Counterfeits in Indonesia and recommendations for brand owners

Table of contents

Counterfeits in Indonesia: Why is this a real threat to foreign businesses?
How to stop counterfeiting
- Register your trademark
- Proactive monitoring to detect counterfeits early
- Warning letters and/or take-down notices
- Seek advice from local experts

1. Counterfeits in Indonesia: Why is this a real threat to foreign businesses?

Indonesia is a promising market in the South-East Asian region, with a population of over 273 million, making it the fourth most populous country in the world[1]. Being located near China – known as the world’s largest producer of counterfeits – Indonesia is one of the biggest destination markets in the South-East Asian region for these problem products[2]. There is also a large amount of locally made counterfeits in Indonesia due to cheap labour costs and materials. According to the joint report from the Organisation for Economic Co-operation and Development and the European Union Intellectual Property Office, Global Trade in Fakes: A Worrying Threat, Indonesia was among the top suppliers of fake handbags and leather articles, clothing, perfumery and cosmetics, footwear, toys and games, and jewellery in the 2017–2019 period.

In the European Commission’s Report on the protection and enforcement of intellectual property rights in third countries, Indonesia was recently listed as Priority 3 due to remaining concerns around intellectual property (IP) protection and enforcement. The report highlights some serious issues in Indonesia, such as the large amounts of counterfeits, inefficient customs measures at the borders and bad faith applications for foreign trademarks by local companies.

Furthermore, the COVID-19 pandemic has driven more and more Indonesian people to go online for shopping. The compound annual growth rate in the e-commerce sector climbed to 52% in the 2020–2021 period[3]. EU stakeholders from various sectors report that e-commerce platforms in Indonesia offer large volumes of counterfeits for sale, and the legal remedies used by enforcement authorities to tackle these online infringements remain inefficient[4]. This, in turn, has created a fertile ground for the crooks, who are easily supplying Indonesia’s online market place with a huge number of counterfeits. The largest e-commerce platforms in Indonesia, such as Tokopedia, Bukalapak and Shopee, were all cited in the Counterfeit and Piracy Watch List by the European Commission.

By labeling fake products with foreign trademarks and selling them at much cheaper prices, the counterfeiters can easily attract a large number of consumers who cannot afford real branded items. This has a severe impact on the reputation of the brand owners, causes them to lose sales and can even have a negative impact on accessing new markets.

Are you a European SME or start-up doing, or willing to do business in Indonesia? Check out the free IP advisory services offered by the South-East Asia IP SME Helpdesk.

2. How to stop counterfeiting?

Register your trademark

Trademark protection is territorial; businesses should register their trademark in each and every country where protection is sought. Registering trademarks in target markets will enable companies to protect their rights against infringement. With this in mind, foreign businesses should register their trademarks as soon as they plan to expand to Indonesia. There are two ways to register a trademark in Indonesia: either by filing an application through the Indonesian Directorate-General of Intellectual Property (DGIP) or by filing an international application designating Indonesia under Madrid – The International Trademark System.

Proactive monitoring to detect counterfeits early

Owning a registered trademark does not automatically guarantee that a third party will not use nor try to register a similar or identical trademark. Regular trademark monitoring on the internet, e-commerce platforms and social media channels is highly recommended. It can result in the early detection of potential infringements, such as counterfeits or bad faith applications, and allows companies to quickly initiate a proper solution to stop or mitigate the violations. Being well informed saves companies a huge amount of time and resources and secures a safe way for their business to grow.

Warning letters and/or take-down notices

In general, sending warning letters (also known as cease-and-desist letters) to infringers is recommended as a first step. In Indonesia, a warning letter is considered a cost-effective measure for retail-level targets where the infringement quantities are low[5].

For online counterfeit cases, a quick solution is to submit a take-down request to the e-commerce platform or social media channel in question. However, after being removed from a platform due to take-down procedures, an infringer can use a new online identity to go back to trading. In light of this, sending a warning letter to the individual or business behind the merchant account (in addition to the take-down action) should also be considered[6]. The warning letter sends a message: it advertises the fact that the brand owner closely monitors online markets and that any repeated violation may attract stronger measures.

Seek advice from local experts

In critical cases, companies should consult local experts with in-depth expertise in infringement cases. A local expert can help with more complex tasks, such as building up an efficient strategy (one properly tailored to the specific case), conducting investigations, evidence-gathering, submitting formal complaints to authorities, or liaising with enforcement bodies (customs, investigators, courts and the police).

Are you a European company seeking to register your trademark, patent or design in Indonesia? Check out our Indonesia IP country factsheet.

Where to get IP support?

The South-East Asia IP SME Helpdesk is an EU initiative that provides free, practical and confidential IP advice to European SMEs in relation to the 10 South-East Asian countries. EU companies can contact our helpline at questionsoutheastasia-iprhelpdesk [dot] eu (question[at]southeastasia-iprhelpdesk[dot]eu) and will receive replies within 3 working days.

Written by Xuan Nguyen, SEA IP SME Helpdesk

[1] https://data.worldbank.org/indicator/SP.POP.TOTL?most_recent_value_desc=true

[2] https://rouse.com/insights/news/2020/the-counterfeit-goods-surge-in-southeast-asia

[3] https://www.bain.com/globalassets/noindex/2021/e_conomy_sea_2021_report.pdf

[4] https://trade.ec.europa.eu/doclib/docs/2021/april/tradoc_159553.pdf

[5] https://rouse.com/media/rijkzo20/ip-enforcement-manual-indonesia-pdf.pdf

[6] https://rouse.com/insights/news/2022/enforcing-trade-mark-rights-in-indonesia

Details

Publication date: 4 March 2022