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Loophole in the Regulation

Swedish furniture giant IKEA lost the right to use its own brand name in Indonesia after a Jakarta commercial court in 2015 granted the right to use the brand name to a Surabaya-based company which filed the IKEA trademark application first. Similar cases happened to DC-owned Superman and ASICS’ Onitsuka Tiger.

Article 21 of Law Number 20 Year 2016 on Trademark and Geographical Indication stipulated that “an Application is refused if the Mark is substantively similar to or identical with: a. a prior registered Mark of other parties or prior Mark application in respect of similar goods and/or services;”

In the US, trademark right is assigned on a first-to-use basis. If a brand can prove that it is the firs to use a mark in commerce, it is entitled for trademark application even though other brands might have registered their mark earlier.

The first-to-file system proves to be flawed as it creates an opportunity for people to steal popular trademarks. A similar issue occurs in China where brands like Michael Jordan and Yeezy were registered by locals.

After an eight-year legal battle, Michael Jordan won a trademark lawsuit against China’s Qiaodan Sports Co. over the use of the ‘Qiaodan’ name. Qiaodan is the phonetic translation of Jordan. People commonly refer to Michael Jordan as Qiaodan. The investigation from Jordan’s counsel in China found that “90% of interviewees who had bought the products of Qiaodan Sports revealed that they believed the products of Qiaodan Sports were related to Michael Jordan.”

Law Number 20 Year 2016 on Trademark and Geographical Indication also includes priority rights (covered on Article 9 and 10) for overseas brands from “another country of which a Member State of Paris Convention for the Protection of Industrial Property or a member of the Agreement Establishing the World Trade Organisation.”

It means that if a brand files for trademark right in its country of origin on 20 August 2020, the date of its trademark application filed in Indonesia will also be recorded as 20 August 2020 as long as it is filed within six months.

It begs the question: do brand founders plan to expand their brand overseas immediately? One year seems to be too soon to plan for global expansion, let alone six months.

In October 2017, Indonesia became the 100th member of the Madrid System. Under the Madrid Protocol, brand founders can file a single application to protect their trademarks in all Madrid System member countries. The Protocol was implemented in full in 2018. The downside of the Madrid Protocol is the steep price brand founders have to pay, especially if the brand registers for multiple classes.

Trademark registration is divided according to the types or classes of goods or services. There are 45 classes in various sectors. If a brand is registered under Trademark Class 25 (clothing, footwear, head cover), another brand with a similar name can register in different category.

This could be a double-edged sword for brands. When ride-hailing app Uber Technologies burst onto the scene in 2011, a New York-based design agency named Über Inc received hundreds of calls and e-mails daily because people mistaken the design agency for the ride-hailing app. The design agency has been using the name since 1999.

On the surface, the solution to this issue seems simple. Brands can file trademark applications spanning multiple classes. However, in Indonesia, Article 74 of Law Number 20 Year 2016 on Trademark and Geographical Indication stipulated that a relevant third party can request a revocation of registered mark if the given mark has not been used for three consecutive years in a course of trades as of the date of registration or last use.

When Trademark Lost its Power

Inventing a catchy name is the goal of every brand founder, including those of Zipper, Thermos, Escalator, Yo-Yo, Hoover, Jacuzzi, Aspirin and Heroin. However, it can lead to genericide, “a process when a brand name loses its distinctive identity as a result of being used to refer to any product or service of its kind.”

Before they became generic terms in the US, the trademark rights to aspirin and heroin belonged to German pharmaceutical company Bayer. Aspirin was the brand name of acetylsalicylic acid (ASA), a medication used to reduce pain, fever, or inflammation.

Saying ’I need to take Aspirin’ is easier than ‘I need to take acetylsalicylic acid.’ Jacuzzi became a generic noun because pronouncing Jacuzzi is easier than saying ‘taking a whirlpool bath.’

Article 22 of Law Number 20 Year 2016 on Trademark and Geographical Indication stated that in respect of any registered mark which becomes a generic name, any person may file for mark application by using that generic name with additional wording to the extent that it contains distinctive elements.

Genericide is a problem unforeseeable by brands. Google, for instance, could lose its trademark as more people are using the name as a verb. For instance, ’information is up on the web, Google it!’ It becomes synonymous with using a search engine to find information.