Trademark Licensing in Indonesia 2026: Legal Requirements, Process, and Business Benefits

The process of trademark registration is simply the beginning for companies to maximize the potential of this trademark registration, it is important that they understand the proper use of the trademark. In Indonesia, there is the concept of trademark licensing wherein the owners are able to grant other entities permission to use the trademark while still retaining their ownership rights and earning some income from the process.

But this process should be done in accordance with Law Number 20 of 2016, with updated operational procedures via Minister of Law Regulation No. 5/2026.. This article discusses the basics of trademark licensing in Indonesia in 2026.

What Is Trademark Licensing?

A trademark license refers to the contractual relationship whereby the registered trademark owner permits another party to use the trademark under certain stipulations. While trademark ownership entails absolute control of the mark, a license simply implies that the licensee is permitted to use the trademark without necessarily owning it.

There exist two parties in trademark licensing and they include:

• Licensor – This refers to the trademark owner issuing the license
• Licensee – This refers to the party permitted to use the trademark

Trademark licensing enables organizations to increase their market coverage without compromising their trademark rights.

Types of Trademark Licensing

It is important to point out at the outset that different trademarks licenses have different levels of exclusivity depending upon how much control the licensee gets. It is the choice of the particular type that would determine whether the trademark could be used by the licensor itself or any third party.

Exclusive License

Under an exclusive license, the licensee will be granted sole and exclusive use of the trademark in a specific area. Neither the licensor nor any other third party may use the trademark in this area without the consent of the licensee.

Non Exclusive License

In a non-exclusive license agreement, the licensor may give licenses to several licensees at once. The licensor may also use the trademark himself.

Sole License

This is a combination license where the licensor gives up the right to license others, but he reserves the right to use the trademark.

Comparison Table

Benefits of Trademark Licensing

Trademark licensing offers obvious benefits when it is properly arranged:

• Business expansion efficiently

Businesses can enter the market with minimum costs of launching a production and operating facilities.

• Revenue generation

There is no need for direct involvement in day-to-day business activities to earn profits through royalty payments.

• Increased brand power

The usage of trademarks in larger volumes ensures higher visibility, faster market penetration, and enhanced brand reputation.

• Risks management

The licensee takes on most business-related risks, whereas the licensor keeps control of the trademark.

• Maximized asset potential

Trademarks become active tools used to facilitate business development instead of being legally valuable but passive objects.

Therefore, through trademark licensing, companies get an opportunity to expand in a cost-effective and risk-free manner.

Key Contents of a Trademark License Agreement

For an agreement regarding trademark licensing in Indonesia to be considered valid, it is essential that:

• Parties involved: Identity of the trademark owner and user
• Use: The manner in which the trademark may be used, which may include products or services
• Territory: Where the trademark will be used
• Term: Time period during which the trademark will be licensed
• Royalties: Payments required and other details

It is important for any agreement to be written clearly and comprehensively to avoid confusion.

Procedure for Registering a Trademark License in Indonesia

Trademark License Registration in Indonesia is not merely about fulfilling a procedural step. It is a systematic process to ascertain whether or not your license will hold up in front of third parties. Just like a trademark registration, attention to detail at the outset makes all the difference.

Step 1 – Drafting the License Agreement

All this begins with a proper written agreement. This is an absolutely necessary condition under Indonesian law.

It is necessary to clearly state who are the contracting parties, the scope of use, the territory, the duration, and the royalty. Most importantly, the terms should not be contradictory to national interests or restrictions on fair competition.

Poorly written agreements are among the most common grounds for rejection at the next level.

Step 2 – Submission to DGIP

After finalizing the agreement, the request to record the agreement will be sent electronically via the official DGIP portal. While the electronic filing system enhances convenience, it still demands meticulousness. The following papers are needed:

• License Agreement signed by all parties
• Trademark Registration Certificate
• Identification Papers of all Parties
• Letter of Attorney (if using a lawyer)

Accuracy is important at this point since any data discrepancy may delay the process.

Step 3 – Administrative Examination

Upon filing, DGIP shall perform an administrative review to confirm:

• The completeness of the document;
• The validity of the trademark registration; and,
• The conformity of the agreement with Law No. 20 of 2016.

If there is any missing requirement, DGIP will notify the party to rectify the deficiency within a specified period. Any non-compliance might lead to the rejection of the application.

Step 4 – Recordal of License

In case of passing the examination, the license will become officially registered and listed in the DGIP registry.

This is the critical point where the trademark license becomes effective legally against any third party and thus may be utilized in enforcing its rights in case of any infringement.

Failure to do so makes the license binding only on the licensor and licensee and not against anyone else outside them.

Requirements for Trademark License Registration

To record a trademark licensing agreement in Indonesia, the documents shall be in accordance with the provisions of Law No. 20 of 2016. The relevant documentation is as follows:

• Registered trademark

The trademark should have obtained a certificate prior to applying for the licensing procedure. It can only be granted by the owner of the trademark itself.

• License agreement

The license agreement should be in writing. It should contain details such as the scope of use, geographic scope, time period, and royalties payable.

• Documents

Documentation is necessary in order for the application to be made successfully. Some of the mandatory documents include:

• • Certificate of Trademark Registration
  • Signed agreement
  • Identification of all involved parties
  • Articles of Incorporation of PT/foreign party
  • Power of Attorney if represented by a registered IP consultant

• Representation of Foreign Parties

Neither the licensor nor the licensee can submit the document themselves. They need to be represented by a registered IP consultant.

Inadequate and/or inconsistent documents are among the main reasons for rejections.

Requirements Table

Is Trademark Licensing Registration Mandatory?

The recording of a trademark license agreement with the Directorate General of Intellectual Property of Indonesia is very crucial according to Indonesian legislation.

It stems from Article 42 of Law No. 20 of 2016 Concerning Trademarks and Geographical Indications which stipulates that the license must be registered with the DGIP to gain legal force vis-à-vis third parties.

Concretely, it means the following:

• The license agreement remains valid for both licensor and licensee
• But it cannot be enforced against third parties (such as infringement)

Therefore, failing to register the license is associated with high legal risks since the licensee will not be entitled to file a lawsuit in the matter of any infringement or dispute.

How to Draft a Trademark License Agreement

The trademark licensing agreement should be written clearly, fully, and in accordance with Indonesian laws in order not to be rejected during recordal process and minimize possible legal problems. The list below consists of several important items that should be written properly in trademark licensing agreement:

• Determine the Parties

Identify all parties in the contract by giving full legal name, addresses and nature (individual, PT, or foreign corporation). It is only the trademark owner who is eligible to give a license for its use.

• Define Usage Rights

It is very important to mention the ways in which the trademark may be used, which include specific products or services, type of use, and restrictions on use. They should correspond with the descriptions found in the trademark certificate.

• Set Royalty Terms

Define royalty payment terms, which include the type of fees to be paid, payment period, consequences, and methods for late payment.

• Establish Duration

Define the starting and ending date of the licensing agreement. The duration of licensing shall not surpass the validity of the registered trademark, and renewal conditions need to be mentioned if necessary.

• Include Protective Clauses

Include necessary clauses that provide protections for each party, like:

• Clause for terminating the contract due to violation or expiration
• Dispute resolution clause, usually arbitration or Indonesian court
• Clause for quality control in order to preserve the reputation of the trademark
• Clause for restriction to avoid misuse or any sublicensing

In this way, an appropriately formulated license agreement will not only fulfill the requirements of Law No. 20 of 2016 but also enhance the effectiveness of trademark licensing.

Common Mistakes in Trademark Licensing

Some typical mistakes may make the agreement less legally strong and lead to legal battles in the future:

• No registration of the agreement

The failure to register the agreement with the Directorate General of Intellectual Property results in its ineffectiveness towards any third party under Law Number 20 of 2016.

• Inconsistency in defining the details of the contract

This mistake may lead to a discrepancy in understanding what was agreed upon by the contracting parties.

• Undefined royalties payment scheme

The lack of a clear description of payments made and conditions for their calculations leads to potential disagreements between the parties.

Why Use Professional Trademark Licensing Services

At Widjojo Law Firm, we recognize that trademark licensing is more than just another formality; it is an important process that impacts your trademark’s protections and value. Properly done, each and every license will be effective and consistent with Indonesian Intellectual Property legislation.

By relying on professional legal assistance, you will:

• Ensure full compliance with the law, specifically Law No. 20 of 2016 and DGIP regulations
• Avoid potential conflicts due to accurate, precise and proper licensing documentation 
• Have a faster registration process, from license creation to license recordal without undue delays

License arrangements require knowledge of some legal technicalities which may pose difficulties for those who are inexperienced in IP regulations. Therefore, at Widjojo Law Firm, we offer our assistance with all matters related to trademarks and licensing processes.

FAQ

What is trademark licensing?

Trademark licensing is a contractual arrangement where a third party uses a registered trademark under certain terms.

Is trademark licensing required to be registered?

Yes, it is necessary to have trademark licensing registered.

How much does trademark licensing cost?

The price will depend on government fees and those of services used.

What is the difference between licensing and franchising?

While the latter deals with a business system, the former refers to trademark use.

Who can grant a trademark license?

A license should be granted by the registered trademark holder only.

How long does a trademark license last?

Its duration may vary but must not exceed that of the registered trademark.

Conclusion

The use of trademark licenses represents a valuable legal mechanism for expanding, profiting from, and developing a brand. Nonetheless, this can only be achieved through proper structuring and adherence to the laws of Indonesia.

In order to have a safe and smooth procedure, it is best to cooperate with legal experts. With a properly structured license, you will be able not only to protect your brand but also unlock its full potential.