Indonesia‘s new Customs Regulation

First steps towards a Customs IP border protection system

Indonesian Government has issued Regulation No. 20 of 2017 on Controls of Import and Export Goods Constituting or Deriving from Intellectual Property Rights Infringement (“Regulation”). The Government Regulations was stipulated on 30 May 2017, enacted on 2 June 2017 and takes effect from 2 August 2017. It implements provisions in Law No. 17 of 2006 on Amendments to Law No. 10 of 1995 on Customs.

Recordal for trademarks and copyrights

The Regulation provides for an IPR recordal system for trademarks and copyrights only. Recordals are valid for a year, but renewable.

Applications can only be made by Rights Holders with a business entity domiciled in Indonesia.

Applications must attach evidence of ownership, product authentication, distribution routes and marketing information of products. Customs will approve or reject an application within 30 days.

Specific procedures will be set out in a government regulation from the Ministry of Finance.

Preliminary Restraint of goods

For trademarks and copyrights that have been recorded, Customs can detain suspected infringing goods as follows:

  • Customs will send a Notification of Restraint to Right Holders
  • Rights holders must confirm the notice within 2 days; and
  • Right holders must then file a Suspension Request to Commercial Court within 4 days of their confirmation of the notice.

For other IPR infringements like patents and industrial designs, the Customs have no power of preliminary Restraint and Right Holders have to file a Suspension Request to Commercial Court.

Suspension Request to Court

For the Suspension Request to Commercial Court, Right Holders must

  • pay operational costs security to Customs of Rp100,000,000 (about USD 7,500) in the form of bank or insurance guarantee.
  • submit sufficient evidence of the IPR ownership and infringement
  • apply to Court for physical examination over the goods for which Suspension is being requested.

The Regulation states that the Commercial Court shall approve or reject the Suspension Request within 2 business days and notify Customs 1 day later.  There will be further Regulations on the procedure for the Suspension Request.

Execution of Suspension Order  

If a Suspension Order is issued, Customs will notify the Right Holders, the importer or exporter of the goods and the DGIP. Within 2 days of the court decision, Right Holders shall submit an application to Customs to set a schedule for the physical examination of the suspended goods.

Customs will detain the goods for up to 10 days from the date of the receipt of the Suspension Order. Rights holder may apply to renew one time for a maximum 10 days by providing additional operational costs security.

Under certain circumstances, for example where the detained goods have short shelf life, the importer/exporter or owner of the goods may apply to Court for a termination of the Suspension Order by providing security.

Expiry of Suspension Order

Once the Suspension Order expires, the detained goods can be dealt with as follows:

  • destroyed by Customs in accordance with procedure
  • surrendered to the investigators in the event of any legal action under the criminal provisions;
  • handed over to the Court’s bailiff in the event the Right Holder files an action and/or application for security for costs over the suspended goods; or
  • by way of private settlement of disputes

The security deposit provided to Customs may be used to cover all operational costs such as transport and storage costs. Any shortfall will be invoiced to the rights holder, and any excess returned. The procedures will be governed by another Ministry of Finance Regulation.

Exceptions – Transhipment, Consignments via postal/courier

The Suspension provisions do not apply to transhipment cases. All Customs will do in these cases is notify the Customs of the next country of destination

There will be further Regulations by the Ministry of Finance to deal with commercial purposes of goods brought by passengers, border crossers, or consignment sent by postal or courier services.

General Comments  

The Regulation is a step in the right direction and sets out procedures for Suspension Requests.

The Regulation’s apparent prohibition on foreign Rights Holders from using the recordal system needs to be investigated further as that would defeat the purpose of the Regulations for most Rights Holders. 

For now IP holders need to await further news on the additional regulations, which are being drafted now by the Ministry of Finance and more information on how the present ones will be interpreted.