Trading of Trademark: Lessons from Sariwangi Case
In the 4th quarter of 2018, Indonesian netizens were surprised once more by the bankruptcy case of one famous Indonesian company, Sariwangi. Netizens exchanged their best memories with Sariwangi’s tea. It seemed acceptable since Sariwangi’s tea is well-known in Indonesia as the pioneer of tea-bag tea.
However, Unilever Indonesia, as the current official owner of Sariwangi’s tea brand made a clarification about the news of bankruptcy of Sariwangi. Unilever Indonesia stated the bankrupted company is PT Sariwangi Agricultural Estate Agency, which is not a part of Unilever Indonesia. Unilever Indonesia was indeed once had a business cooperation with that company which has been discontinued in early 2018.
After further investigation, it is known that Sariwangi brand was sold to Unilever Indonesia in 1989 by the previous owner. The selling of Sariwangi brand gave Unilever the rights to sell tea products under ‘Sariwangi’ brand. Can a party sell a brand or trademark of a business entity ? How is the impacts in long term? Please read the following article coverage.
Trademark can be defined as graphically shown marks, such as images, logos, names, words, letters, numbers, colors, in the form of two dimension and/ or three dimension, sounds, holograms, or combination of two or more to differentiate goods and/or services produced by a person or legal entities in the activities of trade of goods and/or services.
Trademark is divided into two types, which are Trade Brand and Service Brand. The Trade Brand is a brand that used in a traded goods product by a individual(s) or legal entity to differentiate with other similar goods product.
Meanwhile, Service Brand is a brand that is used on services by a person or several people jointly or by legal entities to differentiate with other similar services.
Article 41 Act Number 20 Year 2016 (the Trademark Law) stipulates the transfer of Trademark title. The article regulates that Trademark title can be transferred to the other party due to the inheritance, testament, waqf, grant, contractual, or any other lawful reasons under the prevailing Laws and regulations.
One of other reasons that deemed lawful transfer of Trademark title under contractual arrangement is through sales transaction, in which the Indonesian Civil Codes admits the present of sales contract and there is no specific regulations that prohibit the sale of a Trademark. Therefore, the sale of brand is deemed rightful by the Law as a reason for brand transfer.
In the implementation a Trademark Sales Contract is to be made before the Notary and the buyer of the Trademark shall file an application to the Minister of Law and Human Rights through the Directorate-General of Intellectual Rights, to apply for the transfer title of the registered Trademark . The application shall be submitted along with complete supporting documents, including but mot limited to the Trademark Registration Certificate, evidence of the sales of the Trademark (Trademark Sales Contract) and/or other relevant evidences.
The title transfer is later recorded in the Trademark Official Gazette, in which without such registration in the Trademark Official Gazette, then the Trademark title transfer will not have legal binding power to the third parties. As additional information, the application for the transfer of trademark title can also is subject to official charges which will be imposed to the applicant and.
Please be noted that the Trademark transfer is limited to the right of the trademark usage in commercial use by the business. For example, in the case of Sariwangi, Unilever Indonesia hold the title and rights from the previous owner to use ‘Sariwangi’ brand for the tea products they are selling, however, other intellectual property related to the production process, license, trade secret, and others intellectual property rights might still owned by the previous owner unless it is being transferred through certain contractual transaction or other lawful transfer title process.
So what would be the issue in a long term from the transfer of Trademark title? Of course, once you acquire the title of a Trademark you will be able to use the trademark/brand for the product you sold, however, you need to understand that Trademark/brand that you bought is attached to certain qualities or prestige of the products itself and if you cannot meet the qualities or prestige expectation as provided by the previous owner, then this will surely jeopardize the brand image as well as your business.
With the above circumstances, it is necessary for you to also consider the following options; First, you also buy all intellectual property rights attached to the respective product with the said brand; Second, to produce the products or services either by yourself or outsource it to the third party and ensure same level of quality as produced by the previous owner; and Third, to buy the entire business of the brand’s from the previous owner. Which one is better? For this, only you can decide.
Editor: Andry Yudistira
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Author:Thareq Akmal Hibatullah