Real stores, fake brands, legal loopholes

For decades, Ralph Lauren’s iconic Polo Bear has been a globally recognized symbol of classic American style. Yet in Indonesia, that very symbol is being mass-produced and sold in malls across the country, far from the control of the original brand. The parent company issued a press release in July 2024 disavowing all affiliation with Indonesian storefronts and clarifying it had not authorized any third party to operate under the “Polo Ralph Lauren” or “Ralph Lauren” names. The company stated it is “aware of several third parties, including PT Manggala Putra Perkasa, that have registered trademarks in Indonesia similar to its own,” specifically noting that the firm “has also established a subsidiary named ‘PT Polo Ralph Lauren Indonesia,’” a move Ralph Lauren explicitly disavows. “We acknowledge that these activities create marketplace confusion. Ralph Lauren will pursue all available measures to defend our intellectual property rights and protect consumers from counterfeit goods in the region,” the company stated. Arc’teryx’s ghost stores This challenge is not unique to Ralph Lauren. In Indonesia and other countries, the Canadian outdoor retailer Arc’teryx has faced nearly identical challenges with legally sanctioned operations claiming trademark rights. According to Arc’teryx’s website, the brand “does not operate any stores or sell products directly to consumers in Indonesia. All current storefronts and merchandise in the country are unauthorized and not covered by Arc’teryx’s warranty.” However, this legal gray area exists because PT ATX Asia Sport Products holds a formally registered trademark for “Arc’teryx” with Indonesia’s Directorate General of Intellectual Property (DJKI) of the Ministry of Law and Human Rights. PT ATX claims exclusive rights to manage, distribute, and market Arc’teryx products in Indonesia, citing a licensing agreement registered with DJKI. Trust at risk: Indonesia’s investor credibility problem Nailul Huda of the Center of Economic and Law Studies (CELIOS) warns that failing to protect brand owners’ rights risks damaging investor confidence and discouraging foreign businesses from entering the Indonesian market. “Despite significant investment in research and innovation, these brands find their intellectual property inadequately shielded under Indonesia's current trademark framework. This persistent vulnerability may give investors pause when considering whether to enter the Indonesian market,” Huda tells Jing Daily. “If we are serious about protecting investor rights, we absolutely need to learn from China’s case concerning IP law,” he adds. A decisive victory in China While brands like Polo and Arc’teryx operated in Indonesia for years without official storefronts — exposing a vacuum that copycats were eager to fill — Ralph Lauren recently found legal success in China’s courts. In December 2024, Ralph Lauren won a major victory against trademark infringers in China’s Shanghai Intellectual Property Court, a ruling that highlights the country’s advancing commitment to intellectual property protection. The cases targeted Shanghai Ruifa Apparel Co., Ltd. and Qingyuan Huahao Zhibai Leather Goods and Apparel Co., Ltd., two major licensees of Guangzhou Aichi Leather Goods Co., Ltd., a firm long accused of systematically exploiting Polo Ralph Lauren’s brand identity in China. The court recognized Ralph Lauren’s trademarks including “Polo,” “Polo by Ralph Lauren” and “Polo Ralph Lauren” as highly influential within the industry and among Chinese consumers. According to the China National Intellectual Property Administration, the country has implemented proactive measures to address corporate intellectual property concerns, ensuring equal legal protection for both domestic and foreign innovators. How first-to-file systems backfire In response to similar challenges in Indonesia, officials from the country’s Directorate General of Intellectual Property have clarified that Arc’teryx holds no registered trademark in Indonesia and therefore is not entitled to legal protection within the country. “Trademark protection is territorial and based on a first-to-file system. Since the Canadian company did not register its brand in Indonesia, the rights to the trademark in Indonesia belong to the Chinese company that filed for it in 2019,” Hermansyah Siregar, Director of Trademarks and Geographical Indications at Indonesia’s Directorate General of Intellectual Property, says. “The existing Trademark and Geographical Indications Law already provides a clear framework for both registration and dispute resolution. Therefore, any actions taken must comply with these established legal procedures,” Siregar adds. The sole path for Arc’teryx to reclaim its trademark rights in Indonesia is to win a cancellation lawsuit in the Commercial Court. The challenges faced by brands under Indonesia’s IP regime risk accelerating a significant drain on domestic luxury spending. According to the UOB ASEAN Consumer Sentiment Study 2024, 60% of Indonesian consumers spent money overseas in the past year, primarily during leisure trips and business trips. Coordinating Economy Minister Airlangga Hartarto has highlighted how this trend undermines the national economy, with the core issue remaining consumer sensitivity to product availability. When local assortments fall short, shoppers readily turn to international markets. The 90% problem: China’s counterfeit dominance China remains a dominant source of counterfeit goods globally. According to U.S. Customs and Border Protection data, seizures from China and Hong Kong accounted for approximately 90% of the total quantity of counterfeit goods seized in fiscal 2024. The counterfeit luxury boom is fueled by the interplay of social status and social media influence. This is especially true in Southeast Asia, where the luxury market is thriving. Statista projects the luxury fashion segment alone will hit a market volume of $5.79 billion by 2025. It is imperative for both market regulators and regional governments to take action. They must protect not only consumers from fraud, but also safeguard the brands whose innovation and value are undermined by counterfeits. Globally, brands must prioritize understanding local trademark law to avoid losing their rights. In key “first-to-file” jurisdictions including China, Indonesia, Thailand, Vietnam, and the EU, trademark rights are granted to the first registrant, not the first user. This has created significant challenges for brands like Polo and Arc’teryx, which have struggled to reclaim their rights in Indonesia after others registered their marks. In China, however, the Shanghai IP Court actively upholds equal protection for foreign and domestic brands, building trust among international rights holders. As IP lawyer Kang Lixia of Beijing’s Hanray Law Firm told China Daily in 2023, the growing number of brands choosing to settle disputes in China reflects this increasing confidence in its judicial system. “When foreign entities have an IP dispute in China, it’s often an administrative case, directly involving the rulings of Chinese IP authorities,” Lixia said. “This surge in litigation demonstrates growing foreign confidence in China’s IP protection, making it a preferred venue for settling disputes,” she added. China’s IP ecosystem continues to attract international rights holders, as demonstrated by strong growth in key metrics. According to China National Intellectual Property Administration data, authorizations for foreign invention patents reached 92,000 in the first 10 months of 2024, a 5.3% year-on-year increase, while foreign trademark registrations surged 13.1% to 121,000. Due diligence: Checking before you expand As Huda suggests, rectifying misconceptions about trademark protection requires greater government collaboration with international brands. One viable approach for Indonesia would be to implement a framework inspired by China’s method. “For example, if a brand name is already registered in the U.S., a company must verify its availability and legal status in the target market before expanding. This due diligence includes checking for existing local registrations, assessing potential conflicts, and determining if a representative has already secured the rights,” Huda says. A trademark can only be legally recognized as “famous” in Indonesia through a final and binding court ruling, according to intellectual property lawyer Jekrinius Hasiholan Sirait. While trademark examiners may grant the status during the application process using global database searches, internet trends, and other internal criteria, Sirait emphasizes that this designation lacks legal force. He further explains that the law provides only general guidelines for what constitutes a famous mark, as factors including brand recognition, sales, and publicity are dynamic. Without a definitive court decision, the “famous trademark” status remains provisional. “A plaintiff just needs to prove the other party acted in bad faith, such as trying to piggyback on a famous brand’s reputation or creating a copycat that implies a fake affiliation,” he says, adding that in several markets like Europe and the U.S., enforcement of clauses concerning dishonest conduct is more effective. “This is a common global issue, not just in Indonesia, where a brand’s success makes it a target for copycats,” intellectual property lawyer adds. “The key is straightforward: if a party can demonstrate that their well-known brand is being harmed by a registration in another country, they have the right to sue. The case rests on proving the brand’s fame through substantial evidence, such as major sales figures, widespread publicity, international registrations, and other criteria outlined in the relevant laws.” Amending the law: Indonesia’s unfinished business However, the real long-term solution requires amending the trademark law to better recognize and protect well-known brands proactively. Yet, until such reforms are implemented, the situation is likely to remain unchanged. “That’s a question for the lawmakers. At the moment, trademark law reform isn't on the table. The focus is solely on updating the copyright act,” Sirait says. In the end, the only true measure of authenticity lies not in the law, but in a brand’s own diligence to secure its identity before it becomes another’s legal property.

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Real stores, fake brands, legal loopholes