September 2024

Wednesday, 04 Sep 2024

Extension of Trademark Usage Period from 3 to 5 years

 

According to Article 74 (1) Law No 20 of 2016 on the Trademark Law and Geographical Indications, any interested third party may file for the removal of a registered trademark to the Commercial Court on the ground that said trademark has not been used for three consecutive years in a course of trades of goods and/or services as of the date of registration or last use.

Through Indonesian Constitutional Court Decision Number 144/PUU-XXI/2023, the mandatory period for trademark usage is amended from three to five consecutive years. This decision was a result of a separate case filed by a Micro, Small, and Medium Enterprises (“MSME”) entrepreneur by the name of Ricky Thio.

As a background, Ricky Thio was sued for the removal of a registered trademark by Zhejiang Dahua Technology Co., Ltd. (“Zhejiang”) with the argument that Ricky Thio did not use his “HDCVI and Logo” trademark registration No. IDM000553432 in Class 9 for three consecutive years (the “Non-Use Claim”). In this case, the decision of the Commercial Court was strengthened by the Supreme Court in deciding not to accept Zhejiang’s Non-Use Claim since the claims are vague and unclear. Zhejiang mixed two jurisdictions in its claim requests, namely (i) the removal of Ricky Thio’s “HDCVI and Logo” trademark registration No. IDM000553432 in Class 9 and (ii) the registration of Zhejiang’s “HDCVI” trademark application Agenda No. DID2022097231.

The Commercial Court does not have authority to examine the trademark application. The one who has the authority to examine the trademark application is the Directorate of Trademark (the Supreme Court decision No. 511 K/Pdt.sus-HKI/2024 Jo. The Commercial Court decision No. 28/Pdt.Sus-Merek/2023/PN.Niaga.Jkt.Pst).

Knowing that he still could not use his “HDCVI and Logo” trademark in commerce, after submitting the counter memorandum of cassation in the Non-Use Claim; Ricky Thio submitted the judicial review claim to the Indonesian Constitutional Court on 27 October 2023. Ricky Thio requested the Constitutional Court to declare Article 74 of the Trademark Law as unconstitutional against Articles 28H (4), 28D (1), and 33(4) of the Indonesian Constitution and therefore, not legally binding. Ricky Thio argued that the non-use claim with the period of three years can be harmful to MSMEs since they need more time to recover their businesses due to the effect of the Covid-19 pandemic.

The Constitutional Court ruled in favor of Ricky Thio based on the considerations that Article 19 Annex IC of the Trade-Related Aspects of Intellectual Property Rights Agreement (“TRIPS Agreement”) states that trademark registrations can only be cancelled after an uninterrupted non-use period of at least three years, unless there are valid reasons to justify the non-use. Therefore, the three-year non-use period is not mandatory. In principle, the TRIPS Agreement did not require their country members to use the three-year non-use period, instead it gives countries freedom to determine the period of non-use. Further, there are also several countries that have implemented a non-use of period of five years instead of three years.

In addition to that, the Constitutional Court in its decision stated that Covid-19 pandemic was a force majeure situation, hence, the extension of the non-use period will provide trademark owners especially MSME entrepreneurs more realistic time to use their trademark in commerce.

The extension of trademark usage period has positive and negative impacts. The positive impact is the trademark owners, including MSMEs, have lengthy time to use their own trademark which is beneficial for new businesses or those who do defensive registration to protect their rights in Indonesia. As for the negative impacts, the extension of period may encourage trademark squatters to (i) register the trademark without the intention of using them or (ii) to request big amount of compensation when the real trademark owner would like to buy out such trademark. If this condition occurs, it is recommended for the trademark owner and its legal counsel to consider filing cancellation action based on well-known trademark and bad faith arguments instead of filing non-use claim.

 

Disclaimer: This legal news serves as general guidance only and should not be treated as legal advice. If you wish to have further information on this topic, please contact  Diyah Ratnajati (dratnajati@rosetini.co.id), Andre Suprapto (asuprapto@rosetini.co.id) or Rosetini Ibrahim (ribrahim@rosetini.co.id).