The Indonesian Constitutional Court recently rendered Decision No. 144/PUU-XXI/2023, in response to a petition for a formal judicial review of Article 74 of Law No. 20 of 2016 on Trademark and Geographical Indications (“Trademark Law”). In its decision, the Constitutional Court agreed to extend the period of non-use trademark from 3 to 5 consecutive years and include force majeure conditions to avoid trademark deletion claim by any third party.
This decision marks a pivotal shift in Indonesia’s trademark law, adjusting the non-use period to better reflect the economic realities faced by business actors, particularly micro, small, and medium enterprises (MSMEs), in the country’s evolving marketplace.
Background
Originally, Article 74 of Trademark Law allowed an interested third party to file a civil claim for trademark deletion with Commercial Court if a registered trademark had not been used commercially for 3 (three) consecutive years since the date of registration or the last use.
Moreover, Article 74 of Trademark Law also set out that certain conditions of non-use such as import ban, temporary prohibition related to the circulation of goods, temporary decision by an authorized party, or other similar prohibition under government regulations, could not be considered as a legitimate reason to delete a registered trademark.
Given the above, the Petitioner, a micro, small, and medium enterprise (MSME) entrepreneur in the technology sector, filed a judicial review against the article above to the Constitutional Court. The Petitioner requested Constitutional Court to declare the Article 74 of Trademark Law as unconstitutional against Articles 28H paragraph (4), 28D paragraph (1) and 33 paragraph (4) of the Indonesian Constitution.
In its petition, the Petitioner claimed that the existence of Article 74 of Trademark Law had harmed its constitutional rights. The Petitioner, the holder of a registered trademark, Walaikumsalam Warahmatullahi Wabarakatuh confronted with a civil claim initiated by a third party, who sought the deletion of the Petitioner’s trademark registration. The third party argued that the trademark had not been used for a period of three consecutive years, thereby rendering it subject to deletion under the stipulation of Article 74 of the Trademark Law. As a consequence of the protracted legal proceedings, the Petitioner has incurred significant costs and time in defending its intellectual property rights.
In addition, the Petitioner also highlighted that the implementation of the non-use trademark period also brought disadvantages for business actors, particularly MSMEs. The business operations of MSMEs could potentially be affected by numerous factors including capital issue, supply chain vulnerabilities, technological challenges, marketing constraints, force majeure condition, etc. Such occurrences could lead to the potential deletion of an MSME’s trademark.
Legal Consideration
In its consideration, the Constitutional Court elucidated that the provisions set forth in Article 74 of the Trademark Law aim to address the issue of registered trademarks that remain unused. Consequently, the complete repeal of Article 74 of Trademark Law, as requested by the Petitioner, would be inconsistent with the fundamental purpose of trademark protection as mandated by the Trademark Law. Therefore, it is essential that registered trademarks be utilized in commercial activities, thereby contributing to national economic development.
However, the Constitutional Court asserts the necessity of reevaluating the provision governing the non-use period for registered trademarks, in light of the COVID-19 pandemic’s impact on trademark owners. This is particularly pertinent for MSMEs, which may face challenges in utilizing their registered trademarks to produce goods or services. Such constraints could potentially lead to the deletion of their trademarks. By considering the specific conditions of the Indonesian economy which relies on MSMEs, it is considered necessary to adjust the non-use period which Walaikumsalam Warahmatullahi Wabarakatuh originally determined for 3 (three) consecutive years, into 5 (five) consecutive years. This adjustment would provide trademark owners with adequate time to account for exceptional circumstances, such as natural disasters or pandemics.
The Court’s decision emphasized that while TRIPS (Trade-Related Aspects of Intellectual Property Rights) set a minimum non-use period of three years, it also allows countries to determine their own period based on their national economic conditions. In Indonesia’s case, where MSMEs constitute the majority of businesses, extending the non-use period to five years provides greater flexibility for small businesses to commercialize their products, establish their market presence, and overcome operational hurdles without the fear of losing their trademark rights prematurely.
In addition to extending the non-use period, the Constitutional Court also introduced a modification to the exceptions for non-use. Previously, certain conditions such as an import ban, temporary prohibition related to the circulation of goods, temporary decision by an authorized party, or other similar prohibition under government regulations, could prevent the deletion of a trademark.
In its consideration, the Constitutional Court emphasized that phrase “other similar prohibitions” in Article 74 of Trademark Law encompasses condition of force majeure, which are an inseparable part of the reasons for the exception of non-use.
Conclusion
The Indonesian Constitutional Court’s decision marks a significant shift in trademark law by extending the non-use period for trademarks from three consecutive years into five consecutive years. This decision is a critical adjustment, particularly in light of the challenges faced by MSMEs, which are central to Indonesia’s economy. By extending the non-use period, the Court acknowledges the operational hurdles MSMEs face, such as capital constraints, supply chain disruptions, and unforeseen events like pandemics or natural disasters, all of which can hinder the ability to use a trademark commercially.
Furthermore, the Court’s inclusion of force majeure conditions as a valid reason for non-use, underlining that exceptional circumstances should not result in the loss of trademark rights. This modification reflects a nuanced understanding of the economic realities in Indonesia, where a large portion of business activity relies on smaller enterprises that may not have the resources to weather prolonged commercial interruptions.
