As highlighted back in 2022 (click here to read our previous client alert on the same topic), the government had enacted Government Regulation No. 24 of 2022 on the Implementing Regulation of Law No. 24 of 2019 on Creative Economy (“Regulation“). The Regulation confirmed that intellectual property (“IP“) assets can be pledged as a security to obtain financing from banks and non-bank financial institutions. While the concept of taking security over IP is not new, the Regulation is a significant step in Indonesia’s IP regime, besides also stimulating the creative economy ecosystem in Indonesia.
From a regulatory standpoint, Law No. 42 of 1999 on Fiducia Security (“Fiducia Law“) stipulates that fiducia can be established on any movable intangible object that can be owned and transferred, regardless of whether it is registered or unregistered. Furthermore, Law No. 28 of 2014 on Copyright (“Copyright Law“) and Law No. 13 of 2016 on Patent (“Patent Law“) explicitly stipulate that copyrights and patents can serve as objects of fiducia security. In practice, we have seen IP assets, mostly trademarks, being used as security objects to secure a loan or financing transaction. Although theoretically, IP assets can be encumbered through a pledge, as mentioned above, we have only seen these IP assets being encumbered by way of a fiducia security and subsequently registered at the Fiducia Office.
In light of the Regulation finally coming into effect on 12 July 2023, below is a highlight of some of the key steps that need to be taken by all the parties involved.
For more information, click here to read the full Legal Update.
