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The Removal Plan of Article 20 of Indonesian Patent Law through Omnibus Bill on Job Creation
- 2020-06-21 11:35:17

The Article 20 of Law Number 13 of 2016 on Patent (Indonesian Patent Law) has been getting topical issue in the Intellectual Property field due to numerous critics which are received especially from foreign inventors who dominate the patent registration in Indonesia. According to the Directorate General of Intellectual Property (DGIP)’s data by 2018, it is recorded that there were 8,640 patent applications coming from abroad out of 11,302 applicants in total and 5,909 patents were registered from 6,705 the total number of registered patents. However, the total number of the patent applications in Indonesia has been recorded experiencing a significant drop for the last three years.

The Article 20 of Indonesian Patent Law is considered as the source of the problem of such matter, because the Article has become a burden for foreign inventors who want to register their patents.

On 14 January 2019 a critic came from the member states of the European Union when the Minister of Law and Human Rights of Indonesia, Yasonna H. Laoly, met the ambassadors to discuss the certainty of Article 20 of Indonesian Patent Law. They assumed that such article would bring burdensome effect to the foreign inventors as patent holders are obliged to manufacture some goods which have been registered as patent or use the patent-registered process in Indonesia. If they do not so, the registered patents will be revoked.

Article 20 of Indonesian Patent Law states:

  1. “The Patent Holder is obliged to manufacture products or use the process in Indonesia.”
  2. “Manufacturing products or using the process as referred to in paragraph (1) shall support the transfer of technology, investment absorption and/or employment provision.”

 

In regard with the patent removal, Article 132 paragraph (1) letter e juncto Article 4 of Indonesian Patent Law stipulates that apatent may be revoked for non-compliance with Article 20 although the parties that may apply for revocation on this ground to the commercial court are the public prosecutor or party representing national interest or compulsory-license receivers.

Aside from that, another reason regarding patent removal of the Article 20 is that such Article is also considered that it has violated the non-discriminative principle as stated in Article 27 TRIPS Agreement which was ratified by indonesian government by enacting the Law of the Republic Indonesia No. 7 of 1994 on Ratification of Agreement Establishing The World Trade Organization, which stipulates:

“…patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced.”

In order to open the foreign investment resources, the government of Indonesia initiated Omnibus Bill on Job Creation (hereinafter referred to Omnibus Law). The objective of the Omnibus Law is to create employment, increase the ease of investing and ease of doing business, and accelerate national strategic projects (Article 3). This bill consisting of 174 articles will revoke 79 laws which are considered not in accordance with the prevailing laws. One of the laws that will be revoked through the bill is the Article 20 of Indonesian Patent law on the ease of doing business cluster.

The Article 110 of Omnibus Law states: "Provisions in Article 20 of Law Number 13 Year 2016 concerning Patents (State Gazette of the Republic of Indonesia Year 2016 Number 176, Supplement to State Gazette of the Republic of Indonesia Number 5922) is deleted”.

As stated in the Academic Script of Omnibus Law, there are 7 following reasons why Article 20of Indonesian Patent Law shall be revoked, because:

  1. Indonesia requires flexibility in regard with the compulsory of manufacturing products or patent process.
  2. The Article is considered that it is discriminative and has violated the Article 27 of the TRIPS Agreement
  3. The right of patent will be revoked if the patent holders do not implement the provisions of Article 20.
  4. The compulsory in Article 20 is impossible to implement for every technology because of the cost, technological knowledge, human resource, and so on.
  5. It may decrease the foreign investors numbers.
  6. The compulsories in the Article 20 are difficult to implement practically.
  7. The provision of transfer of technology is difficult to implement practically because of the difficulty in obtaining its raw materials.

Legal Analysis

By the enactment of Omibus Law bill which regulates that it will revoke and erase the Article 20 of Indonesian patent law, it will make confusion among people both in Indonesia and abroad who want to register their patent or want to transfer their patent right through license which will lead to disharmony and inconsistency between the regulation and its prevailing implementation laws. This is mainly because the government previously has already given a relief regarding the implementation of Article 20 of Indonesian patent law through its prevailing implementation laws.

On the Article 3 of the Law of the Ministry of Law and Human Rights No. 15 of 2018 on the Use of Patent by Patent Holder stipulates that the Patents Holders are able to request to the minister to delay of the implementation of the Article 20 provisions for 5 years accompanied by a reason, while the request of the delay implementation of Article 20 is able to be submitted no later than 3 years from the date the patent is granted (Article 4). Moreover, the patent holders may request the compulsory-license to the minister if after 36 months the Patent Holder is not be able to manufacture their registered patent products or use the process in Indonesia as regulated (Article 82 paragraph (1) letter a of Indonesian Patent Law juncto Article 8 letter a of the Law of the Ministry of Law and Human Right No. 30 of 2019 on Procedure for Granting Compulsory-License Patent).

Nevertheless, the plan to revoke the Article 20 of Indonesian Patent Law indeed will bring both positive and negative signals.

On the positive side, of course it will bring some positive news to the foreign investors as a result it will increase their numbers in Indonesia. On the other side, the removal plan of the Article however would likely make Indonesians always depend on the foreign inventions since the obligation to transfer the technology and to manufacture or to use the patent process in Indonesia.

 

Historically, prior to the amendment of Indonesian Patent Law of 2016, Law No. 14 of 2001 on Patent especially in the Article 17 paragraph (1) has already obliged Patent Holders to manufacture products or use the process granted as a patent in Indonesia. Therefore, the provision shall not be revoked since that provision has already implemented in Indonesia for a long time ago.

 

In order to avoid the inconsistency among the prevailing laws and to support the patent implementation in Indonesia, it seems to me that the Indonesian patent law does need more specific stipulations from the provisions of Article 20 of Indonesian patent Law to stipulate which provisions need to be implemented, given a relief, or revoked. Nevertheless, in regard with the enactment process of Omnibus Law, of course it is worth waiting until the parliament discussion on the upcoming meeting is over, and thus this polemical Article will be over and may bring positive results to the Intellectual Property field in Indonesia.

 

References

Omnibus Law Bill on Job Creation.

The Law Number 13 of 2016 on Patent.

The Law Number 14 of 2001 on Patent.

TRIPS Agreement ratified by the government through Law No. 7 Tahun 1994 on the Ratification of Agreement Establishing The World Trade Organization.

The law of Ministry of Law and Human Rights No. 30 of 2019 on Procedure for Granting Compulsory-License.

The law of Ministry of Law and Human Rights on the Patent Implementation by Patent Holders.

https://dgip.go.id/images/humas/Images/Laptah-2018_compressed.pdf.

https://statistik.dgip.go.id/statistik/production/paten_jenis.php.

https://dgip.go.id/menkumham-bahas-revisi-uu-paten-untuk-kepastian-usaha-dengan-uni-eropa.

Academic Draft of Omnibus Law Bill on Job Creation.



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