Prospects for Using Intellectual Property as Collateral in Indonesia The consequence of Indonesia’s participation as a member of the World Trade Organization (WTO) is to take essential steps, including harmonizing the legal regulations in the field of Intellectual Property (IP) with the provisions of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement.   This includes following developments in global regulations, where IP is one of the accesses to obtain banking credit internationally. It is noted that IP, such as Copyrights, Patents, and Trademarks, have become a common source of banking financing in foreign countries. This makes it easier for business people with products and/or services protected by IP law to access bank credit for capital to develop their business.   Regulation v Implementation in Indonesia Since 2022, the Government has stipulated Government Regulation Number 24 of 2022 concerning Implementing Regulations of Law Number 24 of 2019 concerning Creative Economy. This confirms that IP can be pledged as collateral for financing from banks and non-bank financial institutions. This regulation has only been implemented since July 12, 2023.   However, Melly Goeslaw, a singer and songwriter who has composed more than 600 songs, in her interview with Najwa Shihab, an Indonesian Senior Journalist, on the Mata Najwa podcast, which was released on the YouTube channel on January 16, 2024, admitted that her songs still cannot be applied for as loans at the bank. With the popularity of her songs, such as “Bunda” (1997) and “Ayat-Ayat Cinta” (2009), she still feels worried that she will not be able to support her children and provide them with a promising future if she is no longer productive. That’s why she proposed herself as a legislative candidate for the 2024-2029 House of Representatives of the Republic of Indonesia, hoping that existing regulations can be implemented comprehensively.   The same thing was expressed by Mira Lesmana, producer of blockbuster films such as “Petualangan Sherina” (2000) and “Ada Apa dengan Cinta?” (2002). Her work as Intellectual Property has indeed been recognized, but it cannot be used as collateral to the bank. It is easier to sell than to be used as collateral. Luckily, non-bank funding institutions already understand the value of a film, so they don’t need to sell or relinquish ownership of their old IP to get fresh funds to make new films because quality films cannot be made with a low budget.   The Concept of IP as a Collateral Object in the Fiduciary Guarantee System In Article 1, paragraph (1) of Law No. 42. 1999 concerning Fiduciary Guarantees, Fiduciary means transferring ownership rights to an object based on trust, provided that the object whose ownership rights are transferred remains in the control of the object’s owner. Meanwhile, a Fiduciary Guarantee is a security right for movable objects, tangible and intangible, and immovable objects, especially buildings that cannot be burdened with Mortgage Rights.   From a legal aspect, Intellectual Property as Fiduciary Guarantee is regulated by the following legislation: Copyright Law Article 16 Paragraph 3 Copyright can be used as an object of fiduciary guarantee. Patent Law Article 108 Patent rights can be used as an object of fiduciary guarantee.   For Industrial Design, the regulations are still in the form of an amendment, where Article 62 of the Industrial Design Bill states that Industrial Design can be used as an object of fiduciary guarantee. However, just like Trademarks, Trade Secrets, and other IP regimes, which are identifiable intangible assets, they can be categorized as objects of fiduciary collateral.   Conditions for IPs as Fiduciary Guarantee For Intellectual Property to be used as collateral or fiduciary guarantee, 2 (two) conditions must be met, namely: Has been recorded or registered with the Directorate General of Intellectual Property (DGIP) as indicated by possession of a Certificate of Recordation for Copyright or Certificate of Registration for other Intellectual Property; It has been managed independently, and/or the rights have been transferred to another party, as indicated by proof of use or a License Agreement document.   Obstacles in the Field Seeing the high growth in IP recordation and registration, if this regulation is implemented, interest in applying for IP as collateral will also be increased. However, as stated at the beginning, rejection still occurs a lot. Why?   Because if we talk about providing bank credit to debtors, there is always the potential for bad credit/failure to pay. So, to anticipate this risk, banks generally require debtors to provide credit collateral with a definite execution value to get the total return value. In practice, collateral such as land or buildings with much potential interest takes work to get buyers at the expected value. As a result, without further understanding the economic value of IPs, calculating the credit that can be granted becomes increasingly complex, and IPs are only considered as additional collateral guarantees.   Considering that there are still many other factors that are pretty complex in assessing an IP, it is felt necessary for these institutions to collaborate with other institutions that are not only able to calculate the valuation of IP assets but also legal audits that must understand the validity period, cancellation status and ownership (who is suitable to be given credit), as has been practiced abroad, including Singapore.   Solutions for Intellectual Property Valuation Even though there is no particular institution for valuing IP assets in Indonesia, there are already institutions that can be further empowered to assess and even help with payments in the event of bad credit. Here are some examples that can be applied:   Empowering National Collective Management Organization (LMKN) for Copyrights To facilitate the assessment of Copyright, especially music and songs, the Government and bank and non-bank financial institutions need to maximize the role and function of the LMKN, which has been established since 2014. By involving LMKN, bank and non-bank financial institutions can increasingly be confident in making music and songs as fiduciary guarantees. So far, LMKN has been tasked with collecting and distributing royalties for music and

The Directorate General of Intellectual Property of the Republic of Indonesia under the Ministry of Law and Human Rights of the Republic of Indonesia (hereinafter referred to as “DGIP”) has established various procedures under which the examination of a patent application may be accelerated. Under these procedures, DGIP will advance an application out of turn for faster examination if the applicant files the following special requests through the ASPEC program, Indonesia-Japan PPH program, or simply by providing the examiner in charge the granted corresponding claims from other Patent Offices, such as the USPTO, JPO, EPO, and others. We herewith summarize the options that may suit your need, depending on where you file your patent applications in other jurisdictions: 1. ASPEC The ASEAN Patent Examination Co-operation ( hereinafter referred to as “ASPEC”) was launched on 15 June 2009 and it is the first regional patent work-sharing program which involves nine participating ASEAN Member States (AMS) IP Offices of Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam. The program aims to accelerate the patent examination process by encouraging each of the participating Patent Offices to share search and examination results to allow applicants in the participating countries to obtain corresponding patents faster and more efficiently. Since ASPEC aims to reduce duplication on the search and examination work done, it is hoped that the search and examination work done on a corresponding application can be used as a useful reference in producing high-quality examination reports. Hence, if you can obtain the examination result from other countries in the participating Patent Offices, then the examination results or reports can be used as the basis of examination acceleration, as long as the corresponding claims are the same. When requesting ASPEC, the patent applicant is required to submit an ASPEC Request Form in the second Patent Office. The ASPEC Request Form shall be accompanied by the following documents: 1. a copy of the Search and Examination (S&E) report or the Examination report (“minimum documents”) of a corresponding application from the first IP Office; and 2. a copy of the claims referred to in the minimum documents submitted, with at least one claim determined by the first IP Office to be allowable/patentable. For PCT ASPEC request, the patent applicant is required to indicate that the request is for PCT ASPEC in the ASPEC form. The completed ASPEC request form shall be submitted together with the following documents: 1. a copy of the written opinion/international preliminary examination report (“WO/ISA, WO/IPEA or IPER”) established by an ASEAN International Searching Authority/International Preliminary Examining Authority (ASEAN ISA/IPEA) (“minimum documents”) relating to a corresponding application from the first IP Office; and 2. a copy of the claims referred to in the minimum documents submitted, with at least one claim determined by the first IP Office to be allowable/patentable. Please be mindful that the request to utilize ASPEC can only be done after the application has finished the publication stage. Based on our experience, the time it takes from filing the ASPEC request until the issuance of the decision to grant will not be more than 12 months – a great improvement in lead or pendency times compared to the processing time for non-ASPEC (or PPH) patent applications in Indonesia.   2. Japan-Indonesia Patent Prosecution Highway (Indonesia-Japan PPH) The Japan Patent Office (hereinafter referred to as the “JPO”) and the DGIP have initiated a Patent Prosecution Highway Program (hereinafter referred to as the “PPH”) back on June 1, 2013, and since then, the PPH has been chosen by many applicants who have previously filed their base applications in Japan as the method of accelerating the patent applications in Indonesia. The PPH request can be filed at any time as long as it is before the deadline to request the substantive examination stage. Please also be mindful that there will be an official fee of Rp 5.000.000,00 incurred for requesting the PPH acceleration program. When it comes to the requirements, the DGIP will require the applicant to provide the following documents in order to start the accelerate examination process: All formality documents required to file the application have been submitted and the DGIP will issue the notice of formality documents completion, which should also be provided by the applicant; Proof of payment to file a substantive examination request; The application should have passed the Publication of Period of 6 months; PPH Form (filled in); Corresponding claims which should be equivalent or less compared to the claims granted by the JPO; OEE ad OLE examination results; and OEE/OLE in English and/or in Bahasa Indonesia. Based on our experience, the time it takes from filing the ASPEC request until the issuance of the decision to grant will not be more than 7 to 12 months – a great improvement in lead or pendency times compared to the processing time for non-ASPEC (or PPH) patent applications in Indonesia.   3. Providing Corresponding Registered Claims In case none of the options above apply to you, you mal also provide the examiners at the DGIP with the corresponding granted claims from other well-established Patent Offices, such as the USPTO, UKIP, EP, AUIPO, SIPO, JPO, etc. The provision of the corresponding granted claims from the aforementioned Patent Offices will make it easier for the examiners at the DGIP to expedite the examination. Please note that the documents should be provided with the equivalent English translation. For any questions related to patent application in Indonesia, please do not hesitate to contact us at [email protected].