Indonesia Issued Regulations on Recordal of IP License Agreements

Understanding of Enactment

In order to make registered IP agreements to be fully effective, the Indonesian government has issued regulations for Recordation of Intellectual Property License Agreement. This enactment will enable the licensor to easily license their Trademarks to the third party.

Benefits from Agreement

This recordation of IP agreements shall benefit the Businesses through a stable royalty structure of their IP license agreements and will enable them to enter into other sectors that are out of their forte. This can result in an increase in sales and public awareness of new business lines.

To avoid disputes and keep a healthy relationship between the parties, all parties have to abide by terms and conditions that are set in the Trademark License Agreement which will be recorded with the Directorate General of Intellectual Property Rights (DGIP), which falls under Article 43 (3) of the Indonesian Trademark Law (“GR No. 36/2018). If the License agreement is not recorded as per prescribed guidelines- It can result in the Cancellation of Trademark and will not hold any legal effect towards a third party.

The record of license agreement may be made against any of the intellectual property fields like copyright and other related rights, patent, trademarks, industrial design, integrated circuit layout design, trade secret, and plant varieties.

The following are a few of the general requirements for recordation of license agreement GR No. 36/2018 :

1. The licensor should not grant a license to the licensee in terms of protection has lapsed or IP registration is withdrawn.
2. A license agreement must be written in the Indonesian language
3. The agreement cannot include provisions that may Harm Indonesia’s economy or national interests or result in unfair business competition or conflicts with prevailing laws, religion, morality, and public order.

For recordation of License, either the licensor or the licensee may file an IP license agreement with DGIP.

An IP license agreement should consist of:

1. Date, month, year, and the location where license agreement was signed
2. Name and address of the licensor and licensee
3. The object of the license agreement
4. Provision on whether the license is exclusive or non-exclusive, including sub-licensing
5. Term of the license agreement
6. The territorial scope of the license agreement
7. The party who will make annuity payment, in the case of patent

In such cases where licensor or licensee are Foreigners and domiciled outside the territory of the Republic of Indonesia, the application for recordation should be filed through a local registered IP Consultant.

The recordation process can be filed either manually or electronically, by attaching the following required documents:

1. Copy of the license agreement
2. Official excerpts of the relevant IP certificate, or proof of ownership of copyright or related rights
3. Power of attorney, if such application is filed through a proxy
4. Payment receipt of the official fee for recordation.

Once the application is submitted, the examiner will review the application and verify all documents.

Once the application is complete, the examiner will inspect the authenticity of documents within five days of submission. Post verification, a Letter of recordation for license agreement will be issued which will also be recorded with the relevant IP registry and the recordation shall be published in the relevant official gazette.

In case of incomplete documentation, the examiner will issue a written notice to the applicant for providing requested documents or rectify any shortcomings within 30 business days after the notice is received. Failure to do so will lead to the withdrawal of the application.

Recordation Period

Recordation of a license agreement will be valid for the term of five years, after the expiration of this term; the applicant can re-apply for recordation.

The issuance of this regulation is a welcome development considering that a license holder does not have a recognized right in Indonesia to enforce the licensed intellectual property rights against an infringer in the absence of such records. Moreover, the license holder’s use of the IP will not be recognized as “actual use” by the IP owner if the license agreement is not recorded with the DGIP.

For applications that were filed prior to the issuance date of Regulation No. 8 Year, 2016 must request for recordation of an IP license agreement and shall be processed in accordance with the above regulations.

Author: Ms. Deepika Sharma, Sr. Patent Associate at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at [email protected].