The most common types of business in Medan Selayang
District are culinary businesses with a total of 886 units, and then in the
service sector, as many as 200 units. Generally, these businesses have not
received legal protection for their brand rights from the government. The
problems faced by MSME actors are very diverse, ranging from capital, permits,
legal protection, and brand rights. Related to the legal protection and brand
rights registration problems, based the data recorded by The Creative Economy
Agency shows the fact that the MSME sector in Indonesia is still very identical
to various traditional businesses and there are 96% of MSMEs not yet legally
incorporated or legally protected (Betlehn & Samosir, 2018). Based on these
data, it is clear that the number of MSMEs registering their brand rights is
minimal and inversely proportional to the total number of existing MSMEs.
A brand is a sign that can be displayed graphically in the
form of an image, logo, word name, letter, number, color arrangement in
two-dimensional or three-dimensional form, sound, hologram, or a combination of
two or more of these elements to distinguish the goods and service produced by
a person or legal entity in the activities of trading goods and services. The
legal protection of MSME product brands is the same as the legal protection for
other brand rights holders as regulated in Law Number 20 of 2016 about Brands
and Geographical Indications (Purnama, 2010).
Legal protection of brand rights for MSME actors adheres
to the first to file principle (Hidayah, 2017). Based on this
principle, business actors who wish to have rights to a brand must register the
brand (Riswandi, 2004). Brands are part
of intellectual property rights that are not solely related to legal protection
but are closely related to issues of trade, economic, and technology
development and become the basis for business actors to advance the
socio-cultural of their nation and society in general (Adisumarto, 1990). Although the
brand and legal protection of a brand for MSME actors are very important, the
current data shows that the desire to register a brand is minimal. Data from
the Directorate General of Intellectual Property (IP) shows that from 2016- to
April 2018, the registration of MSME brands was only 8.55%.
The lack of interest in MSME actors in registering their
brands raises an interesting question: What factors cause the importance of
registering brand rights for MSME products. Apart from that, it is also
necessary to study what legal consequences will be received by MSME actors
whose trademarks are not registered, as well as the relevance of brand rights owned
by MSMEs as their economic rights. To answer this question, the research's area
or scope will focus on one of the sub-districts in Medan City, namely the Medan
Selayang District, to make it easier to identify and examine the existing
problems. By the background that has been described, the problems to be
discussed can be formulated in the form of legal questions, as follows:
1. What
factors make it important to register brand rights for MSME products?
2. What
are the legal consequences for MSME products whose brands are not registered,
and what is the relevance of brand rights as economic rights for MSMEs?
METHOD
The type of research used
in this paper is normative legal research. Normative legal research is legal
research conducted by examining library materials or secondary data (Soekanto, 2007). This research has
an approach that refers to the applicable law and regulations by using the
qualitative descriptive analysis method (Soemitro, 1990). Qualitative
descriptive means providing data that describes humans, circumstances, or other
symptoms related to the research topic as accurately as possible (Soekanto, 2005).
This study used primary
data in the form of interviews and secondary data derived from primary legal
materials consisting of Law Number 20 of 2008 about MSME; Law Number 20 of 2016
about Brands and Geographical Indications; Minister of Law and Human Rights
Regulation Number 12 of 2021 about Amendments to Minister of Law and Human
Rights Regulation about Brand Registration, secondary legal materials, namely
journals and other scientific articles as well as other tertiary legal
materials.
RESULTS AND DISCUSSION
A. Factors
Causing Importance of Brand Right Registration for MSME Products
A
brand is a part of Intellectual Property Rights (IPR) which is described as
property rights arising from human intellectual abilities (Kesowo, 1995). The conception of
IPR is based on the idea that humans have produced intellectual works that
require the sacrifice of energy, time, and money. The existence of these
sacrifices makes the work that has been produced has economic value because of
the benefits that can be enjoyed (Ismail, 1990).
Brands
have an important role in avoiding unfair business competition practices because
brands can distinguish the origin and quality and guarantee the originality of
an item. Brands can also be classified into the category of immaterial objects
because a brand is something that is attached to a product but not the product
itself, and what consumers can enjoy is a non-brand product. Brands can only
lead to satisfaction for consumers.
The
function of a brand is as a differentiator from goods and services made by a
person or other legal entity. Goods or services must be identified to distinguish
them (Usman, 2003). Consumers also
need brands to determine the choice of goods/services to be selected. In short,
a brand is a mark of differentiation, identity, quality assurance, and a
valuable asset (Permata, Safiranita, & Utama, 2019).
The
function of a brand is first as an identity to distinguish one company's
products from other products (product identity) (Khoironi, 2013). This function
also connects goods or services with their producers as a guarantee of the
reputation of their business result when traded. Second, as a means of trade promotion. The promotion is carried
out through advertisements of producers or entrepreneurs who trade goods or
services. A brand is one way to attract consumers, symbolizing entrepreneurs
expanding the market for their products or merchandise. Third, as a guarantee for the quality of goods or services. This
benefits the producers who own the brand and protects the quality assurance of
consumer goods or services. Fourth, the brand is a designation of the origin
of the goods or services produced (source of origin). A brand is an
identifier of the origin of goods or services with the region/country of
origin.
MSMEs
are businesses that are limited in terms of capital and market share, and
reach. In order to develop and survive, MSMEs need loyal consumers, so there is
a consistent turnover of capital and economic activity. In its development,
branding is one of the keys to success in running MSMEs. Brand image is the
perception and belief by consumers of certain products, which is reflected in
the associations that occur in consumers' memory (Kotler & Keller, 2009).
The
first factor that makes it important for MSMEs to register their brand is
because brands can be a differentiating identity that makes it easier for
consumers to remember their products. This can help MSME actors get loyal
consumers because they continuously remember their products. A brand can also
become a lifestyle. Many consumers who have believed in the quality of products
from certain brands make these products a continuous lifestyle. This lifestyle
will be brought and disseminated to the consumer's social environment. It will
help MSMEs to promote their products. A good brand image, a brand helps MSMEs
to gain communal trust from society. This is the second urgency why MSMEs have
to register the brand rights of their products or services.
Building
a brand is not an easy business. It takes much time to build a strong image in
the community. It will be unfair if a certain brand is imitated by
irresponsible parties and destroy all the brand image which has been built.
This is why brand rights registration can be a form of legal protection for the
entrepreneur. Brand right is an exclusive right granted by the state to the
brand right holder for a certain period. The brand-right holders can use the
right for themselves or let other individuals or legal entities use it. By
registering the brand, the MSME actors can be protected from irresponsible
parties who take advantage of the brand image from the goods or services they
produce or want to damage their brand.
The
exclusive right can guarantee the MSME actors of legal protection on their
brand. With that exclusive right, the MSME actors can focus on the business development,
maintaining the quality and image of their good or service products. Those
three factors are related to one another, which can be a key to the MSME to
develop and survive in the business world with limited capital, source, and
smaller market compared to the macro business.
Through
the Directorate General of Intellectual Property in the Minister of Law and
Human Rights of Republic Indonesia, the government has provided online brand
registration services through dgip.go.id website. The government also provides
a special service to the MSME actors. The first thing to do is register an
account on the brand rights registration website dgip.go.id, then apply for a
new brand right registration. The next step is to fill out all the forms and
pay all the bills from the SIMPAKI application. The total registration fee is Rp. 1.800.000- (one million eight hundred thousand rupiahs)
for each class in general and Rp. 5.000 (five
thousand rupiahs) for MSME actors for each class. After the payment, the
registrant must fill out all the forms on that website. The final step is to
upload all the needed data and documents.
The
brand rights registration number by MSME actors is still low. The result of
research in Medan Selayang district shows several factors that make the brand's
right registration number still low. First is the lack of certainty and
guarantees for MSMEs to obtain the brand-right certificate. The length of the
registration process to certification makes MSMEs reluctant to register their
brand. In the Medan Selayang district, there are cases of MSME actors having to
wait up to 3-4 years from submitting a trademark registration to obtaining a
brand-right certificate. There are even MSMEs that have been waiting for the
result of applying for brand right registration to DJHKI for a relatively long
period but then received a notification letter that their brand right
application was rejected on the ground that there had been an application for
brand right registration by other MSME actor (the same as the brand that they
apply).
Second, the regional office of the Minister of Law
and Human Rights as the responsible actor in processing the brand right
registration is still not optimal. The limited socialization budget and human
resources are the reasons for the lack of socialization of IPR in the
community. Socialization is often carried out by NGOs or universities observing
the MSME businesses.
The lack of public awareness of brand registration
was also found in the Medan Selayang district. This happened because there is
no guarantee of the time needed to register a brand and obtain a brand-right
certificate. The other reason is that the fee is relatively expensive for the
MSME actors. The other obstacle is that the community is not well informed
about IPR. Society does not know the difference between copyrights, brand
rights, patents, and industrial designs.
From these data, it can be seen that many MSMEs do
not have a brand-right registration certificate. In fact, at the practical
level, there are many obstacles for entrepreneurs, especially MSMEs, to obtain
protection for their brands, including:
1)
The MSME actors lack knowledge about the brand and its registration
procedures, especially in home industries.
2)
Lack of socialization from the local government.
3)
The brand-right
registration is too long. The registration period of a brand takes
approximately two years to obtain a brand-right certificate.
4)
Brand right
registration fee is relatively expensive for MSME.
The local government lacks the
budget and human resources for the IPR sector.
B. Legal
Consequences on MSME Products Whose Brands Are Not Registered and The Linkage
of Brands as Economic Rights for MSMEs
As
explained above, brand right registration in Indonesia adheres first to the
file principle, which is adhered to in a constitutive system. This
principle and system aim to see who is the first to apply for registration of a
certain brand, making it easier for the government to refuse if there is an
attempt to obtain the right to a certain brand by parties to plagiarize or have
bad intentions. In this system, the right to a new mark will arise when
registered, thus registration is necessary (Saidin,
2002).
One
of the IPR experts, Emmy Pangaribuan, explained that
this constitutive system provides certainty to whom the government grants the
rights to the brand. This is also supported by Sudargo
Gautama, who believes that the system provides legal certainty for anyone
registering rights to certain product brands.
To
register a brand for a certain product, registrants must meet the requirements
stipulated in Article 20 of Law Number 20 of 2016 about Brand and Geographical
Indication. Interestingly, this law also regulated the conditions under which
the registration of brand rights on goods/services can be refused, with the
following provisions:
1) A
registered brand belonging to another party or previously requested by another
party for similar goods or services;
2) Well-known
brand belonging to other parties for similar goods or services;
3)
Well-known brand belonging to
other parties for goods or services of a different kind that meet certain
requirements; or registered Geographical indication.
In more detail,
through Article 16 paragraph (1) of Minister of Law and Human Rights Regulation
Number 12 of 2021 about Amendment to Minister of Law and Human Rights
Regulation Number 67 of 2016 about Brand Registration, an application for brand
registration cannot be registered if:
1) Contrary to
state ideology, laws and regulation, morality, religion, or public order;
2) Same with,
related with, or only mention the name of goods or services for which
registration is requested;
3) Contains
elements that can mislead the public about the origin, quality, type, size, the
purpose of use of goods or services for which registration is requested, or is
the name of a protected plant variety for similar goods or services;
4) Contains
information that is not by the quality, benefits, or efficacy of the goods or
services produced;
5) Has no distinguishing power;
6) A common name or symbol of public property; or
7) Contain a functional form.
From this provision, it is clear that the
legal consequences that can arise if the mark on a product owned by MSMEs is
not registered are: (1) The products can be imitated, plagiarized, or modified
by irresponsible parties., and (2) The products can be registered by other
parties, so that the right to the brand on the products or services is owned by
another party which is detrimental to the MSME actors themselves.
Not registering the brand rights on
certain products does not only result in the threat of plagiarism or the
efforts of certain parties to imitate or copy the goods/services of MSMEs. Not
registering a brand also eliminates the opportunity for MSME actors to have
exclusive rights to the goods or services produced by the MSME actors.
The exclusive right on a product or
service in the form of a brand is not only a form of legal protection but also
has economic value. Economic rights arise because the rights attached to the
brand have material properties. Like the material, there are economic rights
that can provide benefits in the form of royalties. The economic rights that a
person has for their creativity can be transferred to other people
(transferable).
Economic rights to the brand can be
implemented, especially in the franchise business. This is a very effective
distribution channel to bring products closer to consumers through franchise
branches (Hayuningrum & Roisah, 2015). In the franchise,
the products traded are intellectual property rights on certain products,
including Copyrights, Trademarks, Patents, Industrial Designs, Layout Designs
of Integrated Circuits, and Trade Secrets (Susilowati & Kurniati, 2018).
The brand contains economic rights for
the registrants, including the MSME actors, because they can be traded. This is
a legal consequence and also an advantage of economic rights which is very
crucial if accepted by MSME actors if they register trademark rights for the
goods or services they produce. This, of course, can provide benefits for MSME
actors, not only as an alternative income by earning profits by trading brand
rights to their products in the form of franchise agreements but also by
expanding the business scope of the goods or services they produce of the
franchisee. The.
CONCLUSION
Micro, Small, and Medium
Enterprises (MSMEs) have a crucial role in the growth and development of the
Indonesian economy. In today's circumstances, there are various problems faced
by MSMEs to develop, one of which is the lack of interest in registering brand
rights for the products they produce, which results in the absence of legal
protection for intellectual property contained in the goods and or services
they produce.
The factors that lead to the
importance of registering brand rights for MSME products include: (1) The brand
is an identity that MSME actors can use to get loyal consumers. This is because
the brand is a differentiator that can be used to overcome the problem of
market reach, (2 ) Brands are an effective marketing method that MSME actors
can use to gain the trust of consumers for the goods or services they produce,
and (3) Brand Rights are a form of legal protection provided by the Government
for MSME actors in bad faith to imitate, plagiarize or damage the image that
has been built on the goods or services they produce.
Suppose MSME actors do not
register their brands. In that case, the main legal consequences that may occur
are: (1) Brands on the goods or services they produce can be imitated,
plagiarized, or their image is damaged by irresponsible parties, (2) Brands for
their products can be registered by other parties which results in them losing
the opportunity for exclusive rights to the goods/or services they produce. In
addition, the brand is also closely related to economic rights because a brand
is a right that has material rights that can be traded. This economic right
also includes business benefits from expanded market coverage obtained through
franchise agreements.
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