Bizarre brand dispute rattles IKEA in Indonesia

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IKEA IndonesiaIn a unique court decision, Swedish furniture giant IKEA lost the right to use its brand name in Indonesia to rattan furniture company PT Ratania Khatulistiwa which registered the same trademark in December 2013 as an acronym of Intan Khatulistiwa Esa Abadi, a term referring to the rattan industry.

IKEA, a globally active company whose sales stood at $32 billion in 2015, in fact registered its trademark in Indonesia in 2010, but opened its first store, a big outlet in the suburbs of Jakarta, only in 2014. Ratania Khatulistiwa opened a court case in the matter, claiming that the Swedes have lost their the right to the IKEA name because they didn’t use it for more than three consecutive years, an argument that Indonesia’s highest court followed.

IKEA now has the options to file an appeal to the same court, change its name in Indonesia or pay royalty fees to the Indonesian company.

Analysts says that the surprising court decision could make foreign companies more cautious to invest in Southeast Asia’s biggest economy, which is already growing at its weakest pace since the global financial crisis and as of late suffered from factory closures of foreign electronics companies and withdrawn investment pledges from multinationals.

For IKEA, the legal battle is a drawback in its expansion drive in Southeast Asia, a region it entered only recently as it recognised the healthy demand for home furnishing mainly by higher incomes and the rise of middle-class consumers in line with rapid urbanisation in the region.

Within Southeast Asia, IKEA currently operates six stores, two in Singapore, two in Malaysia, one on Indonesia and one in Thailand. Plans are to open another two big stores around Bangkok until 2020, and one each in Johor and Penang in Malaysia. Meanwhile, IKEA is also looking for business partners in Vietnam and the Philippines, reportedly being interested to set up stores in Ho Chi Minh City and Manila.

 

 

 

 

 

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In a unique court decision, Swedish furniture giant IKEA lost the right to use its brand name in Indonesia to rattan furniture company PT Ratania Khatulistiwa which registered the same trademark in December 2013 as an acronym of Intan Khatulistiwa Esa Abadi, a term referring to the rattan industry. IKEA, a globally active company whose sales stood at $32 billion in 2015, in fact registered its trademark in Indonesia in 2010, but opened its first store, a big outlet in the suburbs of Jakarta, only in 2014. Ratania Khatulistiwa opened a court case in the matter, claiming that the Swedes...

Reading Time: 2 minutes

IKEA IndonesiaIn a unique court decision, Swedish furniture giant IKEA lost the right to use its brand name in Indonesia to rattan furniture company PT Ratania Khatulistiwa which registered the same trademark in December 2013 as an acronym of Intan Khatulistiwa Esa Abadi, a term referring to the rattan industry.

IKEA, a globally active company whose sales stood at $32 billion in 2015, in fact registered its trademark in Indonesia in 2010, but opened its first store, a big outlet in the suburbs of Jakarta, only in 2014. Ratania Khatulistiwa opened a court case in the matter, claiming that the Swedes have lost their the right to the IKEA name because they didn’t use it for more than three consecutive years, an argument that Indonesia’s highest court followed.

IKEA now has the options to file an appeal to the same court, change its name in Indonesia or pay royalty fees to the Indonesian company.

Analysts says that the surprising court decision could make foreign companies more cautious to invest in Southeast Asia’s biggest economy, which is already growing at its weakest pace since the global financial crisis and as of late suffered from factory closures of foreign electronics companies and withdrawn investment pledges from multinationals.

For IKEA, the legal battle is a drawback in its expansion drive in Southeast Asia, a region it entered only recently as it recognised the healthy demand for home furnishing mainly by higher incomes and the rise of middle-class consumers in line with rapid urbanisation in the region.

Within Southeast Asia, IKEA currently operates six stores, two in Singapore, two in Malaysia, one on Indonesia and one in Thailand. Plans are to open another two big stores around Bangkok until 2020, and one each in Johor and Penang in Malaysia. Meanwhile, IKEA is also looking for business partners in Vietnam and the Philippines, reportedly being interested to set up stores in Ho Chi Minh City and Manila.

 

 

 

 

 

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