Non-payment of patent annuities in Indonesia
Recently, the Indonesian Patent Office has begun enforcing a little-known provision governing the non-payment of patent annuities. This provision concerns the so-called ‘passive abandonment’ of patents and has resulted in much confusion among patent holders and practitioners alike.
Enacted in August 2001, the Indonesian Patent Law has served as the operative document governing the payment or non-payment of patent annuities to the Indonesian Patent Office for more than 14 years.
The provision at issue is Article 115(1) of the Indonesian Patent Law No. 14/2001, which states that if a patent holder does not pay the required annuity fees for a period of three consecutive years, the patent will then be deemed void starting from the end of the third year. Article 90 stipulates that a written request from the patent holder to the Patent Office is required to abandon a patent. However, this provision was not strictly enforced and the Patent Office routinely allowed parties to passively abandon their patents.
But over the past two years, the Indonesian Patent Office has begun issuing letters to patent holders who sought to passively abandon their patents. These letters state that the unpaid annuities that accumulated over the three-year period where the patent holder was in the process of abandoning its patent still need to be paid. The English language version of these letters describes the unpaid annuities as a “debt.”
The legal justification for this position is based upon one sentence contained in the ‘Elucidation’ (otherwise known as the ‘Explanatory Notes’) to Article 115(1) of the Patent Law, which states: “Annual fees that are not paid in 3 (three) years are debt that must be paid by the Patent Holder.”
To date, we are not aware of any instances in which sanctions or other penalties have been imposed against the patent holder over such “unpaid debts”. However, that could change in the future should the Indonesian government attempt to enforce this provision more vigorously.
Additionally, the Indonesian Patent Law is in the process of being revised and it is possible that this provision will be eliminated. However, no one knows if this will really happen and if so, whether it will have retroactive effect and therefore will cancel the so-called “debt” that was previously incurred through the non-payment of annuities.
Until the current and future situation is further clarified by the government, it is highly recommended that any patent holder who wishes to abandon their patent in Indonesia do so by writing a formal letter to the Patent Office instead of passively abandoning the patent(s) through the non-payment of annuities.
*A version of this article was posted on www.lexology.com.