“Parallel import” refers to the importation of genuine goods, originally sold with the intellectual property owner’s authorization, into a country without the consent of the local rights-holder or its licensee. While the products themselves are authentic, such practices can raise certain legal and commercial issues, with certain jurisdictions having different rules to them– which is why parallel imports are sometimes referred to as “grey market import”.
Although parallel imports are not explicitly addressed under Indonesian IP law, understanding how the existing IP framework interprets such practices could be beneficial for rights-holders. In this article, we break down how current regulations might respond to parallel importing, providing insights that can help inform your IP strategy in Indonesia.
Exhaustion of Rights
Discussing parallel import is not complete without first understanding “exhaustion or rights”, as both principles are closely related. The term, also known as “first sale doctrine” refers to a principle that after the first authorized sale or circulation of a protected product, the rights holder can no longer oppose its resale or further distribution within a specific geographical area.
Depending on the jurisdiction, exhaustion can be national, regional, or international. Under national exhaustion, rights are only exhausted within a specific country, while regional exhaustion (such as in the EU) applies within a defined market, allowing trademark owners to block parallel imports from outside the region. Meanwhile, International exhaustion frees products for resale worldwide once initially sold with the owner’s consent.
Perspective of Indonesian Trademark Law
According Law No. 20 of 2016 on Trademarks and Geographical Indications the rights of a trademark owner include the exclusive right to authorise others to use it (licensing). Article 42 stipulates that a registered trademark owner may grant a licence to another party and still reserve use of the mark themselves unless otherwise agreed. However, as previously stated, this regulation does not explicitly provide a regime for exhaustion of rights nor parallel imports of trademarked goods. This means that whether a trademark owner can prevent the importation of genuine goods into Indonesia via a third party, unauthorised channel depends largely on court interpretation.
It is important to note that Article 43 of the Trademark Law does touch upon on-exclusive licensing rights. The article stipulates that trademark owners that have grant licenses still retaining the right to the trademark themselves or to license a third party, other unless agreed otherwise. While this provision clarifies non-exclusive licensing rights, it does not explicitly address parallel imports and there remains some uncertainty.
Perspective of Patent Law
In contrast to Indonesia trademark regime, Indonesia’s patent laws are clearer in regard to parallel imports, but only for pharmaceuticals. Under Law No. 13 of 2016 on Patents Article 167 stipulates importation of a patented pharmaceutical product into Indonesia is excluded from criminal provisions and civil lawsuit provided the product has been lawfully marketed in another country and is imported in accordance with legislation. This effectively permits a form of national exhaustion in Indonesia (for patented pharmaceuticals) by allowing legally marketed foreign patented products to be imported without infringing the patent–provided conditions are met.
Another regulation, Government Regulation No. 32 of 1991 concerning Import of Raw Materials or Certain Patented Products for the Domestic Production of Drugs, regulates importation of raw materials or patented products for domestic production of drugs, also relating to how imports of patented goods may be treated.
Conclusion
For patent owners (especially in the pharmaceutical sector) and generic manufacturers/importers, Indonesia presents a more defined legal environment for parallel imports than the trademark space. However, the situation is clearer in regards with trademark. Therefore, for license owners, you should ensure you’re licensing and distribution agreements are carefully drafted to anticipate possible parallel imports, monitor unauthorised imports, and be prepared to enforce rights.
For more questions regarding this subject and other matters related to IP law, contact us at ambadar@ambadar.co.id
Source:
Understanding Trademark Exhaustion and Parallel Import in Indonesia – A&Co Law
