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New Indonesian Customs Regulation for Protection of IP Rights

The Indonesian Government has recently implemented legislation to assist IP owners to enforce their copyrights and trademarks. The Regulation (No. 20 of 2017) came into force on August 2, 2017.

The new Regulation provides that IP owners with rights registered in Indonesia may apply for customs recordal to the Directorate General of Customs and Excise (DGCE).

Currently, applications for recordals can only be made in respect of registered copyright or trademark rights.

Once an application is made to the DGCE, a notice of approval or rejection of the recordal application will be given within 30 days. Recordals which are granted will be valid for one year and will be renewable annually.

Restraint of Infringing Goods

While a recordal is in force the DGCE can, of its own accord, temporarily detain any goods that it suspects to be infringing the IP owner’s rights.

If infringing goods are detained, the DGCE will send a notification to the IP owner regarding the infringement. The IP owner will then have two days to confirm receipt of the notification. If the IP owner wishes to pursue the matter, it can then notify the DGCE that it intends to file a “Suspension Request” with the Commercial Court.

Suspension Request of Infringing Goods

Suspension Requests are a mechanism for IP owners to seek assistance with enforcement of their IP rights. Suspension Requests, unlike recordals, are not limited to copyrights and trademarks. IP owners can also apply for Suspension Requests in respect of goods that infringe patents, industrial designs, integrated circuit layouts and geographical indications.

However, Suspension Requests cannot be made in respect of goods which are in transit and are not intended for sale in Indonesia. In those circumstances the DGCE can only inform the relevant customs authority of the destination country.

To file a Suspension Request, IP owners need to submit proof of ownership of the IP rights and evidence of the infringement, including a description of the infringing goods.

Suspension Requests must be accompanied with a deposit to cover DGCE’s operational costs. The deposit is currently set at IDR 100 million (nearly USD 7,500), and must be made in the form of a bank or insurance guarantee. The operational costs will be used for the transport and storage of the suspended goods. In the event of an operational cost shortage, the IP rights holder will have to cover additional costs; if there is any excess, costs will be refunded.

Ratification of Suspension Order

The Commercial Court will issue a decision in respect of a Suspension Request within two days.

If the Suspension Request is granted, the Commercial Court will issue a “Suspension Order” and notify the DGCE accordingly.

The DGCE will then detain the infringing goods for up to ten days. During this period, the IP owner must file a schedule for inspection of the suspended goods.  However, the owner can request for an extension of another ten days, subject to additional payment in respect of operational costs.

If the goods have a short shelf-life, the importer or exporter can apply to the Court for termination of the Suspension Order by providing security.

Termination of Suspension Order

The DGCE will terminate the Suspension Order where (a) the suspension period has expired; (b) the Commercial Court orders it to do so; or (c) a legal action by the IP owner has been raised by virtue of the suspension.

After termination of the Suspension Order, the detained infringing goods may be:

-Destroyed by the DGCE;

-Surrendered to investigators (e.g. if there is any legal action under criminal provisions);

-Given to law enforcement officers (e.g. if there is an application for security for costs over suspended goods); or

-Disposed according to the terms of a private settlement with the IP owner.

This relatively simple procedure of customs recordal is a positive development for rights holders in Indonesia. Time will tell as to how well the system will work in practice.

By Gladys Mirandah and Paul McClelland