Protecting Your Intellectual Property in Indonesia

A Hot Tip about Corporate Law in Indonesia

Posted on: 2 Mar 2010


Several general principles are important for effective management of intellectual property rights in Indonesia. First, it is important to have an overall strategy to protect IPR. Second, IPR is protected differently in Indonesia than in the United States. Third, rights must be registered and enforced in Indonesia, under local laws. Companies may wish to seek advice from local attorneys or IP consultants. The U.S. Commercial Service can provide a list of local lawyers upon request.


It is vital that companies understand that intellectual property is primarily a private right and that the USG generally cannot enforce rights for private individuals in Indonesia. It is the responsibility of the rights' holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. While the USG is willing to assist, there is little it can do if the rights holders have not taken the fundamental steps necessary to securing and enforcing their IPR in a timely fashion. Moreover, in many countries, rights holders who delay enforcing their rights on a mistaken belief that the USG can provide a political resolution to a legal problem may find that their rights have been eroded or abrogated due to doctrines such as statutes of limitations, laches, estoppel, or unreasonable delay in prosecuting a lawsuit. In no instance should USG political relations or advice be seen as a substitute for the obligation of a rights holder to promptly pursue its case.


It is always advisable to conduct due diligence on partners. Negotiate effectively and give your partner clear incentives to honor the contract. A good partner is an important ally in protecting IP rights. Keep an eye on your structure and controls, and reduce the margins (and the incentive) of would-be bad actors. Projects and sales in Indonesia require constant attention. Work with legal counsel familiar with Indonesian laws to create a solid contract that includes non-compete clauses, as well as confidentiality/non-disclosure provisions.


It is also recommended that small and medium-size companies understand the importance of working together with trade associations and organizations to support efforts to protect IPR and stop counterfeiting. There are a number of these organizations, both Indonesian and or U.S. based. These include:

- The U.S. Chamber and local American Chambers of Commerce

- National Association of Manufacturers (NAM)

- International Intellectual Property Alliance (IIPA)

- International Trademark Association (INTA)

- The Coalition Against Counterfeiting and Piracy

- International Anti-Counterfeiting Coalition (IACC)

- Pharmaceutical Research and Manufacturers of America (PhRMA)

- Biotechnology Industry Organization (BIO)

- Indonesian Directorate General for Intellectual Property Rights


IPR Climate in Indonesia

Protection of IPR in Indonesia is hampered by inadequate enforcement of the relevant laws and regulations. Problems in IPR protection raised by industry include: rampant software, audio and video disk piracy (with a piracy rate estimated at 90 percent); pharmaceutical patent infringement; apparel trademark counterfeiting; an inconsistent and corrupt law enforcement regime; and an ineffective judicial system. The lack of effective IPR protection and enforcement serves as a considerable disincentive for foreign investment in high technology projects in Indonesia. The Indonesian court system can be frustrating and unpredictable, and effective punishment of pirates of intellectual property is rare. Foreign companies therefore must be vigilant and creative in building strategies to protect their products from infringement.


Foreign rights holders often work with local law firms and security consultants to arrange for police raids on counterfeiters. Others conduct periodic seminars on the adverse effects of IPR infringement on the Indonesian economy, one of which is reduced investment by foreign companies. Ultimately, the course taken by companies to protect their intellectual property rights will depend on their product. As an example, a U.S. company might first identify the counterfeiters of its products. They then proceed to develop them as legal licensees of its products. Some computer software companies provide free training and/or sell their software at competitive prices, while warning that copies of their product may contain damaging viruses. Also, companies with well-known trademarks seek to defend them by registering them early or seeking the cancellation of an unauthorized registration through the Ministry of Justice. In general, a strong local partner or agent can help in defending trademarks and intellectual property, as long as the arrangement remains amicable. (See also Chapter VI - "Investment Climate" - for background on Indonesian laws and regulations regarding the protection of intellectual property rights.)



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Posted: 02 March 2010

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