Counterfeit Cosmetic Cases in Indonesia: Why Not Trademark Infringements?

Rapid economic and scientific developments have led to massive changes in cosmetic products, Indonesian traditional medicine, and medical devices. Today, the cosmetic industries’ establishment and development seem increasingly significant. According to data from the Indonesian Anti-Counterfeiting Society (Masyarakat Indonesia Anti Pemalsuan), in 2010, economic damage due to counterfeiting reached 37 trillion rupiahs and covered 12 industrial sectors, contributing 16% of total losses. This monetary figure is nine times that of 2005, a loss of 4.4 trillion rupiahs. In law enforcement, several regulations from, for example, the Mark Law (Law No. 20 of 2016), the Health Law (Law No. 36 of 2009), and the Consumer Protection Law (Law No. 8 of 1999), are often applied to sanction cosmetic counterfeiting. However, because counterfeit medicine infringes on registered trademarks, the Mark Law is one of the main regulations, especially the new Mark Law (No. 20 of 2016) that imposes heavier penalties on trademark violators that cause health problems and/or deaths of human beings: The violator shall be subject to the criminal sanction of imprisonment for a maximum of 10 years and/or a fine of a maximum of five billion rupiahs—this is much heavier than other regulations. Therefore, this research analyzes 50 Indonesian court decisions on illegal and/or counterfeit cosmetics from 2010 to 2018, concluding that not every problem of counterfeit cosmetics is treated as trademark infringement; in fact, the majority of cases are still treated as Health Law infringements. Compared with other regulations, solutions to cosmetic counterfeiting based on the Mark Law violation provide more benefits to affected parties—directly to brand owners and also to consumers who use or might use counterfeited cosmetic products. Even so, the Mark Law provision that requires a trademark owner to initiate legal infringement processes is the most common reason counterfeiting cosmetics cannot be easily treated as trademark infringement. Although compared with other laws, Article 100, Paragraph (3) of the Mark Law provides greater criminal sanctions for cosmetics counterfeiters, the provision’s objectives are unlikely to be achieved. This research recommends that infringement of Article 100, Paragraph (3) of the Mark Law should be treated as a regular offense not based on a brand owner’s complaint.