Good Faith as the Limit to Indonesia's First-to-File Trademark Principle

Indonesia consistently applies a constitutive trademark registration system, universally known as the first-to-file principle. Under Article 3 of Law No. 20 of 2016 on Trademarks and Geographical Indications (the Trademark Law), trademark rights are acquired once a mark is registered. In theory, this system creates legal certainty and makes it easier for the state to identify the single rights holder of a given mark.

In practice, however, the absolute nature of first-to-file often creates room for trademark squatting, or free-riding on someone else's reputation. A legal problem arises when a party, deliberately and in bad faith, registers a sign that has, in fact, already been used and developed by another party — the prior user — who simply hasn't yet registered it administratively. This is where the doctrine of good faith steps in as a corrective instrument to prevent misuse of rights.

How bad faith is established in trademark registration

Under Indonesian trademark law, "bad faith" is an absolute ground both for rejecting a trademark application and for cancelling a mark that has already been registered. Article 21(3) of the Trademark Law expressly states that a trademark application will be rejected if filed by an applicant acting in bad faith.

In theory, bad faith in a trademark application can be established where the applicant had knowledge, or should reasonably have suspected, that another party's mark already existed, and knowingly proceeded to register a mark in order to:

• Imitate or copy a similar mark belonging to another party;
• Free-ride on the reputation or fame of an existing mark;
• Obstruct or shut out a competitor — the genuine prior user — from the market.

The evidentiary dialectic: overcoming a certificate with proof of use

Even though the first registrant holds formal proof in the form of a Trademark Certificate, the legal standing of a genuine prior user remains protected through a Trademark Cancellation Lawsuit before the Commercial Court under Article 76 of the Trademark Law.

The crux of such a dispute lies in the burden of proof. The prior user must overcome the presumption of validity attached to the registration by establishing the following elements:

1. Proof of prior use

The prior user must show actual, continuous, and commercial use of the mark well before the first registrant's filing date. Evidence for this includes:

• Sales invoices or receipts bearing an earlier date.
• Proof of promotion (print advertising, social media, or brochures).
• Awards or participation certificates from trade exhibitions.

2. Proof of the applicant's "knowledge" element

To establish bad faith, there must be a logical connection showing it was implausible for the first registrant not to have known of the prior user's mark. Courts typically look at parameters such as:

• Geographic proximity — whether both parties operate in the same city or overlapping market.
• A prior business relationship — whether the first registrant was once a distributor, employee, or business partner of the prior user.
• Identical similarity — where the registered mark is phonetically and visually identical to a degree that rules out coincidence.

3. Guidance from Supreme Court jurisprudence

Drawing on various Supreme Court decisions — including cases involving well-known marks — bad faith is assessed by whether the registration undermines fair competition. Where a registrant cannot explain the philosophy or origin behind the mark's creation, this reinforces an indication of bad faith.

Indonesia's first-to-file principle is not a purely mechanical, administrative rule — it remains subject to the legal-moral principle of good faith. Legal protection for a genuine prior user who has not yet registered their mark remains available through cancellation litigation, provided the prior user can present factual evidence of use that predates the registration. In this way, Indonesian trademark law preserves the balance between administrative certainty and protecting the economic rights born from creativity and honesty in business.