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You Snooze, You Lose – IKEA v Ikea

IKEA received a lot of media attention at the beginning of this month after one of its franchisees lost a trade mark dispute in Indonesia. The Supreme Court ruled that the IKEA name is owned by local furniture company, PT Ratania Khatulistiwa ("PTRK").

Swedish furniture giant, IKEA, received a lot of media attention at the beginning of this month after it lost a trade mark dispute in Indonesia. Although the case was decided in May 2015, the Indonesia's Supreme Court only published its report this month. The Supreme Court ruled that the IKEA name is owned by local furniture company, PT Ratania Khatulistiwa ("PTRK").

What happened?

IKEA registered an Indonesian trade mark in 2010 covering furniture and household items. In December 2013, local business PT Ratania Khatulistiwa, registered their trade mark "Ikea" (standing for Intan Khatulistiwa Esa Abadi) for the same goods. IKEA did not open its first store in Indonesia until 2014 at which point PTRK brought legal proceedings to remove the 2010 trade mark from the register on the grounds of non-use.

Under Indonesian trade mark law, if a trade mark isn't actively used for commercial purposes for three consecutive years, it becomes vulnerable to a non-use challenge and can be revoked. Subsequent use does not cure the issue and defeat the revocation action. In this case, IKEA was unable to prove use during the three years following registration and consequently the 2010 trade mark was revoked by the District Court, which found that PTRK was now the legitimate owner of the mark by virtue of its 2013 registration.

IKEA appealed to the Supreme Court, which affirmed the District Court's decision. The Supreme Court ruling, however, was not unanimous. One of the three judges did rule in favour of IKEA, noting the size difference between the two companies and the historical origin of the IKEA name in Sweden.

According to press reports, a spokesperson from IKEA has stated that the ruling does not affect the store's operation in Indonesia, although the exact measures taken to allow continued use of the trade mark are unknown. It is possible that IKEA has been obliged to license the 2013 registration from PTRK.

Key learnings for global businesses

The case provides two object lessons on IP strategy. The first lesson highlights the impact that local variations in trade mark law can have on outcomes. A three year non-use period is common to many jurisdictions; however, the fact that resumed use will not defeat a revocation action is a peculiarity of far fewer jurisdictions.

The second lesson is on timing. If IKEA had refiled its mark in 2011 or 2012, once it realised that its Indonesian launch would be later than anticipated, the issue would not have arisen. As far as possible, the timing of trade mark filing strategies must be meshed closely with the commercial planning of the business. Where the timing of commercial plans slips, it is necessary to revisit the IP strategy and revise it – even if that means making repeated filings in some circumstances.

Many thanks to Aliyah Hussein for her help in preparing this blogpost.

 

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