Starting a Business or Registering a Trademark: Which Should Come First?

In Indonesia, trademark registration is often set aside by business actors, such as MSMEs, who prefer to open their business first. In fact, this decision can backfire when a dispute arises later on.

Under Article 1(5) in conjunction with Article 3 of Law Number 20 of 2016 on Trademarks and Geographical Indications, Indonesia adheres to a first to file system, whereby exclusive rights to a mark are granted only to the party who first registers it with the Directorate General of Intellectual Property (DJKI), not to the party who has used it the longest. As a result, a business actor who has spent years building a business can lose the rights to its own product name because another party officially registered that name first.

This situation is not infrequently exploited by bad-faith actors who deliberately register another person's mark for personal gain. The aggrieved party may indeed file a cancellation lawsuit with the Commercial Court under Article 76(1) in conjunction with Article 21(3) of the Trademark Law, but this route consumes considerable time, cost, and effort.

Therefore, registering a trademark from the outset is not merely an administrative matter, but the most fundamental protective step for business continuity. Under the first-to-file system, whoever registers first is the one protected by law.