Trade Name as a Trademark in Indonesia

According to Article 8 of the Paris Convention in conjunction with Article 21, paragraph (2), letter a of the Law No. 20 of 2016 concerning Mark and Geographical Indication (“Trademark Law”), the name of a legal entity must be protected in all member countries without the obligation to submit or register a trademark.

Although a Trade Name is not obligated to be registered as a trademark, a Trade Name and a Trademark are two separate legal grounds since they are interconnected. Any legal entity established to carry out activities, whether in the form of a Limited Liability Company (Perseroan Terbatas – PT), a foundation, a cooperative, or another form, generally has its own Trade Name.

The Trade Name itself, apart from serving as the company’s identity as regulated under Company Law, also functions as a trademark, which is regulated under the Trademark Law. The protection of a Trade Name as a Trademark, particularly in Indonesia, plays an important role, not only in preventing other parties from filing the Trade Name as a Trademark in bad faith but also in protecting the reputation of the legal entity itself.

This article focuses on the use of a Trade Name as a Trademark in the Company Name of a Limited Liability Company.

1. Comparing Company Name (Trade Name) and Trademark

According to Article 1 paragraph (2) of Government Regulation No. 43 of 2011 concerning Procedures for the Application and Use of a Limited Liability Company Name (“PP 43/2011”), the “Company Name” is the name used as the identity of a Company in order to differentiate it from other Companies.

Moreover, according to Law No. 40 of 2007 concerning Limited Liability Company, the Company Name of a Limited Liability Company must be stated under the article of association, and may not use any name that:

Has been lawfully used by another Company or is essentially the same as the name of another Company;
Are contrary to public order and/or morality;
Is identical or similar to the name of a state institution, government institution, or international institution, except with permission from the party concerned;
Does not conform to the purposes and objectives, as well as business activities, or only designates the purposes or objectives of the company without having its own name;
Are comprised of numbers or a series, letter or a series of letters that do not form any word; or
Has a meaning as a Company, legal entity or private partnership

In other words, the Company Name can be used by any party provided that it is not confusingly similar to another registered Company Name in the Directorate General of General Legal Administration.

Whilst according to Article 1, paragraph (1) of Trademark Law, the “Mark” is defined as a sign that may be displayed graphically in the form of an image, logo, name, word, letter, number, color arrangement, in 2 (two) dimensions and/or 3 (three) dimensions, sound, hologram, or a combination of 2 (two) or more of those elements in order to distinguish goods and/or services that are produced by individuals or legal entities in goods and/or services trading activities.

Unlike the Company Name, the Mark can be in a plain word or stylized form, as long as it has distinctive features that distinguish it from a registered mark or prior trademark application in the Directorate General of Intellectual Property.

2. Importance of Protecting Company Name (Trade Name) as a Trademark

A company can file for the trademark of its Company Name or Trade Name before or after the Ministry of Law issues the decree. The trademark application could be for either a partial (specific words of the company name) or the entire company name. The considerations for filing a partial or entire Trade Name are as follows:

Legal certainty
By registering the Company Name or Trade Name as a Trademark, the company has the right to claim rights against any party that violates or infringes the company’s trademark or uses a trademark identical to the Company Name.
Avoid trademark squatters
Trademark Squatters are individuals or entities that register trademarks in bad faith without intending to use them. Their primary goal is to capitalize on the value of the trademark by preventing a legitimate company from using identical trademarks. In some cases, trademark squatters extort legitimate companies on the grounds of trademark infringement.Registering the Trade Name as a Trademark immediately will reduce the likelihood of trademark squatters filing an identical trademark.
Increase public presence
Filing a trademark can significantly increase a business’s public presence by establishing brand identity and recognition. It will serve as an identifier for the company, products or services. It may also become a distinctive feature that sets it apart from competitors.
Business value
Once registered, the trademark can increase the business’s value, as it is an intangible asset that is invaluable to investors, shareholders, and consumers

3. Legal Protection of Trade Name as a Trademark in Indonesia

In Indonesia, the Trade Name or Company Name is registered under the Directorate General of General Legal Administration, while Trademark is registered under the Directorate General of Intellectual Property.

Although the Company Name has been registered with the Directorate General of General Legal Administration, it is not automatically protected under the Trademark regime. The Trademark Law in Indonesia adheres to the principle of a first-to-file system, which means that any party filing the trademark application first shall reserve the right to such trademark. Accordingly, the company should file the Company Name either partially (i.e., certain words of the company name) or the entire part of the company name with the Directorate General of Intellectual Property to ensure that no other party can file an identical trademark.

4. Court Case

Recently, our firm represented a company whose part of the company name was being filed for a trademark by “another party” in bad faith. The “other party” intentionally filed the trademark to extort and claim compensation from our client on the grounds:

The trademark was first registered under the “other party’s” name;
Our client has been using the trademark for more than one year, which has received economic benefit from using the trademark; and
The “other party” claimed compensation of IDR 20 billion (over 1 million USD).

The “other party” filed a compensation lawsuit against the Jakarta Commercial Court through the Central Jakarta District Court, but the panel of judges rejected such claims because the court found no evidence of trademark infringement by the Defendant (our client). The Defendant was using a legally registered company that had been registered under the Directorate General of General Legal Administration, which did not infringe upon the Plaintiff’s (the other party’s) trademark. Moreover, Article 8 of the Paris Convention and the Trademark Law, the name of a corporation/legal entity is exempt from the requirement of trademark registration, as based on Article 21, Paragraph (2), Letter a of the Trademark Law, the Republic of Indonesia grants legal entities the right to use the name of the legal entity as a Trade Name. Therefore, the Plaintiff’s claim for damages due to trademark violation was dismissed.

5. Conclusion

Protecting a Trade Name as a Trademark in Indonesia is crucial for maintaining exclusive rights to its business identity. By registering the Trade Name as a Trademark, a legal entity safeguards its reputation and identity while securing robust legal protection against potential trademark infringements by third parties. Therefore, any legal entity seeking to prevent unauthorized use of its Trade Name should register it as a trademark through the Directorate General of Intellectual Property.

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Disclaimer:
The content of this article is intended for informational and educational purposes only and should not be construed as legal advice. The views and opinions expressed are those of the author and do not necessarily reflect the official policy or position of any affiliated organisation. Readers are advised to consult a qualified legal professional for specific legal guidance and advice. The author and publisher disclaim any liability arising directly or indirectly from the use of or reliance on this information.