Legal Alert: New Implementing Regulation of Customs Recordation System

Author: Bama Djokonugroho, Yasser Mandela

On April 2018, the Indonesian Ministry of Finance issued Minister of Finance Regulation No. 40/PMK.04/2018 regarding Recordation, Restraint, Security, Temporary Suspension, Monitoring and Evaluation in Order to Control Import or Export of Goods Allegedly/Originated from Infringement of Intellectual Property (“MOF 40/2018”). The MOF 40/2018 is the implementing regulation of Government Regulation No. 20 of 2017 regarding Import Control or Export of Goods Allegedly/Originated from Infringement of Intellectual Property (“GR 20/2017”).

In essence, GR 20/2017 has earlier provides that the owner/holder of a trademark or copyright may submit an application to the Customs’ recordation/registry system to register their trademark or copyright. To support the implementation of GR 20/2017, Article 5 and Article 19 of GR 20/2017 provides that further provisions related to the recordation system will be regulated in a Minister of Finance Regulation (i.e. MOF 40/2018).

Referring to Article 27 of MOF 40/2018, the regulation will come into effect 60 days from the date of its issuance (i.e. on 16 June 2018). We set out below the salient features of MOF 40/2018, for your ease of reference.

1. Recordation of Trademark and Copyright (“IP Rights”)

Article 3 of MOF 40/2018 provides that the owner/holder of a trademark and/or copyright may submit an application for recordation of IP Rights to the Directorate General of Customs and Excise of the Ministry of Finance (“Customs”). Based on the confirmation from our contacts in Customs, the application shall be addressed to the Director of Enforcement and Investigation.  The owner/holder as stated above must then appoint an examiner who has sufficient knowledge on trademark and copyright of goods, which will be recorded in the recordation system of the Customs.

Pursuant to Article 4 and 6 of MOF 40/2018, after the application has been submitted, the Customs official will then examine such application before approving to record the IP Rights into the recordation system of the Customs. Article 7 of MOF 40/2018 further provides that the recordation of the approved IP Rights shall be valid for a maximum of 1 (one) year, starting from the date of the approval, and can be extended (via application for extension).

If there is any change to the data of IP Rights, Article 8 of MOF 40/2018 provides that the owner/holder of IP Rights must notify such changes to the Customs official. Additionally, Article 9 of MOF 40/2018 also provides that the owner/holder of IP Rights may submit an application to revoke the recordation of IP Rights that has been recorded in the recordation system of the Customs prior to the expiration date of recordation.

2. Restraint (Penegahan)

Article 1 of MOF 40/2018 defined “Restraint” as an qntlistrative action to postpone the release, loading and shipment of goods for import/export until the fulfillment of customs obligation.

Pursuant to Article 10 of MOF 40/2018, a Customs official may Restraint import/export of goods that is allegedly or originated from infringement of intellectual property (“Alleged Goods”) based on “sufficient evidences”. The sufficient evidences shall be obtained by the Customs official during inspection or intelligence analysis pursuant to the recordation system of the Customs.

In the event the Customs official finds a potential infringement of intellectual property, the official will then notify the owner/holder of IP Rights.  Within 2 (two) days after the Customs notification to the owner/holder of IP Rights, the owner/holder of IP Rights must confirm to the Customs official on whether or not they will submit an application for a Temporary Suspension order to the relevant Commercial Court. Article 1 of MOF 40/2018 defined “Temporary Suspension” as a temporary postponement to release goods for import/export from the Customs territory.

If the owner/holder of IP Rights confirms the action to submit an application for a Temporary Suspension order to the Commercial Court, pursuant to Article 11 of MOF 40/2018, the following must be conducted:

1. Provide security payment to the Customs official in the amount of IDR 100,000,000 (one hundred million Rupiah) in the form of bank guarantee or guarantee from insurance company. The owner/holder of IP Rights must provide a security that will be withdrawn in the event there is a cost incurred due to Restraint and Temporary Suspension of Alleged Goods;
2. Submit application for Temporary Suspension by way of petition to the Chairman of the relevant Commercial Court; and
3. Convey proof of submission of Temporary Suspension to the Customs official.

The Customs official may conduct the following:

1. Continue the Restraint of Alleged Goods; and
2. Provide a summary of Alleged Goods to the owner/holder of IP Rights to fulfill the requirements for submission of application for Temporary Suspension by way of petition to the Chairman of the Commercial Court.

3. Temporary Suspension

After the submission of petition for Temporary Suspension to the Chairman of the relevant Commercial Court, the Commercial Court shall adjudicate the case and issue a decree which determines whether such petition shall be granted or not. If granted, Article 19 of MOF 40/2018 provides that such decree will then be notified to the Customs official. Accordingly, the Customs official must conduct the following:

1. Notify (i) the importer and/or exporter; (ii) owner/holder of IP Rights; and (iii) Directorate General of Intellectual Property within the Ministry of Law and Human Rights;
2. Stop the Restraint upon Alleged Goods; and
3. Enforce Temporary Suspension, starting from the reception date of Commercial Court decree.

Pursuant to Article 21 of MOF 40/2018, the Customs official shall enforce Temporary Suspension for a maximum of 10 (ten) working days, starting from the reception of Commercial Court decree. However, the owner/holder of IP Rights may submit a petition for extension of Temporary Suspension – 1 (one) time – to the Commercial Court, for a maximum of an additional 10 (ten) working days.

Subsequently, Article 22 of MOF 40/2018 provides that the Customs official must stop the Temporary Suspension, should any of the following events occur:

1. The period for Temporary Suspension has passed;
2. The period for extension of Temporary Suspension has passed;
3. There is a decree from the Commercial Court to stop the Temporary Suspension; or
4. There is a legal (i.e. shall be transferred to the investigator for criminal action or to the court bailiff in the event the owner/holder of IP Rights submits a civil claim and/or conservatory attachment upon the suspended goods) or other act (i.e. out of court dispute resolution) upon the alleged infringement of intellectual protection.

Notwithstanding the above, Article 23 of MOF 40/2018 provides that in certain events (i.e. lack of durability, dangerous and/or costly maintenance), the importer, exporter or owner of the Alleged Goods may submit a petition to the Chairman of Commercial Court to order the Customs official to stop the Temporary Suspension.

Further, it is important to note that pursuant to Article 24 of MOF 40/2018, the owner/holder of IP Rights shall be responsible for all operational costs arising from the Restraints and Temporary Suspension upon the Alleged Goods.

In any case, following the implementation of MOF 40/2018, we hope the Customs recordation system will bring effective law enforcement upon the infringement of IP Rights by acting as a gatekeeper to prevent the unlawful distribution of counterfeit goods, both inside and outside Indonesia.

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