Indonesia Omnibus Law Counterbalances Covid19 Woes with Compulsory Licensing Relief

(Written by: Liangshu Huang)

There is finally light at the end of the tunnel for patent rights holders who were previously concerned about the obligation to “work” their patents in Indonesia or risk either an award of a compulsory licence or worse, face revocation of their patent for not doing so. The Omnibus Law which revises over 70 existing laws with the aim of dealing with legislative hinderances to foreign investment was finally passed by the House of Representatives of the Republic of Indonesia on 05 October 2020. While controversial for its unfavourable effects to a large extent of the local population, the Omnibus Law removes uncertainty for patent rights holders concerned about compulsory licensing risks.

By way of background, Article 20 of Law No. 13 2016 on Patents imposes an obligation on holders of patents granted on or after 26 August 2016 to work their patented invention in Indonesia within 36 months of grant. Failure to do so can result in a grant of a compulsory licence to an interested person or revocation by the Indonesian government solely on this basis.

As a possible result of strong negative sentiment concerning Article 20, Implementing Regulation No. 15 of 2018 issued on 11 July 2018 introduced a postponement regime that allows patent holders to submit a written request to postpone the “work” obligation for a period not exceeding 5 years with further extensions possible if valid reasons are provided.

With the removal of Article 20, patent holders no longer have to be concerned with the possibility of a compulsory licensing awarded or revocation of their patent solely on the basis of non-working of the patented invention and can be unequivocally seen by patent holders as a positive development and puts to end years of uncertainty.