[Indonesia Update] Behind the scenes: What really happened in the “IKEA” case?

By Carola Monintja

Recently a controversial decision made by the Indonesian Supreme Court has been making waves in local and foreign media. The Supreme Court refused the cassation appeal filed by internationally well-known furniture company, Inter IKEA Systems B.V. (“IKSBV”), and affirmed the decision by the Commercial Court to allow the deletion of the “” trademark in Class 20 and Class 21.

So how could this happen and what does this mean for IKEA’s business in Indonesia? Let’s look at the facts of the story.

The case began when PT. Ratania Khatulistiwa (“RK”), a local company based in Surabaya, East Java, sought protection for their trademark “”. RK’s “ikea” mark is meant to be an abbreviation of:

I = Intan (abbreviation of Industri Rotan (or “rattan industry”))

K = Khatulistiwa (part of the company name)

E = Esa (meaning “one”)

A = Abadi (meaning “everlasting”)

With the intention of building its brand, RK applied to register the “” mark at the Directorate General of Intellectual Property (DGIP) on 20 December 2013, under Classes 20 and 21.

On the other hand, IKSBV owned the “” mark, which was registered in Class 21 on 9 October 2006 and in Class 20 on 27 October 2010 (No. IDM000092006 and No. IDM000277901 respectively).

So why did RK apply to register the “” mark, when the “” mark was already registered earlier under identical classes? Surely RK was aware of the existence of IKSBV’s “IKEA” trademark registrations?

Well, it certainly was. From November 2013 to December 2013, RK hired an independent private investigation agency to conduct a market survey on the existence of “IKEA” products in five big cities in Indonesia, namely, Medan, Jakarta, Bandung, Surabaya and Denpasar. The agency interviewed 140 stores/respondents, all of which confirmed that they had never sold or distributed “IKEA” products or products with the “IKEA” trademark.

RK consequently filed its application for the “” mark in Classes 20 and 21. Four days later, RK filed a deletion lawsuit at the Commercial Court based on the non-use of IKSBV’s “IKEA” trademark for three consecutive years. On 17 September 2014, the Commercial Court decided in favour of RK and declared that:

RK as the third party has the right in filing the deletion lawsuit against IKSBV’s “IKEA” registrations in Classes 20 and 21;
The applications of RK’s “ikea” trademark in Classes 20 and 21 are valid;
IKSBV’s “IKEA” registrations in Classes 20 and 21 were not used for three consecutive years from their registration date.
IKSBV’s “IKEA” registrations in Classes 20 and 21 are to be deleted from the Registry.

IKSBV naturally could not accept this decision, and believed there was an element of bad faith on the part of RK. And so, IKSBV filed a cassation appeal against the Commercial Court’s decision at the Supreme Court.

On 12 May 2015, the Supreme Court rejected the cassation appeal filed by IKSBV. However, in deciding this case, one of the three judges had a dissenting opinion, stating that “IKEA”, as owned by IKSBV, is a well-known mark that must be protected and should not be deleted for any reason. Since there was a dissenting opinion and an agreement could not be reached, the Supreme Court decision was then made based on a majority vote.

This decision has drawn criticism from various parties. However, does this mean that IKSBV’s IKEA has to cease business in Indonesia? The answer is, not at all. The deletion applies to the “” trademark registrations in Classes 20 and 21. But the registered trademarks “” and “” in Class 20, and “” in Class 21, which were filed by IKSBV and granted registration in 2014, are still valid, and IKSBV is the only rightful party entitled to use them.

The lessons to be learnt from this case are that it is important to consider registering both the word mark and composite mark (mark comprising a word & design/device element), and to be aware of provisions that can cause the loss of trademark rights, which in this case was the three years of consecutive non-use. You never know what your competitors have in mind or what they might do to take advantage of your mark!

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Communications at KASS International Sdn Bhd

KASS International is an established Intellectual Property Firm which offers a one-stop solution for IP matters in Malaysia, South East Asia, and worldwide.