Indonesia’s Overhauled Patent Law: A Guide

In a world where innovation drives economic growth, securing robust intellectual property protection is essential for investors and inventors alike. Recognizing this, on October 28, 2024, Indonesia took a significant step by enacting Law No. 65 of 2024, amending the existing Patent Law No. 13 of 2016. These amendments are designed to align Indonesia’s patent framework with global standards and meet the needs of a rapidly evolving technological landscape.

The government’s key goals are clear: foster innovation, streamline processes and create an investor-friendly environment. These changes promise to enhance legal certainty, reduce administrative barriers, and ensure that patents are not only granted but effectively utilized.

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Expanded scope of patentable inventions

The amended law broadens the definition of patentable inventions to include systems, methods, and uses, in addition to traditional products and processes. This expansion offers comprehensive protection for a wider array of innovations, encouraging investment in research and development across various sectors.

Patentability of computer programs

A key clarification in the amended law addresses the patentability of computer programs. While pure software programs remain non-patentable, software-related inventions that are part of a broader technical process or system are eligible for patent protection. This means that if a computer program contributes to solving a specific technical problem or integrates with hardware to achieve a tangible outcome, it can be protected under the new framework.

For example, a software algorithm that enhances the functionality of a medical device or an industrial automation system would qualify for patent protection. This change aligns Indonesia’s patent system more closely with international standards, such as those applied in the European Union and the United States, encouraging more tech-based innovation and foreign investment in Indonesia’s growing digital economy.

Extension of grace period

To provide inventors greater flexibility, the grace period for disclosures has been extended from 6 to 12 months. Inventors can publicly present or discuss their inventions at official exhibitions, research trials, or scientific forums without jeopardizing their patent rights, provided they file within the 12-month window.

Enhanced licensing rules

The amended law introduces enhanced provisions for compulsory licensing. These rules are designed to ensure that patented inventions are utilized effectively, particularly in critical sectors like healthcare and public interest technologies. Licenses can now be granted more readily when a patent holder fails to implement their patent within a reasonable timeframe or meet public demand.

Key aspects of enhanced licensing rules

Public health and national interest

Compulsory licenses can be issued for inventions related to public health emergencies, such as access to essential medicines, vaccines, and medical devices. This provision aligns with the global movement to ensure that life-saving technologies are available to the public, especially during crises.

Non-Use of patents

If a patent holder does not exploit their patent within 36 months of the grant date, the government can issue a compulsory license to a third party. This ensures that patents are not left dormant, encouraging active innovation and commercialization.

Availability and affordability

Compulsory licenses can also be issued if the patent holder fails to meet market demand or if the product is offered at unreasonably high prices. This prevents monopolistic practices and ensures that essential products are accessible to the public.

Simplified process for licensing requests

The amended law streamlines the process for granting compulsory licenses. The requirements for submitting licensing requests have been simplified, reducing bureaucratic delays and expediting approvals. This is particularly beneficial for industries such as pharmaceuticals, agriculture, and technology, where timely access to innovations is critical.

Cross-border licensing

To support international cooperation, the law allows for the granting of compulsory licenses to export patented products to countries facing public health crises. This provision aligns with the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights) and supports global health initiatives.

Royalty compensation

The amended law ensures that patent holders receive fair compensation (royalties) when compulsory licenses are granted. The royalty rates are determined based on the economic value of the invention and the specific circumstances of the licensing arrangement.

Extension of property rights

The new amendments allow for an extension of patent protection periods in specific cases, such as delays in obtaining regulatory approval for pharmaceutical products. This ensures that patent holders receive fair compensation for their innovations, particularly in industries where product development and approval timelines are lengthy.

Simplified patent administration

The amended patent law significantly enhances the efficiency of the patent filing and administrative processes. These changes aim to reduce bureaucratic hurdles and improve accessibility for both local and international applicants, making Indonesia’s patent system more streamlined and transparent.

The key changes include:

1. Faster processing times
   The new amendments aim to reduce the timeline for patent examinations and approvals. By introducing more efficient workflows and leveraging digital infrastructure, the Indonesian Directorate General of Intellectual Property (DGIP) can now process applications more swiftly. This helps inventors secure their patents faster and bring innovations to market sooner.
2. Digitalization and e-services
   The amended law promotes the use of online platforms for filing, tracking, and managing patent applications. This reduces the need for physical paperwork, minimizes delays, and allows applicants to monitor the status of their applications in real-time. Digital submissions also make it easier for international applicants to navigate the system.
3. Reduced bureaucratic complexity
   Procedural requirements have been simplified to reduce unnecessary steps and redundant documentation. This makes the patent application process more straightforward, encouraging more inventors, especially small and medium enterprises (SMEs) and startups, to protect their innovations.
4. Clearer guidelines and support
   The amendments introduce updated guidelines and resources to help applicants understand the patent process better. This includes clearer instructions on requirements, timelines, and compliance, minimizing errors and rejections due to procedural issues.
5. Efficient appeals and dispute resolution
   The new system improves the process for handling appeals and disputes related to patent applications. This ensures that applicants can resolve issues more efficiently without facing prolonged delays.

Language requirements

Previously, patents needed to be submitted in Bahasa Indonesia. The amended law relaxes this requirement by allowing initial filings in English, provided a translation into Bahasa Indonesia is submitted within a specified period. This change facilitates foreign applicants’ entry into the Indonesian market, reducing barriers and administrative burdens.

Annual reporting requirement for patent holders

Patent holders must now submit an annual report detailing how their patents are being implemented in Indonesia. This requirement ensures that patents contribute to economic development and are not left dormant, promoting accountability among patent holders.

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Key aspects of annual reporting

Purpose of the requirement

The government intends to ensure that patented inventions are being used commercially or in practice within Indonesia. This helps drive innovation, supports economic growth, and prevents the accumulation of unused patents.

What to include in the report

The annual report must include:

• Details of how the patent is being utilized (e.g., production, licensing, or commercialization).
• Revenue or economic benefits generated from the patent.
• Challenges or obstacles in implementing the patent.
• Plans for future use or commercialization of the patented invention.

Consequences of non-compliance

Failure to submit the annual report may result in penalties or even revocation of the patent in cases of prolonged non-compliance. This ensures accountability and encourages patent holders to actively leverage their intellectual property.

Impact on licensing and partnerships

For companies and investors, this requirement provides greater transparency about patent usage. It can also help identify opportunities for licensing agreements or collaborations with other businesses seeking to utilize patented technologies.

Encouraging innovation

By requiring patent holders to demonstrate the real-world use of their inventions, the law encourages continuous innovation and prevents the strategic hoarding of patents without practical application.

Bolar Provisions

The revised Bolar provisions permit third parties to use patented inventions for research and development to obtain regulatory approval before the patent expires. This change supports the timely introduction of generic medicines post-patent expiration, benefiting public health and fostering competition in the pharmaceutical industry.

What these amendments mean for investors

The revised patent law enhances legal certainty and broadens the scope of protection, making Indonesia a more attractive destination for innovation-driven industries. By streamlining patent administration and aligning with international standards, the law reduces barriers for businesses seeking to secure and manage intellectual property rights.

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