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Sunday, August 5, 2012

Passing off unfair competition in Indonesia as an effective IP law

The law looks like a lookalike law
A report on Jakarta's UPH University website last week illustrates a weakness in Indonesia's IP laws. The report talks about a seminar in June at which the unfair competition law was discussed, as regards passing off or trade dress protection. There have been other similar academic discussions in previous years. They centre around the weakness of the provisions supposed to cover protection for copied products and services with a reputation Indonesia.

The WTO TRIPS agreement mandates that member states must put in place systems for protection of unfair competition as that is covered in the Paris Convention and therefore incorporated into TRIPS. Indonesia's IP laws were all amended to implement TRIPS in 1997 and 2001. However unfair competition, unlike all other areas of IP has no specific law in Indonesia, so it was never amended or updated. If the provisions are not effective it is possibly a WTO breach.
Indonesia has only very basic rules on this area. They predate TRIPS but postdate the Paris Convention. The general academic view is they are not specific enough for many modern IP situations. But until there is a specific change (one was proposed for the upcoming Trademark Law amendments then dropped), there is no other route to argue it. There are two provisions:

          Article 382bis of the Penal Code

Any person who, in order to establish, to retain or to expand the sale of his trade or business or those of the trade or business of another, commits a fraudulent act of misleading the public or a certain person, shall, if there from some loss for his competitors or competitors of the other person may arise, be guilty of unfair competition, and be punished by a maximum imprisonment of one year and four months or a maximum fine of thirteen thousand five hundred rupiahs.

          Article 1365 of the Civil Code

Any unlawful act that has caused damage to another person, shall require the person   whose wrongful act has caused such damage, to cover the damage.


These have significant limitations. Article 382bis of the Penal Code requires fraud to be proven, (fraud is possibly a higher test than say UK passing off deception, or German slavish imitation). With respect to Article 1365 of the Civil Code, it is not clear whether the reference to a prior “unlawful act” has to actually be a breach of another law (such as Article 382bis) or whether the term may be broader and may include any general bad faith dealings. Finally, Article 1365 of the Civil Code provides only for damages, and not injunctions.

So technically, it is possible to file a lawsuit based on unfair competition type of arguments under the Indonesian Criminal and Civil Codes. However, these general provisions are not tailored with modern intellectual property rights in mind. These provisions were used in the last century when there were no proper IP laws, mostly to argue trademark conflicts. Arguably because Indonesia has acceded to the Paris Convention and TRIPS, these laws should now be interpreted to give 'direct effect' to the treaties and provide full modern unfair competition protection. This has in fact happened in the case of anti dilution protection in trademark cases (to enforce trademark protection in cases where the Indonesian law is insufficiently worded).

But this is all theory, until someone brings a case in the District Courts in a pure passing off situation. Until then academic discussions will reach the same inconclusive conclusion.

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