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Patent Update: INDONESIA’S NEW PATENT LAW 2016 ENACTED

New Patent Law was passed by the Indonesian House of Representatives on 28 July 2016, replacing the current Patent Law year 2001 and it will come into effect on 28 August 2016.
 Those patent applications filed before the enactment of the new Law will not be affected and thus can be prosecuted or examined using the the old law. 

Amendments to Indonesia's patent system include the following important changes:

  1. Expanded scope of protection for Petty Patent (Utility Model): including process

    Protection of petty patent has been expanded from merely “product” in the old law into “product and process” and improvements to the existing product and process.
  1. Second use & second medical use: not allowable

    Under the new law, the folowing type of claims are not patentable:
    -  new use for an existing and/or known products;
    -  new forms of a pre-existing compound, except they generates significant improvement on efficacy.
  1. Computer programs per se is not patentable, it must have technical effect

    If a computer program has characters (instructions) that exerting technical effect and function to execute a problem solving in either tangible or intangible forms, such a program is patentable. 
  1. Obligation to disclose origin of Genetic Resources

    The origin of genetic resources and/or traditional knowledge cited in a patent description must be disclosed clearly and properly. This provision is in line with Nagoya Protocol for the Access Benefit Sharing (ABS) to protect Genetic Resources and Traditional Knowledge.
  1. Diclosure of patent specification: Best Mode

    Best Mode should be expressed in the specification. Claim should disclose clearly and consistently of the invention’s subject matters, and must be supported by description.
  1. Shortened Period of Examination: from 36 to 30 months

    Acceleration of examination process is also considered in the new law. Examination period for a patent Examiner to finalize the substantive examination has been cut from 36 (under old law) to 30 months from the time the examination request is made.  In the case of petty patent (utility model), the limit given to a patent Examiner for producing a decision is now 12 months from the filing date, (from 24 months under the old law).
  1. External Expert may be hired as official Patent Examiner

    Experts from universities, researchers or practitioners are possible to be hired as Patent Examiners through special selection and training. This article is set to overcome current limitation on number of in-house patent examiners available at the DGIP and also higher number of backlog in the examination stage. This will also be parallel to the new time line for examination set in the new patent law, namely from 36 months to be shortened to only 30 months. It is still not clear if the status of Expert Examiner is ad hoc, part timer or permanent employment. The quality of examination of said Expert is considered equivalent to that being generated by regular Patent Examiner.
  1.  Maintenance (Annuity Payment)

    There is significant change on mechanism for patent annuity payment. Unpleasant experiences with annuity payment arrangements (particularly those with null or abandoned patents which causing complicated debts collecting and restructuring) during the past 4 years are now reflected in the new law, which seems to encourage “pre-paid” mode rather than “post-paid” or payment with grace period. The following provisions are adopted:

a) The first back annuity fee payment (back fees) must be made within 6 months from the issuance date of Patent Certificate (Letters Patent).

b) The next annuity payment should be made 1 month, at latest, before a date similar to that of filing date of the upcoming year of protection period. 

c)  There is a dispensation where patent holder can postpone the back fees for maximum 12 months from respective deadline by requesting (in writing) an application to use grace period mechanism. Such request must be filed within 7 days before the deadline of the payment of the back fees. Payment through such grace period mechanism is subject to additional penalty fee in amount of 100% counted from the total amount of back fees.

Accordingly, under the new law, the patent is deemed null and void if the annuity is not paid by the due date. Despite of the dispensation to postpone the back fees until 12 months with extraordinary penalty fee (100%), the new provisions provide quite short time for patent holder to settle the payment (in the old law, a patent will only be considered null and void after 3 consecutive years of unpaid annuity).

  1. Exemptions from Patent Infringement: Parallel import

    Under the new law, parallel imports (in pharmaceutical) is exempted from criminal and civil liability. Parallel import involves importation of a pharmaceutical product which is patented in Indonesia and the product is legally marketed in another country without the permission of the patent owner. Parallel import will only be permitted under condition where the price of a pharmaceutical product in Indonesia is found to be unreasonably extremely high than its corresponding product at international market. Parallel import is hoped to reduce the price of certain pharmaceuticals for national interest.
  1. Exemptions from Patent Infringement: Bolar Provision, expanded from 2 into 5 years before patent expired

    Under the new law, the act of manufacturing pharmaceutical product (by another party) which is patented in Indonesia within 5 years before patent expiration, to obtain a license for distribution, preparation of factory and marketing purposes, also termed as “Bolar Provision,” is exempted from criminal and civil liability. Bolar Provision is needed to ascertain that pharmaceutical products will be made available in the market and widely distributed to consumers once patent protection expires, in order to prevent products scarcity and price gap.

Under the old law, this period was given only 2 years from patent expiration, which caused problems relating with preparation of manufacturing and clinical trials to such industries as biologicals producing e.g. vaccine or other high tech pharma products.  

Harmonization of this new provision (from 2 to 5 years) with rules applied by Indonesian FDA (BPOM, the national agency responsible to issue drug distribution permit) is also required accordingly.

  1. Broader Scope of Authority Given to Patent Appeal Commission (PAC)

    In addition to regular assignments in receiving, examining and deciding appeal petition against rejected patent application (as prescribed in the old law), under new law the PAC now has additional authority to handle following works:

    a) appeal petition against correction on patent specification after granted , where appeal petition can be launched by applicant within 9 months after date of allowance, but in case lapsed, no more chance to re-file an appeal petition;

b) appeal petition against notice of allowance decision (post-grant opposition), where appeal petition can be launched by any third party within 9 months after date of allowance, but in case lapsed, the third party can still file a lawsuit to the next stage i.e. to Commercial Court to pursue the same purpose). 

This provision constitutes a development in Indonesian IP practice since it gives a likely one-stop service to patent society seeking ways to invalidate a granted patent without necessity to go to the Court. As we may know, in some cases, it is very difficult to find a jugde in the Commercial Court who has proper knowledge or understanding on IP, more particularly in complicated patent cases. Frequently, appelant should bring at least one Expert Witness to the Court to clarify the matters, which causes more expenditure burden. It is believed that PAC has all needed tools, skill and expertise among its members.     

  1. Future migration to electronic system

    All services provided by the Indonesian DGIP will gradually be made electronically (i.e. electronic filing and monitoring). Applicants may enjoy 10% discount for each services provided electronically, compared to those provided manually.
  1. Patent Right as Fiduciary Objects

    Under new law, patent right can be ulitized as fiduciary objects, such as a guarantee in a credit or loan scheme. Introduction of this provision could increase appreciation on patent rights as valuable assets among the stake-holders and societies and also further encourage patent commercialization and incentive for patent-based economy. 

By: Kusno Hadi Kuncoro
Partner at Batavia Patentservis Asia