Regulations on Patent Working Requirement and Compulsory License in Indonesia

The Government of the Republic of Indonesia has released the new Patent Law in 2016. Following the enactment of several sensitive articles, particularly Article 20, the Minister of Law and Human Rights has issued the Minister Regulation No. 15 of 2018 which provided a facility to delay the patent working.  Before end of 2018, the Government has also introduced a Ministry Regulation relating with the Procedure for Grant of Patent Compulsory License.

  1. Minister Regulation No. 15 of 2018 concerning Implementation of Patents by Patent Holders (Patent Working), effective on July 11, 2018.

 Like in India, where several years ago the provision on patent working requirement was set by its government, the implementation of Article 20 (para.1) of the new Indonesia’s Patent Law No. 13/2016 has been widely criticized. The complete Article 20 (para. 1) stipulates that a patent holder is obligated to manufacture the granted product or use the granted process in Indonesia. It is further stipulated in Article 20 (para. 2) that such product manufacturing or use of such a process must encourage the technology transfer, attracting investment and/or creating new job opportunities. Failing to conform to this provision, the granted patent will potentially be invalidated before the Commercial Court filed by public prosecutor or any party representing national interest (any individual who launch the lawsuit voluntarily for the sake of the society or the country), or compulsory-Licensee [Article 132 (para. 1)(e) jo (4)].

For this reason, the Government has issued the Minister of Law and Human Rights Regulation No. 15 of 2018 concerning Patent Implementation by Patent Holders (MR 15/2018) which was stipulated on May 22, 2018 and promulgated on July 11, 2018. In the event that a Patent Holder has not been able to implement its patent in Indonesia, the patent holder may delay working the patent in Indonesia for a maximum of 5 (five) years by submitting an application to the Minister accompanied by reason. Furthermore, the application for the postponement of patent application should be submitted within a period of 3 (three) years, counting from the date of grant. The MR 15/2018 also allows opportunity to request a second (and may possibly further) term of other 5-year postponement.

Patent holder is encouraged to file request for postponement in due time if they are not able to work their patents in Indonesia during prescribed time line. Please contact our Attorney regarding suggestion on variable reasons preferably prepared on the submission.

B. Minister Regulation No. 39 of 2018 concerning Procedure for Grant of Patent  Compulsory License, effective on November 26, 2018.

According to the regulation (MR 39/2018), an application of Compulsory License may be granted to a third party if:

  1. The patent holder does not perform its obligation (as mandated by the Patent Law) to manufacture product(s) or use process(es) in Indonesia within 36 months after the patent is granted
  2. The patent has been implemented by the Patent Holder or Licensee in a form and manner detrimental to society
  3. Patents resulting from the development of a Patent that has been previously granted cannot be worked without using another party’s patent which is still under protection
  4. The application of Compulsory License will be assessed by an ad-hoc expert team appointed by the Minister of Law and Human Rights.

Article 22 of the regulation specifically governs the use of Compulsory License for pharmaceutical products, which states that the Minister may grant Compulsory License to produce, import and export pharmaceutical products with patents in Indonesia for the purpose of “curing human disease.”  There are no further details in the article on how it will be implemented.

This regulation is also potentially in conflict with Minister Regulation No. 15 of 2018 on the postponement of local manufacturing (or the so called “patent working”) requirements, which allows patent holders to delay implementation of local manufacturing for five years (and can be further extended). Moreover, the regulation opens up a greater risk for patent holders applying for a postponement that their patent will be requested for Compulsory License.

Prepared by:
Kusno Hadi Kuncoro (Patent & Trademark Attorney at Batavia Patentservis Asia)

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