Under Law No. 13 of 2016 on Patents, Indonesia requires patent holders to implement their inventions domestically. This is done to ensure that patents contribute to the local economy, technology transfer, and job creation, rather than being used solely for exclusive rights without practical application. This concept is called “patent working” and can be achieved through:
Manufacturing the patented product in Indonesia,
• Utilizing the patented process within the country,
• Licensing the patent to a local entity,
• Importing the patented product into Indonesia.
Until recently, there was a lack of enforcement mechanism and no formal requirement to prove or report whether patent working had been applied. This changed with the enactment of Law No. 65 of 2024, which amends the 2016 Patent Law and introduces the annual submission of a Patent Implementation Report to the Directorate General of Intellectual Property (DGIP).
The obligation to submit a patent working report applies to all granted patents that remain in force, regardless of the nationality or domicile of the patent owner, industry sector, or the age of the patent. Even foreign patent holders with no physical presence in Indonesia must comply, provided they hold rights to a granted Indonesian patent.
The report must include:
A declaration on whether the patent has been worked in Indonesia;
• Details of how the patent is being utilized (e.g., production, licensing);
• If the patent is not being worked, a justification for non-implementation.
This applies to all patent holders—individuals, legal entities, universities, and both domestic and foreign applicants.
Consequences of Non-Compliance
While the law does not currently stipulate automatic penalties for failure to work a patent or file the annual report, non-compliance carries risks. If a patent is not implemented within 36 months of the grant date, third parties may apply for a compulsory license. This allows them to use the patent without the owner’s consent, subject to government approval.
Conclusion and Advice for Patent Holders
Several steps are necessary to ensure compliance with Indonesia’s patent working requirements. Rights holders should proactively review their IP portfolios to identify any granted patents that are approaching the 36-month implementation deadline. It is also important to properly document of any commercialization, manufacturing, or licensing activities that could demonstrate that a patent is being worked in Indonesia.
For patents that are not yet in use, companies should be prepared to present a clear and reasonable justification, may it be ongoing regulatory approvals, pending partnerships, or phased market entry plans.
Finally, to ensure the best process, it is strongly recommended to engage with experienced local counsel who are well experienced in enforcement practices. Am Badar & Am Badar, one of Indonesia’s leading IP law firms, offers tailored advisory and compliance services to help patent holders navigate the reporting obligations and safeguard their rights under Indonesian patent law. Contact us at ambadar@ambadar.co.id
