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

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.

General view of IKEA's first city centre store in Hamburg June 25, 2014. REUTERS/Fabian Bimmer

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 Systems 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.

Inter IKEA’s local lawyers were notified of the Supreme Court’s May 2015 decision on Thursday, Niclas Bengtsson, a spokesman for Inter IKEA, said in an email. He did not explain the reason for the delay.

“What we can say right now is that we are analyzing the decision and are confident that we will be able to continue with IKEA operations in Indonesia also in the future,” he said.

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

The options 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.

Reporting by Eveline Danubrata and Fransiska Nangoy in JAKARTA; Additional reporting by Anna Ringstrom in STOCKHOLM; Editing by Elaine Hardcastle