Deal with trademark infringement in Indonesia and find suitable strategies to address online infringement.
Indonesia is notoriously a difficult jurisdiction to protect intellectual property rights. This article examines the region’s practical approach to addressing trademark infringement and appropriate strategies for addressing online infringement.
What are the penalties for trademark infringement?
In Indonesia, trademark infringement can lead to civil liability and criminal sanctions, including:
- The infringer uses the same trademark as the registered trademark – up to 5 years imprisonment and/or a fine (currently up to IDR 2 billion);
- Unauthorized use of a trademark that is not identical but appears to be similar – up to 4 years imprisonment and/or a fine (currently up to IDR 2 billion).
Brand owners can also file civil lawsuits for damages.
What is the preferred method of legal action for trademark infringement?
In Indonesia, the implementation of the IP enforcement framework is far from ideal. It is recommended to start by issuing a warning letter to ensure compliance.
Warning letters are an effective tool because the threat of criminal sanction in a letter can provide powerful leverage to brand owners.
What are the considerations when deciding to file a civil lawsuit ?
Civil litigation is not always preferred because the interim injunction procedure is impractical and not particularly effective when infringers use the corporate form to hide their personal liability. In contrast, criminal reporting may be a more effective way to deter violations.
However, for non-conventional marks, such as placement marks or three-dimensional marks, civil litigation may still help to establish judicial precedent in situations where the police may not be familiar enough to find infringement.
The award of compensation must be based on the actual losses suffered. There may be a punitive element (non-material damage) in the damages award, but this is uncertain. There are also problems with judgment enforcement because the judgment debtor may have taken steps of his own to prove the judgment.
In addition, litigation costs are not recoverable. Likewise, the costs invested in civil litigation may not always be commensurate with the results. Therefore, an investigation is necessary to ensure financial compensation.
Civil actions may also be required for the strategic purpose of establishing judicial precedent in support of broader market enforcement.
What’s wrong with seeking criminal sanctions?
Criminal sanctions start with reporting to the police. This will lead to a criminal investigation and possible investigation and seizure of infringing items on evidentiary grounds.
However, police investigations can be opaque and do not necessarily determine when an investigation can lead to a surprise inspection. Police may impose inconsistent requirements, such as further requirements for product certification or verification of the authorization chain of the power of attorney.
The Indonesian police is a professional organization with a prescribed time frame for the milestone management of case files and an obligation to keep complainants informed of the progress of the case. It is also possible that police resources could be diverted to cases of greater public interest.
The general advantage of criminal sanctions over civil proceedings is that infringers usually do not have recourse to the police. This gives infringers some deterrent to agree to terms favorable to the brand owner. Therefore, calling the police may gain more leverage if an escalation from a warning letter is necessary.
What if a criminal report is necessary?
As mentioned above, criminal reporting should be a last resort. If the warning letter does not ensure compliance, it may be necessary to escalate to the police. The purpose of this is to continue to exert influence, which is even greater because now the police have stepped in.
Unannounced inspections are one of the consequences of calling the police. The more important purpose is to use the police as a bargaining chip in negotiations. The overriding goal, however, is to quell the infringement—a reaction that may arise when a previously persistent infringer realizes that the police have been called. Unannounced inspections of storage facilities can be important in case preparation.
Seizure, while important, is not a requirement for calling the police. Because the infringement has been proven based on the collected evidence, which constitutes the legal basis for calling the police. Such evidence can be gathered through secret surveys. Therefore, even if there is no seizure, the right holder’s reporting can continue. Further psychological stress arises when the infringer is summoned by the police for an interview as part of a criminal investigation.
Now all that remains is for the right holder to offer reasonable settlement terms to the other party based on the bargaining leverage gained in the police report, which might help.
What evidence and documents are required when calling the police?
- A power of attorney issued to the local agent;
- Purchase samples of infringing items;
- Purchase receipt issued by the infringer;
- Authentic samples; and
- A report confirming that the infringer’s sample is a counterfeit product.
How should rights holders communicate with the police?
While Indonesia has made great strides in combating bribery, rights holders should always ensure compliance with both Indonesian and their own anti-bribery laws – in addition to cross-border laws such as the US FCPA and the UK Bribery Act law. As mentioned above, the Indonesian police continue to promote professionalism in their agencies.
Inconsistencies in approach at some levels could still lead to delays in the progress of investigations. It is important to discern when a request is reasonable and when it is not. Unreasonable requests, such as a request to interview the CEO of a multinational brand owner, should be rejected by the brand owner and offered an alternative. While some requests may seem unreasonable, there may be no malice behind them. However, it is important to develop a strategy that provides reasonable alternatives to these requirements.
If necessary, lobbying from foreign consulates (such as the US embassy) may help move the matter forward.
Despite reporting to the police, trademark owners should remain open to reaching a settlement with the infringer.
The most important right of the right holder/complainant is that only the complainant has the right to withdraw the complaint. However, the decision to drop any complaint cannot be taken lightly – a full review by a committee of senior officers is required before a decision can be made for lack of evidence. This right to decide when to withdraw a complaint gives rights holders the power to negotiate with infringers, an important advantage that ensures favorable terms for rights holders.
Because of the uncertain nature of the criminal process, if prosecutors lose the case, seized items may need to be returned to the infringer. Therefore, it is more advantageous to secure a settlement than to allow the case to proceed to prosecution.
What is the best strategy for addressing online infringement?
The fastest way is to submit a takedown request to the platform.
However, this approach can feel like a game of whack-a-mole is impossible to win. Because it is common for the infringer to reappear as a different merchant.
Automatic removals may also not always be effective, as the effects of these measures are mostly only temporary. It is almost inevitable that these infringers will re-emerge under new identities.
Strategies for combating online infringements should be targeted. Therefore, we should focus on the main infringers:
- The largest number of infringing links on all e-commerce platforms;
- the most traded; and
- The longest online.
Takedown measures should be taken against these infringers, as they will be forced to abandon accounts they have worked so hard on for a long time. Yes, they may come back, but they will have to re-open a whole new account and get back in business.
To be effective, action should not be limited to takedown requests against e-commerce platforms, but warning letters should also be sent to the individuals behind these business accounts to ensure that they do not reappear or suffer the economic consequences of signed commitments. punishment.
Therefore, it is necessary to conduct investigations to find out the actual location of the infringing e-commerce merchants.
Any other ideas?
When taking law enforcement actions, we should consider the general direction. When given the opportunity, rights holders should insist that infringers make public apologies. This helps to “pass it on” to deter other infringers who may arise in the future. Action costs not only serve immediate infringements, but also help deter infringements on a broader level.
For further information, please contact:
Kin Wah Chow, Rouse
kchow@rouse.com
