Implementing Regulations for IP recordal and seizure passed
After Government Regulation No. 20 of 2017 on Controls of Import and Export Goods under 2006 Customs Law came into effect on 2 August 2017, the Ministry of Finance has finally passed Implementing Regulation No. 40 of 2018 which sets out the procedures for customs recordal and seizures. The Implementing Regulation takes effect on 16 June 2018.
Recordal for trade marks and copyrights
Trade mark and copyright owners with a local business entity domiciled in Indonesia can now file customs recordal applications. In addition to the usual proof of trade mark certificates or copyright and information on genuine goods, the application must include documents relating to the local business entity, importer/exporter information and a statement of liability from the IPR owner. The IPR owner must also appoint an Examiner who can verify genuine products as well as understand the distribution and marketing of the products.
Once the application is submitted, Customs will review the application and approve/reject the application within 30 days.
Recordals are valid for one year and are renewable.
Restraint – confirmation by IPR owner in 2 days
Once Customs notifies the IPR owner of a restraint, the IPR owner will need to send confirmation of its decision to either apply for Court detention order or otherwise to Customs within two days.
The IPR owner or its proxy must then apply to Court within four working days and provide to Customs a bank or insurance guarantee of IDR100M (USD7,200) which is valid for 60 days. The application is to the Commercial Court in the jurisdiction of the port where the goods were seized.
Customs then holds the goods and provides the IPR Owner with a detailed summary of the shipment. The Court must deliver its detention order decision within two business days from the filing of Court application and send its decision to Customs within one business day.
Examination of detained goods
Upon receipt of the Court detention order, Customs will detain the goods for ten business days. Within two business days of Customs’ receipt of the Court detention order, the IPR owner will need to send its request to Customs who will arrange a time for all parties including the appointed Examiner to examine the detained goods.
If more time is required, the IPR owner can apply to Court for an extension of ten business days but there will be an additional security of another IDR 100 million (USD 7,200).
After the ten-day detention period, if the goods are confirmed as infringing and if there is no settlement, the IPR owner can take legal action. The 2017 Regulation provides that this means civil or criminal action or settlement. This is problematic, as it is not clear how it is possible to file legal cases in such a short period, and of course, lawsuits are expensive.
While it is positive that Indonesian Customs has introduced a database to record IP rights, this recordal system is currently limited to IPR owners with a local subsidiary. We believe the Indonesian government’s desire to encourage foreign investment is its rationale behind this requirement, as it hopes that many more foreign IPR owners will set up local presence in Indonesia. The process for the Court detention order and examination looks relatively clear, but this needs to be tried to see how it works, and the timelines are very short. Finally, there remains uncertainties if parties are unable to settle following the expiry of the detention order, they may have to choose to proceed with either civil or criminal action which will be expensive.
IPR owners who wish to take part (those with a local subsidiary), can start to prepare the necessary documentation, review and decide whether they are able to and should use the system. Please contact us at email@example.com for a more detailed discussion.