Indonesia’s trademark system has long subscribed to the first-to-file principle, which does not take prior overseas uses into account. This approach offers predictability and legal certainty for those operating within the system. But for established international brands seeking to expand into the Indonesian market, it creates a real risk: their trademarks may have already been registered by local third parties, including so-called trademark squatters acting in bad faith.

Toyota’s experience shows how real this risk can be. In 2014, the Japanese carmaker found itself embroiled in a legal dispute over its Lexus premium automotive brand. Toyota filed a trademark cancellation lawsuit at the Supreme Court against ProLexus, a footwear firm in the East Java industrial town of Sidoarjo, alleging that ProLexus’s mark infringed on the goodwill and recognition of Lexus.

Toyota argued that “ProLexus,” registered for goods in Class 25 (clothing and footwear), closely resembled its own trademark and risked misleading consumers into thinking there was an affiliation. According to Toyota, adding the prefix “Pro” was insufficient to distinguish the mark and appeared to be a calculated attempt to ride on Lexus’s brand reputation. However, the crux of the dispute was not similarity but timing. ProLexus had registered its mark in 2010 – two years before Toyota registered “Lexus” and related marks such as “Lexus Racing” in Indonesia.

The Central Jakarta Commercial Court ruled in favour of ProLexus, citing its earlier filing date and the absence of bad faith. The court also found Toyota’s lawsuit had exceeded the five-year limitation period prescribed in Indonesia’s 2016 Trademark Law. On appeal, the Supreme Court upheld the decision, noting the dispute involved only name similarity, not violations of public morality or order, and confirmed that Toyota’s challenge was procedurally time-barred.

Other brands have faced similar setbacks in Indonesia. BMW sued local clothing company BMW Body Man Wear, claiming its global reputation warranted protection across classes. The Commercial Court agreed, but the Supreme Court dismissed the case because the goods were unrelated. DC Comics failed to cancel a long-registered local mark for Superman chocolate wafers, with courts siding with the Indonesian registrant based on prior use and a narrow reading of bad faith. Even IKEA had two early filings cancelled for non-use, but maintained control of its brand through newer filings. 

To counteract such risks, some jurisdictions, such as China, have reformed their trademark laws to include a “good faith” requirement in applications. Indonesia, for its part, has taken steps to strengthen its system. Article 21 of the trademark law requires the rejection of applications that are substantially or wholly similar to earlier-filed marks for the same or similar goods and services. While this provision offers procedural clarity, it remains susceptible to misuse unless balanced by substantive safeguards.

Indonesia now recognizes the rights of owners of well-known trademarks, even if those marks are not registered locally. Under Article 21(1)(b) and (c), applications that resemble well-known marks – whether used for similar or dissimilar goods – may be rejected during examination. Further, Article 21(2)(a) protects the names or likenesses of famous individuals or entities, requiring written consent for use. Importantly, Article 21(3) allows examiners to reject marks filed in bad faith, defined broadly to include attempts to imitate or capitalize on another brand to deceive consumers or undermine fair competition.

Owners of well-known trademarks may also submit formal objections during the examination phase. These objections serve as critical input for the examiner’s assessment. If a conflicting mark is already registered, the rightful owner can file a cancellation lawsuit under Articles 20 and 21. Notably, Article 76(2) allows owners of unregistered well-known marks to seek cancellation after notifying the minister of law, in recognition of the global nature of brand reputation.

Under Article 77(1), such claims must be filed within five years of the disputed registration, though exceptions apply for bad-faith registrations or marks that contravene public order. To determine whether a mark qualifies as “well-known,” examiners are guided by factors such as public recognition, marketing investment, international registrations, and commercial presence. If evidence is insufficient, courts may commission independent surveys to measure public awareness.

Recent reforms under Law No. 6 of 2023 on Job Creation have simplified trademark procedures. The timeline for substantive examination, once up to 90 days, has been reduced to 30 days. New grounds for rejection, including marks with functional elements, have also been introduced, bringing Indonesia’s framework in line with international norms.

These reforms support broader national goals, including boosting Indonesia’s investment climate and streamlining business licensing procedures. For brand owners, the message is clear: proactive registration remains one of the most effective ways to mitigate trademark risk. In first-to-file jurisdictions, delay can lead to significant legal exposure, reputational harm, and commercial loss. As in the cases above, the cost of inaction can be losing control over the brand itself.