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Indonesia’s Unique Policy on Payment of Annual Patent Fees

The rules regarding payment of patent annual fees in Indonesia can be said to be rather unique and controversial. Since around year 2013, the Directorate General of Intellectual Property (DGIP) has been aggressively chasing patent owners for their unpaid annual fees even though their patents have been abandoned or deemed “void by law”. The DGIP has been issuing notices directly to the patent owners to settle their unpaid annual fees and even tried seeking help from foreign embassies in Indonesia in forwarding their notices to patent owners registered in their respective countries. Recently, the DGIP has pushed harder by issuing a letter dated 16 August 2018 notifying the patent owners and IP consultants that the DGIP will not accept any new patent applications from applicants with unpaid annual fees from 16 August 2019 onwards.

The accumulation of these unpaid annual fees is due to the following:

Old Law (before 26 August 2016)

Under Patent Law No. 14 of 2001 (“old law”), annual fees from the date of application up to the date of grant were due for payment within one year from the date of grant and subsequent annuities had to be paid every year until the end of patent term. A 36-month grace period was available but subject to a penalty of 2.5% of the total annual fees for each month. If no payments were made after the grace period, the patent would be declared “void by law” but the outstanding annual fees up to the end of the grace period plus penalties would remain payable. The DGIP would then send three notices and if the unpaid annual fees and penalties were not settled after the three notices, the case would be transferred to the Ministry of Finance as a debt collection matter. The Ministry of Finance would then add further administrative fees of 1-10% depending on how long the debts were outstanding.

Therefore, the only way to prevent the accumulation of debts back then was to explicitly withdraw the patent/application.

New Law (effective 26 August 2016)

Under Patent Law No. 13 of 2016 (“new law”), the regulation on patent annual fees was revised to avoid the issue of debt or liability of patent owners if the annual fee is not paid on time. If a patent owner decides to abandon its patents by not to paying annual fees by the due date, the patent will be deleted from Registry’s records. Although this solves the problem of accumulation of outstanding annual fees, this provision has an adverse effect on patent owners with the abolition of their patents automatically if they do not make their payments timely.

Article 128 of the new law stipulates the mechanism of suspension of annual fee payment. A request for suspension of payment may be filed by a patent owner by submitting a written request to the DGIP no later than 7 days prior to the due date of the annual fee payment. The patent owner will then have a grace period of 12 months to pay the patent annual fee. This suspension of payment is subject to a surcharge of 100%. This mechanism is to accommodate the needs of patent owners who intentionally wish to suspend the payment of annual fee regardless of reason.

However, the needs of patent owners who accidentally exceed the deadline for payment of annual fees and still require patent protection was not addressed. To accommodate this, the DGIP issued Circular No. HKI.KI.05.04-01 on Payment for Lapsed Patent Annual Fee dated 31 January 2019. A patent owner may pay lapsed annual fee within the period of 6 months after due date without any surcharge applied. This payment applies to the first and subsequent annual fees. Although this policy is not listed in the law, the DGIP tries to accommodate the needs of patent owners who unintentionally miss the payment deadline.

Despite the above changes, patent owners should note that debts accumulated prior to the implementation of the new law, still remain payable and must be fully paid by 16 August 2019.