Intellectual Property Updates in Indonesia

Oct 19, 2023

Law Updates

IP as Collateral in Indonesia: New Regulation and Implementation Challenges

We are excited to inform about a significant development in Indonesia's regulatory landscape. Government Regulation No. 24 of 2022 on Creative Economy (“GR 24/2022”), signed to revitalize and boost the growth of Indonesia's creative industry, introduces a groundbreaking opportunity. This regulation paves the way for the use of Intellectual Property (IP) assets as collateral to secure financing from banks and other financial institutions.

Unlocking Opportunities for IP-Based Financing

This regulation outlines a framework that allows bank financial institutions and non-bank financial institutions to utilize IPs as collateral. IPs can take the form of fiduciary guarantees, contracts related to Creative Economy activities, and royalty rights associated with Creative Economy activities. This innovation has the potential to unlock a wide range of opportunities, particularly benefiting creators and innovators.

Challenges in Implementation

The Indonesian Government had initially planned for the official commencement of GR 24/2022 on July 12, 2023. However, the practical execution has faced delays primarily due to the absence of essential technical regulations. These regulations are crucial for providing guidelines on various aspects, including the qualification criteria for parties seeking IP financing, the standardized method for IP valuation, and the process for using IP assets as security in the financing scheme.

To date, there has not been the establishment of an integrated system for an IP database containing comprehensive information about IP objects, including their history, ownership, and potential disputes, which are essential to support the implementation of this regulation. As a result, the Financial Services Authority (Otoritas Jasa Keuangan, "OJK"), responsible for overseeing banking activities, has not introduced general provisions to mitigate risks in the IP financing scheme. Consequently, Indonesian financial institutions, particularly banks, are still hesitant to initiate the scheme's implementation.

Despite these initial challenges, GR 24/2022 represents a significant step forward in fostering the growth of creative industries by providing a new financing avenue for IP assets. We will continue to monitor developments in this evolving landscape.

Ongoing Amendments to the Indonesian Industrial Design Bill: Key Aspects and Pending Changes

The Indonesian government is currently working on a new Industrial Design Law that aims to cater to the specific needs of Micro, Small, and Medium Enterprises (MSMEs). The proposed revisions in the bill cover several key aspects:

  • Definition of Industrial Design: definition of industrial design will be simplified, focusing on the external appearance of a product with aesthetic impressions in two and/or three-dimensional features.

  • Industrial Design Rights: The bill introduces two methods for obtaining protection - registration and recordation, catering to designs with different commercial cycles. Registration provides protection for five years, renewable twice every five years, while recordation offers protection for three years with the option to transfer to the registration system.

  • Criteria for Unprotected Industrial Design: The bill outlines conditions under which industrial designs cannot be granted protection, including designs lacking aesthetic impressions, those designed solely for technical functions, and designs contrary to laws, public order, religion, or decency.

  • Fiduciary Guarantee: The bill explicitly allows registered industrial designs to be used as security objects for securing financing through fiduciary arrangements.

The development of the new Industrial Design Law in Indonesia is aimed at supporting the needs of MSMEs and simplifying the protection of industrial designs. The proposed revisions include changes in the definition of industrial design, new methods for obtaining protection, and criteria for unprotected designs. Importantly, the bill recognizes the use of registered industrial designs as security for financing.

However, it is important to note that the bill is still under review, and several changes are pending. These include aspects related to landlord liability, prior user rights, government use for industrial design, international registration, and the appeals process. The final version of the New Industrial Design Law is yet to be determined as discussions and decisions on these provisions continue. Clients and stakeholders should stay updated on these developments as they may impact their interests and operations in Indonesia's industrial design landscape.


Update on the IP Task Force's Efforts to Combat Counterfeit Products in Indonesia

The IP Task Force is a collaborative initiative comprising key Indonesian government agencies, including the Indonesian National Police, the Directorate General of Intellectual Property (DGIP), the Indonesian Food and Drug Authority (BPOM), the Directorate General of Customs and Excise (Customs), and the Ministry of Health (MoH). This task force was established in response to Indonesia's Priority Watch List (PWL) status, as designated by the United States Trade Representative (USTR).

The IP Task Force has been actively engaged in addressing the issue of counterfeit products within the Indonesian market. Their collective efforts have led to a series of targeted raids aimed at curtailing the distribution of counterfeit goods.

To strengthen these anti-counterfeiting endeavors, a formal recordation process for registered IP has been implemented in collaboration with customs. This recordation process is integrated into the customs system known as "CEISA" and serves the vital function of notifying right holders when there are suspected imports or exports involving infringing goods.

The primary objective of the IP Task Force is to significantly reduce instances of counterfeit product distribution in Indonesia. As a testament to their ongoing efforts, a noteworthy development occurred in August 2023. The IP Task Force successfully executed a raid in Batam, resulting in the seizure of counterfeit cosmetics, medicines, and food items of Chinese origin. The estimated commercial value of the confiscated products is reported to be IDR 1,000,000,000 (one billion Rupiahs).


K&K Advocates