The New 5-Year Non-Use Rule: Indonesia’s Constitutional Court Extends the Grace Period

In a landmark decision that reshaped Indonesia’s trade mark landscape, the Constitutional Court (Mahkamah Konstitusi) ruled on July 30, 2024 that the non-use cancellation period for registered trade marks would be extended from three consecutive years to five consecutive years. Decision No. 144/PUU-XXI/2023 took effect immediately, giving trade mark owners significantly more breathing room to commence use — while simultaneously requiring challengers to wait longer before filing cancellation actions.

The Previous Rule: Three Consecutive Years

Under Article 74 of Law No. 20 of 2016 on Marks and Geographical Indications (the Trademark Law), a registered trade mark could be deleted if it was not used in the trade of goods or services for three consecutive years from the date of registration or last use. Any interested party could file a deletion lawsuit at the Commercial Court (Pengadilan Niaga), and the trade mark owner bore the burden of proving use.

The three-year period was aligned with the Paris Convention and the TRIPS Agreement, which set three years as the minimum non-use period that member states may adopt. It was also consistent with the practice of other civil-law, first-to-file jurisdictions such as Japan and China.

The Constitutional Challenge

The case was initiated by Ricky Thio, an Indonesian micro, small, and medium enterprise (MSME) owner who held the registered trade mark “HDCVI & Logo” (Registration No. IDM000553432). Thio faced a non-use deletion lawsuit filed by Chinese technology company Zhejiang Dahua Technology Co., Ltd., which sought to cancel his registration on the ground that the mark had not been used for three consecutive years.

Thio challenged Article 74 before the Constitutional Court, arguing that:

• The three-year period was too short for MSMEs, which have limited capital and need more time to develop their businesses and bring products to market.
• Force majeure events, such as the COVID-19 pandemic, could prevent trade mark owners from using their marks through no fault of their own.
• The short period could be exploited by business competitors to eliminate MSME-owned trade marks through strategic non-use challenges.

The Constitutional Court’s Decision

The Constitutional Court partially granted Thio’s petition in Decision No. 144/PUU-XXI/2023, making two significant changes:

• Extension to five years: The non-use period was increased from three consecutive years to five consecutive years. A registered trade mark can now only be challenged for non-use if it has not been used for five consecutive years from the date of registration or last use.
• Force majeure exception: The Court introduced force majeure as a legitimate defence for trade mark owners who cannot use their marks due to extraordinary circumstances beyond their control, such as natural disasters, pandemics, or economic crises. Under the original Trademark Law, force majeure was not recognised as a valid reason for non-use.

In reaching its decision, the Court considered several factors:

• Indonesia’s economic structure: The Indonesian economy relies heavily on MSMEs, which account for the vast majority of business entities. These enterprises need more time than large corporations to develop their products and establish commercial operations.
• Alignment with the invalidation time limit: Article 77(1) of the Trademark Law sets a five-year period for filing trade mark invalidation lawsuits. The Court considered it appropriate to align the non-use deletion period with this five-year invalidation window.
• International comparison: While common-law jurisdictions such as Singapore, the UK, Germany, and Norway apply a five-year non-use period, civil-law jurisdictions like Japan apply three years. The Court determined that Indonesia’s specific economic conditions justified the longer period.

Effective Date and Transitional Application

The decision took effect immediately on July 30, 2024. In Indonesia, Constitutional Court decisions are equivalent to legislative amendments and require no further implementing legislation. Key transitional rules:

• Prospective application: The five-year period applies to non-use deletion lawsuits filed from July 30, 2024 onward. Lawsuits filed before this date continue to be governed by the previous three-year period.
• Current registrations: Trade mark owners whose registrations are between three and five years old without use are no longer immediately vulnerable to non-use challenges. They now have additional time to commence use.

Implications for Brand Owners

The extension provides several practical benefits:

• More time for market preparation: Brands entering Indonesia can now hold their registrations for up to five years before facing non-use vulnerability, providing more time for product development, regulatory approvals, and distribution setup.
• Defensive registrations gain breathing room: Registrations filed to reserve a position in Indonesia without immediate commercial plans now have a longer protected window.
• Force majeure protection: The new force majeure exception protects trade mark owners from non-use challenges arising from circumstances beyond their control.

However, the extension also carries risks:

• Longer wait for challengers: Brand owners seeking to clear blocking registrations through non-use deletion must now wait five years rather than three before filing — extending the period during which unused marks occupy the register.
• Potential for trade mark hoarding: The longer grace period may encourage speculative filings by parties who register marks without genuine intent to use them, knowing they have five years before facing a challenge.

Strategic Recommendations

• Use the extended window wisely: The five-year period provides more time, but it is not indefinite. Develop a concrete plan to commence genuine commercial use of your Indonesian registrations within the five-year window.
• Maintain evidence of use: When use commences, systematically document it — sales records, import documentation, advertising materials, distribution agreements — to defend against future non-use challenges.
• Adjust monitoring timelines: If you are seeking to clear a blocking registration through non-use, recalibrate your timeline. The earliest a non-use challenge can be filed is now five years from the registration date or last use.
• Consider the force majeure defence: If non-use is caused by circumstances beyond your control, document those circumstances carefully. The new exception provides a defence, but the burden of proof remains on the trade mark owner.

Common Mistakes

• Assuming five years means unlimited time: The extension is from three to five years, not indefinite. Registrations that remain unused after five years are still vulnerable.
• Confusing non-use deletion with invalidation: Non-use deletion (Article 74) and invalidation (Articles 76–77) are separate proceedings with different grounds and time limits. The five-year extension applies only to non-use deletion.
• Neglecting the force majeure documentation: The new exception requires proof. Simply claiming force majeure without supporting evidence will not suffice.

Key Takeaway

The Constitutional Court’s Decision No. 144/PUU-XXI/2023 represents a significant shift in Indonesian trade mark practice, extending the non-use cancellation period from three to five consecutive years and introducing a force majeure defence. For brand owners, this provides welcome additional time to prepare for market entry and develop commercial operations. For challengers seeking to clear unused marks from the register, it means a longer wait before a non-use deletion action can be filed. The decision took effect immediately on July 30, 2024, and applies prospectively to all future non-use deletion lawsuits.