Address trademark infringement in Indonesia and find appropriate strategies to deal with online infringement.
As we all know, there are certain difficulties in protecting one’s own intellectual property rights in Indonesia. This article discusses a pragmatic approach to dealing with trademark infringement in the country, as well as appropriate strategies for dealing with online infringement.
What are the sanctions for trademark infringement?
In Indonesia, trademark infringement can lead to civil liability and even criminal sanctions, including:
- The infringer uses the same trademark as a registered trademark – up to five years in prison or a fine (currently up to IDR 2 billion);
- Unauthorized use of trademarks that are not identical but similar to registered trademarks – up to four years in prison or fines (currently up to IDR 2 billion).
Trademark brand owners can also file a civil lawsuit to claim damages from the infringer.
What is the preferred legal action model for trademark infringement?
The enforcement framework of Indonesian IP protection laws is far from ideal. It is recommended to first stop the infringement by sending a mitigation notice letter to the infringing party.
A mitigation notice letter is an effective tool, and the threat of criminal sanctions presented in the letter can be a powerful tool to help brand owners protect themselves.
What factors need to be considered when deciding to initiate a civil action?
Not all tort situations are amenable to civil action, as interim injunction procedures obtained through civil action are not practical and are not particularly effective in situations where infringers use corporate protection to escape their personal liability . In contrast, criminal proceedings may be a more effective way to stop infringements.
But civil litigation can still help establish judicial precedents for the protection of unconventional trademarks, such as location marks or three-dimensional marks, types of marks that police may not be familiar with when determining infringement.
Damages awarded must be based on actual losses suffered. Punitive elements (non-material damages) may also be included in compensation awards, but this is uncertain. Enforcement of awards can also be problematic, as the judgment debtor may take steps to prove that it has enforced the judgment in advance.
In addition, litigation costs cannot be recovered. So the investment in a civil lawsuit may not always be commensurate with the outcome. For this reason, it is necessary to conduct relevant investigations to ensure that the relevant financial compensation can be recovered.
However, for judicial strategic purposes, civil litigation remains a necessary means of safeguarding rights, through which judicial precedents can be established to support the protection and enforcement of intellectual property rights in a wider market context.
What are the problems with invoking criminal sanctions?
Criminal sanctions are initiated by the police after being alerted. This can lead to a criminal investigation, and the police may seize the infringing item on the grounds of obtaining evidence for subsequent prosecution.
However, the police investigation process can be opaque and there is no certainty when a surprise investigation can be conducted. Police may make inconsistent requests, such as further requests for product certification or power of attorney authorization chain verification.
The Indonesian police is a professional law enforcement agency with a clear time frame for the management of key nodes in the case file, and is responsible for keeping the complainant informed of the progress of the case. It is also possible that police resources could be used for more public interest cases.
Infringers are often more afraid of police investigations than civil lawsuits. This provides favorable conditions to stop the infringement, which in turn facilitates a settlement in the brand’s favor. Therefore, if it is necessary to escalate from sending a mitigation notice to a further step, reporting the case to the police may provide strong support for defenders.
What if a criminal case needs to be initiated?
As mentioned earlier, initiating criminal proceedings should be a last resort. If a mitigation notice letter fails to stop the infringement, it may need to be escalated to a police report. It is recommended to continue leveraging the facilitation, but this time it will be stronger because the police will be involved.
One of the actions taken by the police after the report was made was to launch a surprise investigation. The more important purpose is to use the police report as an important bargaining chip in the negotiation process with the other party. The most important goal, however, is to put an end to the infringing act — and when the potentially persistent infringer realizes that the infringed person has filed a police report, it is likely to end their infringing act. For cases requiring unannounced investigations of the associated storage facility, it is important to keep this segment abrupt.
While the seizure of related items is an important tool, it is not necessary to maintain the police reporting process. Because the actual occurrence of the violation has been proven based on the evidence obtained that forms the legal basis for the police reporting procedure. This evidence can be gathered through mystery shopping or test-buying. Thus, the rights holder can effectively keep the police reporting process effective even if the relevant items are not seized. Calling the infringer for questioning by the police as part of a criminal investigation can cause further psychological stress.
When faced with such a situation, the rights holder can propose a reasonable settlement, and make full use of the police report as a bargaining chip, and then help protect their own rights and interests.
What evidence and documents do I need to provide when making a police report?
- Power of Attorney for the local legal representative for filing the report;
- Purchase samples of infringing articles;
- Purchase receipt issued by the infringer;
- genuine samples; and
- A certification report confirming that the samples sold by the infringer are counterfeit.
How should rights holders deal with the police?
Indonesia has made great strides in combating bribery, and rights holders should always comply with relevant anti-bribery laws in Indonesia and their home country, as well as cross-border laws such as the US Foreign Corrupt Practices Act and the UK Bribery Act. As mentioned above, the Indonesian police have always instilled professional law enforcement spirit in their agencies.
But inconsistent practices at some levels of law enforcement could still slow investigations. It is therefore important to learn to discern when a request is reasonable and when it is not. If there is an unreasonable request, such as a request for an investigation to question the CEO of a multinational brand owner, the brand owner should counter that and offer an alternative. There are also some requests that may seem unreasonable, but there may not be any sinister motive behind them. It is important, however, to develop a strategy to provide reasonable alternatives to such requests.
If needed, lobbying by foreign consulates such as the U.S. embassy could help move the issue forward.
Despite filing a police report, the trademark owner should still be willing to settle with the infringer.
The most important right of the rights holder/reporter is that only the person reporting the case has the right to withdraw the case. But the decision to withdraw any police report cannot be taken lightly – because the decision to withdraw a report for lack of evidence will result in a full investigation by a committee of senior police officers. This right to decide when to withdraw a case can give the right holder the initiative to negotiate with the infringer—a very important tool that the right holder can use to obtain favorable terms. But given the uncertainty of criminal proceedings, it may be necessary to return the seized goods to the infringer if the prosecutor loses the case. So it is more beneficial to ensure that a settlement is reached, rather than to let the case go to court proceedings.
What are the best strategies for dealing with online infringement?
The quickest way is to submit a takedown request to the platform.
However, defending rights through this approach may well be like playing an impossible game of whack-a-mole. Because the infringer often resurfaces as a different merchant.
Automatic removals may also not always work, as the effects of these measures are mostly temporary. These infringers will almost inevitably re-emerge in new identities.
Strategies to deal with online infringements should be targeted. Actions should therefore be taken against major infringers who meet the following criteria:
- Publishing the largest number of infringing goods on all e-commerce platforms;
- the largest number of transactions; and
- longest online.
Since these infringers will be forced to give up long-established accounts after launching their defense, action should be taken against them. These infringers may come back, but will have to re-create a brand new account and start over with their sales records.
To ensure effectiveness, such targeted measures should not be limited to initiating delisting requests from e-commerce platforms. A mitigation notice letter should also be sent to the individuals behind these merchant accounts and ensure that they do not reappear with financial penalties for signing the undertaking.
Therefore, it is necessary to conduct relevant investigations to identify the actual location of the infringing electronic merchants.
What other ideas and perspectives are there?
Rights protection measures should focus on the bigger picture. When the opportunity arises, the rights owner should insist on a public apology from the infringer. This will help to “kill one and set an example” and effectively stop other potential infringers. The costs incurred by litigation not only facilitate an immediate end to infringement, but also help prevent infringement on a broader level.
For further information, please contact:
Kin Wah Chow, Principal, Rouse
kchow@rouse.com
