Working requirement in Indonesia
As the largest economy in South-East Asia, Indonesia is an attractive and valuable jurisdiction for patent protection.
While Indonesia has largely been a major importer of manufactured goods and technical skills, the economy of Indonesia has recently shifted towards manufacturing and trade. Accordingly, the Indonesian government is keen to promote technology transfer and encourage local job opportunities and has introduced a working requirement for Indonesian patents and has recently further clarified the process.
Working requirement of Indonesian patents
Article 20 of Law No. 13 of 2016 requires patentees to implement the patented invention. That is, the patent product must be manufactured, and/or the patented process must be used, in Indonesia. Under this Article patentees must implement their patents within 36 months (three years) from the patent grant date.
After this 36 month period, any party may submit an application for a compulsory licence of the claimed invention. The onus is on the patentee to produce evidence of the patented invention’s use in Indonesia. The Ministry of Law will examine each application for a compulsory licence and provide the outcome to the patentee. The patentee will be given an opportunity to respond and may seek advice of their own independent experts. If a timely response is not filed the compulsory licence will be approved.
If the patent is not used within the 36 month period the patent may also be subject to revocation the Indonesian government. However, only a public prosecutor or party representative of national interests can request revocation of the patent. It is unlikely that revocation of a patent due to non-use would happen unless it is against the national interest. Moreover, not working an invention does not mean that the patent will be automatically revoked.
Postponement of the working requirement
Recent updates to the Indonesian patent law introduce a postponement regime for this working requirement. More specifically, the Implementing Regulation No. 15 of 2018 was issued to provide clarity on Article 20 and to allow an opportunity for patentees to delay the working requirement.
Under the new Regulation, a patentee can submit a request to postpone the working requirement. If approved, a maximum postponement period of five years may be granted. The request to postpone must be filed by the patentee within the 36 month period from the patent grant date. Further postponements may also be sought.
The request to postpone must cite a valid reason. Examples of reasons include:
- Further development of patented invention required before manufacturing is possible;
- Lack of facilities for the patented invention’s implementation in Indonesia (including difficulty in partnering with local companies for manufacturing, and/or insufficient domestic production capacity);
- Inability to provide investment to bring the manufacturing technology to Indonesia (for example if the product is imported/distributed in Indonesia but not locally manufactured).
While it is not necessary to submit evidence of the implementation of the invention, if a party files an application for a compulsory licence then the patentee will be required to submit evidence (if available). Therefore, patentees should be aware of this 36 month deadline.
It is expected that further clarification on the details of the request to postpone will surface in the coming months. For example, whether an official fee will be payable with the request to postpone.