15 June, 2018
In today’s blog post, we are taking a closer look at the IP protection in Indonesia concerning textile industry. As the industry is attracting investments and offering many business opportunities, it is vital to remind to European SMEs about the importance of IP Protection. In this article you’ll learn how to protect your brand, your design and patterns as well as your textile machinery.
Being one of the 10 largest textile producing countries in the world, Indonesia has a vibrant and growing textile industry that contributes a considerable amount to the country’s GDP and offers employment to over 3 million people.[1] Furthermore, Indonesian government is committed to further developing the country’s textile industry and to increasing the nation’s value of exported textiles to 64 billion EUR in 2030[2]. The anticipated conclusion of the Free Trade Agreement between the EU and Indonesia would further offer European SMEs some promising business opportunities in Indonesia’s textile sector.
At the same time Indonesia’s textile industry still uses relatively old weaving and knitting machinery and is in need of new technologies if it wishes to stay ahead of its competitors in the region like Vietnam and Cambodia. This offers further business opportunities for European SMEs whose top-notch technology is highly appreciated in the region.
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 the country. 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.
Protect your brand in Indonesia
Brand protection is of utmost importance to the SMEs active in textile industry since brand recognition, i.e. customer’s ability to distinguish one SME’s products from competitors’ products, is crucial to SMEs producing garments and accessories. It could be damaging to the reputation of European SMEs if third parties started producing substandard products under the same trade mark.
In this case, counterfeits on the market could lead to the loss of clients due to decreasing trust in the quality of SME’s products. Similarly, companies that are producing textile machinery can lose their reputation and market share once third parties start producing their textile machinery under the same brand name. Therefore, it is crucial for European SMEs to protect their brand via registering their trade marks in Indonesia.
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.
European SMEs should also keep in mind that according to the Indonesian Trade Mark Law, trade marks can be cancelled due to no-use after 3 years of not being used. This means that SMEs should actively start using their trade marks in Indonesia before that time period comes to an end, to avoid a competitor filing for non-use cancellation. At the same time it also gives European SMEs the opportunity to effectively benefit from non-use cancellation in the instance of bad faith registrations, as the company registering in bad faith also needs to conduct business activities within that time frame.
Apply for patents to protect textile producing machinery
As mentioned above, European SMEs will also have business opportunities in the textile machinery sector in Indonesia, as their technology is appreciated in Indonesia. Even though changes in textile machinery are normally quite incremental, new inventions are nevertheless created on a regular basis. Latest inventions include for example a novel prewasher to maximize removal of surface contaminants that uses a vertical counter-flow arrangement which optimizes the use of water and energy. Similarly, some new fabrics and production methods could be patented. It is therefore recommended that companies that manufacture innovative textile machinery or use innovative production methods should apply for patents in South-East Asian countries to protect their products.
A patent provides protection for the invention to the owner of the patent, meaning that the invention cannot be commercially made, used, distributed or sold without the patent owner’s consent.
The country adopts a ‘first-to-file’ patent system, meaning that the first person to file a patent in the Indonesian jurisdiction will own that right within the country once the application is granted. Two types of patents are recognized in Indonesia – ‘Standard Patents’ (for products and processes) and ‘Simple Patents’ (for products only). The process for getting a simple patent is shorter, however, there is a reduced term of protection – as standard patents are protected for 20 years after filing whilst simple patents are only protected for 10 years after filing. At the same time simple patents can be effectively used for protecting textile machinery that only involve incremental improvements and would not qualify for standard patent protection.
SMEs should remember that according to the Indonesian Patent Law, applications will need to be submitted in Bahasa Indonesia language and patent specifications need to be translated into the local language. Translation errors are common, with translations often being too literal and narrowing the claims. This is compounded by the lack of procedures in place to correct such errors once a patent is granted. It is recommended that applicants pay special attention to the translation of the independent claims as these tend to be the most important part of the document. Seeking professional advice of local patent attorneys is highly recommended.
Patent applications in Indonesia should be registered with the Directorate General of Intellectual Property. Simple Patents can take about 2 to 3 years to be registered while Standard Patents are more likely to take 3 to 5 years from filing in Indonesia.
Furthermore, European SMEs wishing to make their patent protection more far-reaching may opt to file for a patent through the Patent Cooperation Treaty (PCT) route which allows for patent protection in PCT multiple member states by filling out just one patent application.
Register your design to protect the appearance of your product
SMEs engaged in textile industry can also protect the design of their textile machinery or the pattern of apparels with registered industrial designs. It is useful to also protect the design of the textile machinery as competitors in Indonesia may copy the design and shape of the machinery and its components and mislead customers to believe that the machinery has the same functions or quality as the original, which often results in losses in sales for the original European manufacturer.
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 form 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. This also means that some textile patterns could be protected by industrial design registration.
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, if 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.
Helika Jurgenson, China IPR SME-Helpdesk
