Dealing with trade mark infringement in Indonesia and finding a suitable strategy to tackle online infringement.
Indonesia is known to be a difficult jurisdiction in protecting intellectual property rights. This article discusses the pragmatic approach towards dealing with trade mark infringement in the region and a suitable strategy to tackle online infringement.
What are the sanctions for trade mark infringement?
In Indonesia, trade mark infringement may incur civil liability and criminal sanctions which include:
- The infringer having used a mark that is identical to the registered trade mark - Imprisonment of up to five years and/or a fine (currently up to IDR 2 billion);
- The unauthorised use is not identical but shown to be similar - Imprisonment of up to four years and/or a fine (currently up to IDR 2 billion).
The brand owner can also file a civil lawsuit for damages.
What is the preferred mode of legal action against trade mark infringement?
The implementation of the enforcement framework for intellectual property rights in Indonesia is still far from ideal. It is recommended to start with a cease and desist letter to secure compliance as a first step.
Cease and desist letters can be an effective tool because threats of criminal sanction in the letter can provide strong leverage to brand owners.
What are the considerations in deciding on civil litigation?
A civil action is not always preferred because the interim injunction procedure is impractical and not particularly effective when the infringer uses a corporate shell to insulate his personal liability. In contrast, criminal complaints may be a more effective method in bringing infringement to a stop.
However, a civil action may still be useful to establish judicial precedent in respect to unconventional trade marks such as placement marks, or three-dimensional marks where the police may be unfamiliar in determining infringement.
Damages awarded will have to be based on actual loss suffered. There may be a punitive element in the damages award (non-material damages), but this is uncertain. There is also the problem in enforcing the award because the judgement debtor might have already taken steps to judgement proof themselves.
Further, litigation costs are irrecoverable. As such, the amount of investment in civil litigation may not always be commensurate with the outcome. Therefore, an investigation is necessary to ensure that financial compensation is recoverable.
Civil litigation may also be necessary for strategic purposes to establish judicial precedent to support enforcement in the broader market.
What are the concerns with invoking criminal sanctions?
Criminal sanctions are initiated by police complaints. This leads to criminal investigation and possible seizures of infringing articles on the grounds of securing evidence for purpose of subsequent prosecution.
However, police investigation can be opaque and not always certain when the investigation can proceed to a raid. The police may issue inconsistent requests such as further requirements on product authentication or verification on the chain of authority for the power of attorney.
The Indonesian police is a professional organisation with set time frames on casefile milestone management, and the duty to keep complainants informed on the progress. It is also possible that the resources of the police are channelled to cases that have greater public interest.
The general advantage over civil action is that infringers generally shun the police. This offers leverage on infringers to settle on terms that are favorable to the brand owners. Therefore, filing police complaints may offer some leverage should escalation from cease and desist letters become necessary.
What if a criminal complaint becomes necessary?
As explained, a criminal complaint should be the last resort. Where the demand letter could not secure compliance, it may be necessary to escalate to a police complaint. The idea is to continue to apply leverage, but this time the leverage is greater because the police are now involved.
Raid is one of the consequences of a police complaint. The more important objective is to use the police complaint as leverage during the negotiation. However, the most important objective is to quell the infringement - a likely reaction when the infringer who might have been stubborn earlier becomes aware that a police complaint has been filed. The element of surprise may be important in the case preparation to raid a storage facility.
Seizure, though important, is not necessary to maintain the police complaint. Since the act of infringement is already proven based on the evidence collected to form the legal basis for the police complaint. This evidence may be collected through mystery shopping or test purchase. As such, the rights holder is able to maintain the complaint even if no seizure is made. A further psychological pressure appears when the infringer is summoned by the police for an interview as part of the criminal investigation.
What is left now is a settlement on reasonable terms that the rights holder may put forward and leverage through the police complaint which can be helpful.
What evidence and documents are required when filing a police complaint?
- Power of Attorney to the local legal representative to file the complaint;
- Purchase of sample infringing items;
- Receipt of purchase issued by the infringer;
- Sample of the genuine item; and
- A report confirming that the sample from the infringer is fake.
How should a rights holder deal with the police?
Although Indonesia has made great strides in combating bribery, the rights holder should always ensure compliance with anti-bribery laws of Indonesia and their home country – in addition with cross border reach such as the US Foreign Corrupt Practices Act and the UK Anti Bribery Act. As mentioned above, the Indonesian police continue to instil professionalism in its institution.
Inconsistent practices at some levels may still lead to delays in progressing investigation. It is important to discern when a request is reasonable and when not. In case of unreasonable requests, such as a request to interview the chief executive of a multi-national brand owner - the brand owner should push back and offer alternatives. While certain requests may appear unreasonable, there may not be any sinister motive behind the request. However, it is important to formulate a strategy to offer reasonable alternatives to such requests.
If need be, lobbying by a foreign consulate such as the US Embassy may help to progress the matter.
The trade mark owner should be open to arriving at a settlement with the Infringer notwithstanding the police complaint.
The most important right to the rights holder/complainant is that only the complainant has the right to withdraw the complaint. However, the decision to drop any complaint by the police cannot be made lightly - there has to be a general review by a committee of senior officers before a decision can be made due to lack of evidence. This right to decide when to withdraw a complaint gives the rights holder power in negotiation with the infringer - a very important card that the right holder can play to secure favorable terms.
Due to the uncertainty of criminal proceedings, if the prosecutor loses the case, it may be necessary to return the seized goods to the infringer. As such, the more expedient course is to secure settlement instead of letting the case proceed to prosecution.
What is the best strategy to tackle online infringement?
The quickest way is to file takedown requests with the platforms.
However, this exercise may feel like the unwinnable whack-a-mole arcade game. Since. it is common for the infringer to resurface under a different merchant identity.
Automated takedown may also not always work as the effect of most of these measures are only temporary. It is almost inevitable that these infringers will re-surface with a new identity.
Strategy against online infringements should be targeted. Such that the efforts should be directed at the major infringers with:
- the greatest number of infringement listings on all e-commerce platforms;
- the greatest number of transactions; and
- the longest online presence.
Takedowns should be targeted against these infringers as they are forced to give up the account that they have painstakingly built over time. Yes, they may come back, but they will have to re-build a brand new account and restart their track records.
To be effective, the action should not just be restricted to takedown requests directed at the e-commerce platforms. Cease and desist letters should also be sent to the individuals behind these merchant accounts to secure undertakings that they will not re-surface on the pain of financial penalty worked into the signed undertaking.
An investigation is therefore necessary to find out the physical location of the infringing e-commerce merchants.
Any other thoughts?
Enforcement action should be taken with the bigger picture in mind. When the opportunity presents itself, the right owner should insist on public apologies from the infringer. This helps to "pay it forward" in discouraging other infringers in the future. The cost of action not only serves the immediate infringement but also helps deter infringement at a broader level.