The potential risks associated with descriptive marks in Indonesia
Background
Following a global pick-up in activity, Indonesia has emerged as one of the most resilient registries in Asia with over 90,000 trade mark applications filed in 2020 and a 40% increase in the total number of classes. The top few classes were classes 30, 3, 35, 5, and 9. This mirrored the local environment where there was a spike in Food and Beverages businesses, personal care and hygiene products market including but not limited to hand sanitizers, and online businesses and mobile applications. From micro, small and medium enterprises to fast-growing technology firms, Indonesia witnessed an acceleration in digital adoption and capabilities.
With rising internet penetration, increasing digitisation and the proliferation of e-commerce platforms, online sales accounted for 20%1 of total retail sales in 2020 compared to a mere 2% in 2016.
Consistent with previous years, local trade mark applications continued to dominate the registry. Over 80% of the trade mark applications in 2020 were filed by local businesses.
Despite the challenges of working from home, the Indonesia Trade mark Office recorded over 185,000 certificates in 2020, a significant increase from previous years.
Dangers of Descriptive Marks
Historically, as English is not the first language in Indonesia, many descriptive marks were registered and the legacy of these descriptive marks continues to cause concern for brand owners. Trade Mark Law No. 20 of 2016 clarified that marks are not registerable if it contains elements that may mislead the public on the origin, quality, kind, size, type, and purpose of the goods. As a result, in recent years, more applications are being rejected on the basis of descriptiveness.
However, there are still some applications that fall through the cracks as shown below:
The potential risks of such descriptive marks were presented in a widely reported trade mark infringement dispute where Hardwood Private Limited sued Unilever Indonesia for over USD 2 million in damages. The dispute was over the use of the mark STRONG despite the fact that both parties were using different main brands FORMULA vs PEPSODENT for toothpaste. Unilever Indonesia lost at first instance before the Commercial Court but eventually succeeded in the appeal. The Supreme Court in March 2021 opined that "Strong" is not a coined word created by Hardwood and there was no infringement as Unilever had registered the entire mark "PEPSODENT STRONG 12 JAM"2
The dangers of descriptive marks are real in Indonesia. Brand owners are advised to conduct comprehensive searches and risk assessments before using what would otherwise be commonly known as descriptors.
Footnotes
1. Momentum Works
2. Putusan Mahkamah Agung No. 332 K/Pdt.Sus-HKI/2021, as published in https://putusan3.mahkamahagung.go.id/direktori/putusan/zaebf4d7b77044e8b856313035343439.html
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
