Sweden's IKEA loses right to use its own name in Indonesia

[February 05, 2016]  By Eveline Danubrata and Fransiska Nangoy

JAKARTA (Reuters) - Swedish furniture giant IKEA has lost the right to use its own brand name in Indonesia after a legal battle with a local company that claimed the trademark, court documents released earlier this week showed.

The court decision could make foreign companies even more cautious to invest in Southeast Asia's biggest economy, which is already growing at its weakest pace since the global financial crisis.

"The clear message is that any business wanting to open up in Indonesia has to be very careful to register all its trademarks so they don't get hijacked," said Keith Loveard, head of risk analysis at Jakarta-based Concord Consulting.

"It's the fact of the law that you have to cross every 't' and dot every 'i'," he said.

In 2014, a Jakarta commercial court granted the rights to use the "Ikea" brand name to PT Ratania Khatulistiwa, a company that plans to sell its own furniture with the acronym for Intan Khatulistiwa Esa Abadi.

Inter IKEA System B.V., part of the Swedish company's franchise division, had registered the "IKEA" trademark with the Indonesian directorate-general of intellectual property twice, in 2006 and 2010.

But Ratania, which is based in the East Java capital of Surabaya, successfully argued at the Jakarta court that the furniture giant had not used the trademark for commercial purposes for three consecutive years.

Inter IKEA filed an appeal to the Indonesian Supreme Court, which was rejected last year, according to court documents uploaded to its website earlier this week. (http://bit.ly/23N1bDG)

IKEA opened its first Indonesian store in the outskirts of Jakarta in 2014. Indonesian retailer PT Hero Supermarket Tbk owns the franchise to operate the IKEA business in Indonesia.

The options now for IKEA are to file an appeal to the same court, change its name, or pay royalty fees to the Indonesian company, according to a legal expert contacted by Reuters.

Ratania could not be reached for comment. IKEA did not immediately respond to an email seeking comment, and calls to its Singapore office and Hero Supermarket went unanswered.

(Reporting by Eveline Danubrata and Fransiska Nangoy; Editing by Elaine Hardcastle)

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