In Indonesia, non-use cancellation is a critical tool to addresstrademark squatting, and offers a practical alternative tocancellation based on bad faith or well-known mark grounds.However, there are challenges that rights holders need to be awareof.
Trademark cancellation on the grounds of non-use is a complementto other grounds for invalidation, and has several advantages:
- Objective grounds: non-use cancellation focuses solely on theabsence of use for five consecutive years, making it lesssubjective than proving bad faith or well-known status.
- A lower evidentiary burden: unlike proving bad faith (whichrequires evidence of intent) and well-known mark status (whichinvolves proof of global recognition), non-use cancellation relieson market surveys and trade data to demonstrate inactivity.
- Broader applicability: non-use cancellation applies to allregistered trademarks, regardless of their origin or reputation,making it a versatile remedy against squatters.
Non-use cancellation proceedings involves filing a lawsuit inthe commercial court. According to Article 74 of the trademark law,an interested third party can file a lawsuit for cancellation ifthe registered trademark has not been used for five consecutiveyears since registration or last use. In July 2024, the period ofnon-use had been extended from three to five years, followingConstitutional Court Decision No 144/PUU-XXI/2023.
A plaintiff must also prove that it is an interested party. Thisis usually established by filing a pending trademark applicationfor the same mark that it seeks to cancel. An office action may beissued before the court cancellation action is resolved. Therefore,when doing so, it is important to request the trademark office tosuspend examination to avoid final rejection.
Factors for a successful non-usecancellation
The burden of proving non-use lies with the plaintiff. Here, amarket survey is critical. To ensure admissibility in court, thesurvey must be clear, measurable and conducted by credibleentities. This will help avoid legal disputes over surveycredibility.
Because of the sprawling geographical spread of Indonesia,conducting a market survey usually involves a sampling of locationthat is roughly representative of that region. This often meanconducting a survey in the capital cities of key provinces,namely:
- Jabodetabek (in Jakarta region);
- Lampung (in Sumatra Island);
- Balikpapan (in Kalimantan/Boneo);
- Surabaya (in East Java);
- Makassar (in Sulawesi); and
- Denpasar (in Bali).
Risk of 'token use'
The agency carrying out the market survey should target thedefendant or trademark holder to obtain evidence that there was nouse of the subject mark. This is important, because it is commonfor trademark registrants to engineer use in response to a non-usecancellation.
Helpfully, in case No 17/HKI/Merek/2015/PN JKT PST, it was ruledthat 'token use' on apparel products will be disregarded.However, the courts have not been consistent in dealing with tokenuse. Therefore, it is important that market surveys should targetthe prospective defendant to pre-empt after the fact engineereduse.
No approval for certain product types is insufficientevidence
Certain product types may require approval before they can besold in Indonesia. While lack of registration can be indicative ofnon-use, it is safer to undertake the market survey because thisseems to be an established practice from case law.
Examples of specific approvals andpermits
| Product type | Approvals/Registration |
|---|---|
| Medicine | Marketing authorisation from Badan Pengawas Obat dan Makanan(EN: National Agency of Drug and Food Control) (BPOM) under BPOMRegulation No 24 of 2017 as revised by BPOM Regulation No 15 of2019, No 27 of 2020 and No 13 of 2021 |
| Processed food | FDA approval under Government Regulation No 69 of 1999 inconjunction with Law No 18 of 2012 in conjunction with BPOMregulation No 31 of 2018 as revised by BPOM Regulation No 20 of2021, and No 6 of 2024 |
| Tobacco products | Custom and Excise duty stamp |
| Telecommunication equipment (including cell phones) | POSTEL registration |
In a non-use cancellation case for medicines, submittingevidence that there was no marketing authorisation may not besufficient. Similarly for the other types of products, evidencethat there was no relevant product registration may be persuasivebut is unlikely to be sufficient. The commercial court typicallyrequires comprehensive evidence to prove non-use, as highlighted bythe constitutional court's 2024 decision.
Potential challenges from exemptions and suspension ofuse requirement
Non-use may also be excused under certain conditions,including:
- import restrictions;
- distribution prohibitions; and
- force majeure events (eg, a pandemic and economic crises).
The force majeure exception was added to Article 74 of theTrademark Law through a constitutional court review of the law,when the user requirement was extended from three years to fiveyears.
Before filing a non-use cancellation case, rights holders shouldtherefore investigate if the particular product type is subject toany government decree that can be considered as a force majeureevent.
Insights from published decisions
Assessment of statistics from published decisions demonstratesthe following:
- 11 cases were dismissed on procedural grounds (eg, pleadingobjections and defective power of attorney).
- Four cases were rejected based on merits.
- 10 trademarks were successfully cancelled.
Reasons for procedural objection include:
- The plaintiff had included additional grounds for cancellation(eg, bad faith), which is not permitted.
- The plaintiff had requested for relief that the court has nopower to grant (eg, an order directing the trademark office toaccept the plaintiff's pending application upon cancelling thedefendant's registration).
The takeaway is that the commercial court takes a strict view onprocedural compliance and there is no avenue to rectify anydefect.
As for cases rejected on merits, in one case, theplaintiff's market survey report was not signed and stamped bythe market research agency. In other cases, the defendant'sevidence of use of the subject trademark was accepted by the courtto refute the plaintiff's non-use assertion.
These statistics demonstrate that care should be taken inpreparing the lawsuit as well as non-use evidence to pre-empt thedefendant from fabricating trademark use after the fact.
A versatile tool, that comes withchallenges
The non-use cancellation route is an essential mechanism and apractical alternative for combating trademark squatting inIndonesia. It aligns with international standards while addressingIndonesia's unique challenges (eg, vast geographical diversityand reliance on SMEs).
However, the process is not without challenges. The evidentiaryburden on plaintiffs, particularly the need for comprehensivemarket surveys, can significantly increase costs. Plaintiffs mustalso anticipate potential token use by registrants and ensure theirevidence pre-empts such defenses. Additionally, specific productapprovals and force majeure exemptions may complicate cases,requiring thorough investigation before filing.
Despite these hurdles, the non-use cancellation route remains aversatile and effective tool for addressing trademark squatting inIndonesia's complex IP landscape. Proper preparation, includingrobust evidence and strategic planning, is critical to success.
This article was first published on WTR in March 2025.
The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.
