Good news for Foreign brands which are doing business in Indonesia - the Indonesian government has passed a new regulation which sets out, for the first time, the procedures for recording IP licences, which include trade mark licences or franchise agreements which contain within them the license of trademarks, copyright and other forms of IP.

The new regulation remedies a procedural anomaly which has hitherto left foreign brands exposed to local infringers and challenges from third parties. Unless the IP licence is recorded, the user of the IP (which could be a franchisee, for example) does not have the right to enforce the licensed IP rights against an infringing third party. Also, and of perhaps greater concern to the foreign brand which owns the IP, the absence of a recordation means that the licensee's or franchisee's use of the IP is not recognized under Indonesian IP law as actual “use” by the IP owner. This means that a third party who wishes to trade under a similar name could exploit this anomaly and challenge the validity of a trade mark on the grounds of non-use. These risks are not just theoretical, as evidenced by a recent successful challenge in Indonesia to IKEA's trade mark registration (click here to read our IP team's blog on this story).

Until now, the snag has been that it has not been possible to record an IP licence in Indonesia due to a lack of implementing regulations and guidelines. The next best step for IP owners has been to file the IP licence and obtain an official stamp on these documents as evidence of good faith. This is not the same as a recordation and therein lies the exposure - foreign brands and their licensees and franchisees have not had certainty that the licensed IP is adequately protected in Indonesia.

The new regulation is therefore welcome news and any brands which are doing business or contemplating doing business in Indonesia should take advantage of the new regulation and register their IP licences accordingly.