THE IMPLEMENTATION OF TRADEMARK LAW IN SMALL AND MEDIUM SIZE ENTERPRISES (SME)

BUSINESS ACTIVITIES IN INDONESIA *

Alexander Y Agung Nugroho *                
Sih Yuliana Wahyuningtyas ** [FN1]

1. INTRODUCTION

     Fair competition is an unavoidable requirement for global trade, within which not only inventions will be encouraged and protected but also the values of mark of goods or services will be more appreciated with certain price. Trademark, which marks the product to distinguish it from other product, gives benefit to the holder to make sure that the market will be able to recognize the product they have been produced with certain qualities without having to be troubled in distinguishing it and being falsified with other, especially similar, product.
Mark (further: trademark) according to Indonesian Trademark Law can be described as a sign in the form of a picture, name, word, letters, figure, composition of colours, or a combination of said elements, having distinguishing features and used in the activities of trade in goods or services. ¹

     Tracing back to the history, trademark in traditional trade is the main means used by merchants to penetrate the chain of grocer and retail trade. This will be further used to set up a direct line to their retail consumers. The use of trademark has been nowadays developed in such way, that it has the function also to determine the value of their products.² It is not only goods or the services themselves having value, but trademark has been recognized as reflecting the value and at the same time establishing the value of a good or service. Trademark has its own value, which is sometimes higher than the product being presented; so that, for example, even with the same quality and style of jeans, consumers would not regard other jeans with the same value with Levi’s. On the other hand, in many cases in Indonesia consumers buy a jeans not because of the quality and style (the intrinsic value), but more because the jeans is Levi’s.

     Trademark is an exclusive right granted by State to the owner of the mark registered on the Trademark Public Registration for certain period of time to be used or to be licensed to be used by other parties. The law products: trademark, has been constructed to provide legal protection not only for the manufacturers but also for the market, since they have the right to get original products, without being prejudiced with false products even at lower price, and these have been put into common agreement between countries. Those agreements show the same perspective in seeing unfair competition as common problem to deal with. The Paris Convention for the Protection of Industrial Property and The General Agreement on Tariffs and Trade in Annex C on Trade Related Aspects to the Intellectual Property Rights, also the Trademark Law Treaty of 1994 has put this matter in the regulation.

     In trade liberalization era, the obedience to these agreements is critically important, since it establishes safety for business players, makes them sure that everything they pay are things as they see when they agree to close the dealings. In short, in the era of global and free trade and in conformity with international conventions having been ratified by the Government of the Republic of Indonesia, the role of trademark becomes significantly important in protecting industrial rights in intellectual works, maintaining fair competition, and encouraging fair and free trade. Indonesia has reflected part of its compliance to the international regulations in regulating trademarks in The Law Number 15 of 2001 of Trademarks.

     Law was constructed to be implemented; this is what law enforcement about. But, in fact, there is a kind of missing link to connect the law with its implementation. The problems might be tracked down to the alienation of the law from the society. Small and medium sized enterprises (SME) have revealed sustainability in entrepreneurship when the economic of the country collapses. Unfortunately, they are also becoming marginalized in ways that they enjoy least benefit of economic development, apart from their role in sustaining it. For small and medium size enterprises, thus, the problems are not that simple as the upper middle size has, since law takes price they cannot afford or that is too much to afford and also takes the product into higher price that will cost in loosing certain number of potential market. Violating other’s trademark (particularly well-known trademark), then, has been seen as a way of cutting short the problems and it seems understandable, though not acceptable.

     Small capital is one of indication in identifying an SME. In Indonesia, this small and medium capital scale of enterprises also brings impact to certain defects needed to win the competition with bigger capital enterprise. The shortcomings are, i.a. the lack of capacity to make invention, the limited capacity in production and marketing the products, the inability to fulfil standard of packaging and, suspected also, of product quality (e.g. hygienist ingredients, dyestuff, and expiration date on food products).

     With regard to trademark law, SME will be analysed in three points, first, the small number of SME who register their trademark and therefore more numbers gain no protection from the law. Second, there emerges suspicion that in certain kind of products, the certain numbers of SME tend to violate well known trademark, e.g. in foods and drinks, clothing, shoes, and bag products. Third, there is also possibility for SME trademark to be violated by bigger enterprises. The three problems will be described below to find out the background and the needs to restore the law enforcement and at the same time put careful consideration on typical characteristic of SME, bearing in mind that nothing in the RI Trademark Law puts distinction between trademark law for SME and for non SME.

II. The Landscape Indonesian Trademark Law

A. Definition and Scope of Trade Mark

     Trademark has been widely recognized as part of the intellectual property rights (IPR), a system conceding appreciation and protection to inventor, designer, author or writer, and any other creator or owner of intellectual property. IPR includes not only the private or moral rights but also the economic rights³ . The system of IPR can be categorized into two major fields as followed ⁴ :

1. industrial property, which includes patent, trademark, industrial design, integrated circuit, trade secret and plant variety protection (PVT)
2. Copyright which includes copyright and related rights.

     Why shall we protect IPR? Among others, the reasons are: first, based on the Human Rights Declaration ⁵ , every human being has the right to protection (morally and materially) of their scientific invention, literature or arts as author; second, to protect reputation; third, to encourage and appreciate every innovation and creation; fourth, to prevent the act of reinventing the wheel, and to support research and development.⁶

     In Indonesia IPR is protected under several regulations. Such regulations are part of main regulation on competition, which can be divided into three following kind majors: first, unfair business or trade also refers to as act against the law (Civil Law Codification Art. 1365); second, IPR infringement (all IPR regulation); and three, monopoly practices and unfair business competition (Law Number 5 of 1999).

     Trademark has been regulated in The Law of the Republic of Indonesia Number 15 of 2001 regarding Trademark (referred herewith as RI Trademark Law). One particular importance considered in the Law is that in the era of global trade and in line with the international conventions that have been ratified by Indonesia, the role of mark become more important, particularly in safeguarding a fair business competition.⁷

*) Dr.rer.pol. (Germany), Senior Lecturer and Dean of the Faculty of Business Administration, Atma Jaya Catholic University, Jakarta, Indonesia.     E-mail: agung.nugroho@atmajaya.ac.id

**) Doctoral student on Competition Law. Max-Planck-Institute fuer Geistiges Eigentum, Steuer- und Wettbewerbsrecht and Ludwig Maximilians University Muenchen Germany. Lecturer on Business Law at the Faculty of Law, Atma Jaya Catholic University, Jakarta, Indonesia.     E-mail: yuliana.siswartono@atmajaya.ac.id

1.RI Trademark Law Art. 1 No.1.

2. Thomas A. Timberg, Paper, “Merek Dagang dan Usaha Kecil di Negara-negara Industri – Bagaimana Usaha Kecil Menggunakannya”, 2001.

3. The importance of economic rights can be seen i.a. in the element of “used in the activities of trade” of mark in RI Trademark Law Art. 1 par. 1.

4. Andy Noorsaman Sommeng, Direktur Teknologi Informasi Dirjen HKI, Departemen Kehakiman dan HAM RI, Paper, “Relevansi Kekayaan Intelektual terhadap Usaha Kecil dan Menengah”, Sosialisasi bagi Aparatur Pemerintah Daerah Propinsi, Kabupaten/Kota yang Membidangi Koperasi dan Usaha Kecil dan Menengah, Makassar, 21 October 2002.

5. The Declaration of Human Rights, Art. 27

6. Ibid.

7. RI Trademark Law, Consideration Part.