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Case Study 01 – Inexperience of Indonesian courts with trade secret cases

Background

In an ongoing case, a European engineering firm, PT Basuki, filed a claim against a large construction company in Indonesia and several other parties, for the misuse of its secret know-how in boiler construction. PT Basuki claimed that its secret boiler design know-how was used by the defendant to develop similar products, however, PT Basuki's claim was dismissed by the Bekasi District Court. The judges reasoned that the Commercial Court rather than the District Court ought to have jurisdiction over the case because the case concerned intellectual property, and the Commercial Court had previously heard a related industrial design case between the same parties. However, the Supreme Court upheld the plaintiff's appeal against the case dismissal. The case was sent back to the Bekasi District Court to be retried and is still on-going.

The Supreme Court ruling confirms what the law has already stipulated - the case was correctly brought before the district court in Bekasi. The initial rejection of the case by the District Court was incorrect and can only be explained by their difficulty with, and lack of experience in, handling trade secret issues. This is a common problem in developing IP jurisdictions in Southeast Asian countries where trade secret issues are seldom brought before the courts despite the fact that the law may provide for it.

The new Indonesian Electronic and Information Technology Law also contains provisions against unauthorised access to computer systems.  However, we have yet to see an actual application of these provisions.

Helpdesk advice

  • Most modern businesses understand when to use patent protection and when to keep their information secret rather than patenting their know-how. Patenting entails comprehensive disclosure to the public of valuable information before patent protection can be granted. Moreover, patent protection is only for a limited duration of twenty years. After patenting their original formula in 1893, the owners of Coca-Cola chose not to patent the new formula and instead chose to use secrecy to protect it until this day.
  • Trade secrecy is only a viable option when reverse engineering (the process of discovering the technological principles of a device, object, or system through analysis of its structure, function, and operation) is impossible and the business in question practices a regime that establishes and maintains secrecy over confidential information. 
  • Where reverse engineering can be easily carried out, it might be more beneficial for the company to use patent protection to protect its IP even if voluntary disclosure to the state is necessary for a protection period of 20 years.