Sunday, October 13, 2019

New Indonesian rules on foreign language trademarks cause confusion


Image result for english language

An uncertain issue under Law 24/2009 has been the mandatory use of Indonesian language in certain contexts. A new Presidential Regulation 63/2019 provides more specificity setting out 14 situations where it is required. One of them surprisingly, is trademarks.  Surprisingly, because this is not a trademark regulation. But the effects for Indonesian businesses and brands may be huge. 

The Regulation says it is mandatory to use Indonesian language for trademarks owned by Indonesian individuals or entities. There is an exception for foreign licensed trademarks (but then these are not owned by Indonesian entities anyway) and an exception for trademarks with historical, cultural, customary and/or religious values in traditional or foreign languages (whatever that means).

This is a classic example of a probably well meaning idea by one part of government, applied to an area they are not familiar, which could cause chaos. Here are some well known Indonesian foreign language trademarks which are now at risk:

A MILD cigarettes 
GRAND INDONESIA malls
SWALLOW motorcycle tires 
DAMN! I LOVE INDONESIA clothing
SILVER QUEEN chocolate 
JULIA JEWELRY
BLUE BIRD taxis

What happens to these longstanding brands? Presumably the government will not start cancelling these marks? For Indonesian licensees of foreign marks must the license be recorded or if not, what happens? What about local subsidiaries of foreign companies registering non Indonesian marks? Is this a new ground to oppose and cancel marks?  

There are no penalties for non-compliance; further guidance is probably needed. However it is not clear where this will come from, whether the TM Office, or a further regulation. We have seen in other cases, other Ministries (e.g. Health) issue rules that cover trademarks which the TMO then has to follow. 

One positive is that presumably local companies can no longer copy foreign marks as easily. American Express, Caterpillar, Home Depot and others may benefit.  

The Regulation potentially makes business much harder for their Indonesians. Of course Indonesian language marks for the local market are great, but these may not travel well. Building an export business is going to be harder since most global brands started in their local market. it would mean an an Indonesian company cannot buy a foreign language brand.  

Expect a number of complaints to arrive in the president’s desk from Indonesian companies as a result of this! Either the regulation will need to be amended, or a scramble to limit its effect to the narrowest of circumstances will be needed. 



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