22 March, 2017
Since Indonesia’s design market and especially furniture design market offers interesting opportunities for European SMEs, 40 selected companies recently took part of the EU Gateway Business Avenues mission, where they met with local companies in Indonesia in early March 2017 to find business opportunities. As IP protection is the key to successful new business endeavors abroad, then in today’s blog post, we have chosen to discuss IP protection issues in the contemporary design industry in Indonesia. You will learn what you need to do in order to ensure that your product design is protected in Indonesia.
Market Opportunities for European SMEs in Indonesia
Indonesia’s contemporary design industry holds great potential for European SMEs, supported by government’s initiatives of further developing the industry. Furniture sector is currently the backbone of Indonesia’s design industry as, boosted by high export demands, industrial production in Indonesia’s furniture industry has recorded high increase rate and profits gains over the past few years, a trend which will continue in 2017 and beyond, as Indonesia aims at becoming the dominant player in ASEAN’s furniture market[1].
Indonesia’s contemporary design market offers interesting business opportunities for European SMEs especially those engaged in the furniture and interior design sector, as the country can offer a competitive manufacturing base with relatively low labor costs and a wide availability of skilled carpenters and wood carvers. Furthermore, the country has vast resources of natural materials like teak, rattan or bamboo, attracting the attention of foreign investors.
The domestic market of Indonesia seems equally promising for imported European design products, especially products relating to interior design and home improvement as there is increasing demand for interior design services due to the booming domestic property sector, such as hotels, condotels, and restaurants. Moreover, the continued expansion of an affluent middle class in the country is driving the demand up for boutique producers of high-end contemporary furniture as well as niche sectors (i.e. leather furniture, European classic style pieces)[2].
European SMEs, however, need to pay attention to protecting their intellectual property rights because despite improvements made in Indonesia’s IP laws and regulations, IP infringements are still commonplace in Indonesia. IP rights are a key factor for business success and neglecting to register these rights could be very costly for SMEs. Thus, a robust and comprehensive IP strategy is needed when entering Indonesia’s market, says Valentina Salmoiraghi, IP Business Advisor of the South-East Asia IPR SME Helpdesk.
Register your Industrial Design in Indonesia
European SMEs are recommended to register their design in Indonesia in order to protect their product design in the country. In Indonesia, an industrial design means a creation on the shape, configuration, or the composition of lines or colours, or lines and colours, or the combination thereof in a three or two dimensional from which gives aesthetic appearances and can be realized in a three or two dimensional pattern and used to produce a product, good or an industrial commodity and handicraft.
It is advisable to register industrial design in Indonesia because a registered design provides SMEs with:
- Protection against deliberate copying and independent development of a similar design;
- Proof of ownership, when SMEs need to initiate enforcement proceedings in case of an infringement;
- Right to make, offer, trade, market or use the product equipped with the design in Indonesia;
- Right to license the design.
The most important requirement for design registration in Indonesia is novelty, meaning that it isn’t similar or identical to prior art. However, the novelty of a design shall not be lost if in a period of maximum 6 months before filing date, the design has been exhibited in an official exhibition (national or international) and/or has been used for the purpose of education, research and development.
Industrial Design applications can be filed with the Directorate General of Intellectual Property and they must be filed in the local language (i.e. Bahasa Indonesia). In some cases, the examiner may raise objection whether the design is a ‘common-place’ design with no distinctive features, but arguments may be filed to overcome such objections. Once the application passes the examination, it will be published for opposition. Where no opposition is filed during the mandatory 3 month period, the certificate of registration will be granted.
Industrial Design registrations apply the so called ‘first-to-file’ rule and last for 10 years from the filing date. One single registration costs around EUR 57 for one Industrial Design application, excluding agent fees.
Don’t Forget to Also Protect your Brand
Besides registering their design, SMEs wishing to bring their design products into the Indonesia market are also advised to register their brand name in Indonesia to avoid someone else starting to produce similar products under the same brand name or using the brand in connection with lower quality products. Similarly to industrial designs, trade mark registration also functions under the ‘first-to-file’ rule in Indonesia and early application for trade marks, ideally before the release of products and services into the market, is recommended.
It is especially important to register a trade mark in Indonesia because trade mark piracy due to ‘bad-faith’ registration is a serious problem in the country. Bad-faith registrations exist where a third party (not the legitimate owner of the mark) first registers the mark in Indonesia, thereby preventing the legitimate owner from registering it in the country. Trade marks can be registered with the Indonesian Trade Mark Office. It may take about 36 months to register a trade mark after the application is submitted.
Trade mark registration is also important to designers because a 3D trade mark registration could be used as an alternative means to protect SMEs’ product packaging/design when other options have been exhausted.
Copyright Can Protect your Design while Obtaining a Registered Design
European SMEs who are in the process of registering their design in Indonesia but wish to simultaneously start marketing their products on the Indonesia market, may take advantage of copyright protection to fight against possible infringements as some elements of product design can also be eligible for copyright protection in Indonesia.
In Indonesia, copyright arises automatically after a work is created in a material form such as in writing, video, audio, sculpture, etc. Copyright is not required to be recorded in order to have it protected, however, voluntary recordal in available in Indonesia and many small businesses operating in the country choose to record copyright to obtain proof of ownership. Furthermore, in case of litigation, enforcement authorities still need to be certain that the IP right holder seeking protection is in fact the rightful owner, and they usually require the copyright recordal certificate to be produced for this purpose. When possible, it is strongly advisable that SMEs record their copyrights in Indonesia.
European designers should keep in mind that the Indonesian Copyright Law also provides for landlord liability of a trade area engaged in the sale and/or the reproduction of pirated goods on its premises. This means that the laws make it possible to directly sue the vendors and shop owners selling infringing products.
In case of copyright, it is wise to clearly determine the ownership of the copyright also through contracts, because for instance, copyrights for works created by an employee, even if in the course of employment, do not automatically belong to the employer. Thus, employment contracts that SMEs choose to use for their employees should expressly address how the ownership of new Intellectual property created will be assigned.
In Case of an Infringement, Enforce your Rights
In case of infringements, IP enforcement is essential as it helps SMEs to fight for their market share and if SMEs manage to build a reputation of strongly enforcing their rights then unscrupulous companies are more likely to move on to harass less litigious companies. Thus, strategic enforcement of IP rights is the key to a successful and comprehensive business strategy.
When European SMEs identify infringement of their design, they should actively enforce their rights in Indonesia says Valentina Salmoiraghi.
In Indonesia two main IP enforcement routes are civil and criminal enforcement, however, in most cases private mediation and settlement could be more effective and should be considered as a viable option, particularly for SMEs with budget constraints.
Given the weaknesses in the enforcement system, issuing ‘warning letters’ should also be paired with a more comprehensive enforcement strategy, particularly when the infringer is a legitimate business. Such infringers are usually opportunistic traders selling counterfeits as part of their product mix rather than running an outright counterfeiting business and warning letters could lead to mediation or settlement.
SMEs should keep in mind that even though enforcing IP rights in Indonesia is still a challenging avenue, it is not an entirely impossible task, and SMEs should try various means to protect their business.
[1] EU Gateway Business Avenues 2016: https://www.eugateway.eu/sites/default/files/collections/
document/file/market-opportunity-singapore-indonesia-
contemporary-european-design.pdf
[2] Ibid
Helika Jurgenson, China IPR SME-Helpdesk
