The Enforcement Gap refers to the difference between legal theory on anti-counterfeiting; that is how the laws purport to prevent such illegal activities and the practical outcomes. This is the fourth contribution in a series of articles which examines the Enforcement Gap. Other markets explored are Thailand, Russia, China, Philippines, Cambodia, UAE, Vietnam and Hong Kong.
The Enforcement Gap in Indonesia
Challenging enforcement landscape, transparency issues – Indonesia remains on the USTR watch list.
Criminal cases may be filed with the Police or DGIP’s Civil Service Investigation Office/PPNS (at the IPR owner’s choice). Many raids do however settle. In general, we do not favour this. Criminal authorities are not supposed to drop cases based on private settlement. In practice, the police expect some payment from settlements. Many IP lawyers engineer them specifically to share the proceeds with police. This is, of course, illegal, but a common occurrence. The net result is that even entering into settlement negotiations risks that happening. It also suggests the IPR holder’s position on fakes is always negotiable and police intervention is devalued.
If the client decided not to prosecute, we usually suggest working on a settlement without payment and ask the target to make a public apology in the newspaper.
Risk of undue influence in Indonesia Courts
The criminal court judge may order the following penalties; however, in practice, judges may award penalties lower than this in most cases.
- Under Article 100 (1) any person who unlawfully uses trademarks that are identical (similar in its entirety) to registered trademarks of other parties for goods of the same kind shall be sentenced to imprisonment of up to five years and/or fine up to Rp2,000,000,000.
- Under Article 100 (2) any person who unlawfully uses trademarks of similar nature (in principle) to registered trademarks of other parties for goods of the same kind shall be sentenced to imprisonment for up to four years and/or fine up to Rp2,000,000,000.
Last year, we had a court case which after a long process in Court and multiple adjournments, the defendant was proven legally and certainly to have committed a crime based on Article 100 (2) above. The judge only imposed an imprisonment term for 8 months on the defendant. This period of imprisonment is satisfied by the time served already in jail unless there is another judge’s decision in the future that the defendant is convicted of another crime within a 1-year period.
Complex customs border protection system
Because of the barrier in the customs recordal system, the actual enforcement is underwhelming since the implementing regulations take effect on 16 June 2018.
- Indonesia requires a subsidiary to use the Customs IP recordal system. For most IPR owners, this is not possible.
- There are very short time frames for responding to customs once they issue a notice.
- The bank or insurance guarantee amount is IDR 100million (about US$ 7,200).
Our action to fill in the gap:
Combination of C&D letter and escalation action is effective alternative self-help remedies. Compared to usual criminal or civil action, our warning programs are effective because they can be set up quickly, more cost-effective, give brand owner control and provide more transparency. So only high-profile targets go to law enforcement authorities.
We have a project with the UK government to address barriers to the Customs regulation to make the recordal and seizure system more effective.