A Singaporean business that had filed a lawsuit against Unilever's Indonesian affiliate for trademark infringement recently received a judgement for roughly $2.14 million in damages from an Indonesian court. In Indonesia, lawsuits involving IP infringement rarely result in such significant damages awards. The Indonesian Trademark Office is currently conducting a substantive review of the applications for the infringing mark, but the Central Jakarta Commercial Court did not deem the matter to be premature. Given that practically all rights are only obtained through registration, it serves as a harsh warning of the dangers of using a trademark in Indonesia before it has been registered.
Some of the key issues presented to the court were, among others:
- Whether 'Strong' is a descriptive mark that cannot be monopolised by a single party;
- Whether the mark's status as a sub-brand to the famous mark 'Formula', reduced the risk of consumer confusion, particularly when compared to another famous brand 'Pepsodent' included in the defendant's mark;
- Whether the lawsuit was premature since the applications for 'Pepsodent Strong 12 Jam' remained pending; and
- The amount of damages to award, if any.
The wordmark and combination mark "Pepsodent Strong 12 Jam" ('jam' meaning "hour" in Bahasa Indonesia) covering toothpaste and other class 03 goods were applied for in 2019 by the defendant's holding company, Unilever N.V. While the applications were being processed, their local subsidiary PT. Unilever Indonesia, Tbk. started marketing, distributing, and selling goods under the name "Pepsodent Strong 12 Jam."
As a member of the Indonesian conglomerate Orang Tua Group, the plaintiff, Hardwood Private Limited, registered the mark "Strong" for toothpaste in class 03 in 2010. This was followed by a number of variations, including "Formula Strong," "Strong Protector," "Formula Strong Herbal," "Formula Strong Protection," and "Strong Protection." Based on these registrations, the plaintiff said that they had the sole right to control any marks in class 03 that were identical to or substantially similar to the word "Strong." The plaintiff claimed that the defendant had violated their exclusive rights by using the mark "Pepsodent Strong 12 Jam," which completely incorporates the plaintiff's mark "Strong," in commerce for products in class 03, and demanded $2.36 million in material damages and $5.37 million in immaterial damages.
The Commercial Court did not specifically decide whether or not the word "Strong" is descriptive of toothpaste in its ruling from November 18, 2020. Instead, it emphasised the mark's Indonesian trademark registration, which gave the owner of the mark exclusive rights to use it in line with Indonesian trademark law.
The court further determined that despite all of the plaintiff's evidence of commercial use containing both "Formula" and "Strong" combined, the fame of the house marks "Formula" and "Pepsodent" was immaterial to their consideration of similarity because the registered mark at issue was "Strong" by itself. The court determined that the plaintiff's registered mark "Strong" and the defendant's mark "Pepsodent Strong 12 Jam" were substantially similar. Because of this, the court determined that the plaintiff was more likely to be confused and that the defendant's acts amounted to infringement.
The "Pepsodent Strong 12 Jam" applications were still being thoroughly reviewed, but the court did not view the lawsuit as being filed too soon. Additionally, it granted the plaintiff's demand for material damages, which covered the expenses used in creating the mark "Strong," including advertising expenses for TV and offline campaigns and the alleged reduction in gross margin in 2019. In the meantime, the plaintiff's request for immaterial damages-which was purportedly made to restore the reputation of the 'Strong' brand after infringement-was denied by the court.
The 2016 Indonesian Trademark Law's civil infringement provisions don't specify statutory maximums or how damages should be determined. The court's decision to accept only material losses, nearly all of which were backed by comprehensive evidence, and to reject immaterial damages, which were not, can therefore be viewed as instructive for determining damages in subsequent trademark infringement cases.
It must be emphasised that the Indonesian trademark registry is full of what most would consider extremely descriptive marks, many of which were registered a long time ago, leaving aside arguments over whether "Strong" should have been determined to be descriptive. If a mark has been registered for more than five years, such as "Strong," it would no longer be subject to annulment due to descriptiveness. Considering that registration would offer a complete defence to accusations of infringement, this case illustrates the risk that these registrations can represent as well as the potential drawback of utilising marks before they have been registered. The risk is increased by the lack of a precise legislative formula or technique for calculating damages.
Unilever's trademark requests are still ongoing as of February 2021, and they have already challenged the Commercial Court's decision to the Indonesian Supreme Court. Therefore, there are still many decisions to be made, and this is probably not the last we will hear about this issue.
Meta Title: Orang Tua and Unilever: Who wins?
Two major Indonesian consumer products companies, Orang Tua Group and Unilever Indonesia, engaged in an unusual trademark fight to determine which would prevail. These two titans have a long history of outstanding business accomplishments in Indonesia. The 1948 founding year of the family-run business empire Orang Tua Group (OT). In Semarang, Indonesia, they started off by producing and selling a traditional herbal beverage called "Anggur Orang Tua," which is Indonesian for "Old man wine." It is widely accepted that the traditional herbal blend Anggur Orang Tua, which combines wine, has health advantages. A traditional drink manufacturer for 73 years, OT has evolved into a local FMCG juggernaut with numerous business divisions producing everything from booze to snacks to confectionery to healthy drinks to oral care items. As an FMCG firm, OT gave IP protection and monetizing their IP rights a high priority. In order to own all their intellectual property, OT founded Hardwood Pte. Ltd. in Singapore. The business also developed an internal licencing structure for the use of its IP. In 1933, when Indonesia was still a Dutch colony, PT. Unilever Indonesia ("Unilever"), a worldwide consumer goods corporation, was founded there. In Indonesia and throughout the world, Unilever is renowned for producing products for every need.
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