Foreign Franchise: IKEA Lost Its Trademark in Indonesia After a Dispute With Local Furniture Company

By Staff Writer

Feb 07, 2016 10:23 PM EST

Multinational furniture group IKEA from Sweden has lost its trademark in Indonesia, following a dispute with a local furniture company based in the city of Surabaya. The decision was ruled by Jakarta last year after the case was brought to the court in 2014, but the result had just been published online by the court on Thursday.

The lawsuit was cast out by local furniture company PT Ratania Khatulistiwa which registered the IKEA trademark under the name Intan Khatulistiwa Esa Abadi that refers to the company. Ratania Khatulistiwa registered for IKEA trademark in December 2013, while Sweden's IKEA had just operated in Indonesia since October 2014 in its only store near the capital city of Jakarta.

IKEA did register its trademark in Indonesia before it officially launched its business unit in Indonesia. According to ABC News, IKEA registered its trademark in Indonesia in 2010. However, according to Indonesia's trademark law, the trademark could be ruled out because the company had not actively used the trademark for commercial purposes in three consecutive years after its registration. The Sweden company had first registered its trademark in Indonesia in 2006, then renewed the certification in 2010, but it's not until 2014 that the company had used the name in its first store in Indonesia.

The Jakarta court decided that the IKEA trademark should go to the Surabaya company in September 2014, according to Coconuts Jakarta. Then, the Sweden furniture maker made an appeal to the Indonesian Supreme Court, but the request was denied so the company would have to abide by the Central Jakarta District Court.

It's still unknown what the next step for IKEA would be after this court decision. The company could pull out of Indonesia or change its official name. Some blamed Indonesia's unclear and ambiguous law on the issue, making foreign companies uneasy with their moves and decisions while doing business in Indonesia.

One Supreme Court Judge, I Gusti Agung Sumanatha, apparently believed the decision is not proper. He said that It's plain and obvious that Sweden's IKEA is big enough and could be seen plainly, so that the legal justification that was used to build the case cannot be applied, as quoted by Detik.

PT Ratania Khatulistiwa of Surabaya, Indonesia, was established in 1988. Since then, the company had made furnitures that were also exported to Spain, Japan, Australia, and the U.S. Sweden's IKEA itself is an acronym of Ingvar Kamprad from Elmtaryd, Agunnaryd. Ingvar Kamprad is a Swedish businessman that founded IKEA in 1943. 

The result of the dispute legally forced IKEA to change its trademark in Indonesia if it still wishes to operate in the country. It's unclear which step will be taken by the Sweden furniture company, but regardless, foreign companies are getting more cautious doing business in Indonesia. For now, IKEA in Indonesia means PT Ratania Khatulistiwa, a furniture company based in the city of Surabaya.

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