had to wait for days for the copyright certificate to be issued.

Recommendations

In summary, although the Copyright Law states that recordation is not a requirement to obtain copyrights or related rights, recordation of a copyright license agreement requires proof of copyright ownership in the form of a copyright certificate. Therefore, parties who intend to file a copyright license agreement in Indonesia pertaining to a copyright work that has not yet been recorded should record the work with the DGIP. With the tools now provided by the DGIP, this is a fast and relatively simple process that can be handled even on the same day as submitting the license recordation application.

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