Trademark As Fiduciary Guarantee

Every human movement relates to various objects produced to meet human needs. Each of these objects generally has a “self-identity” as an identifier. This identity is generally known as “brand”.

In Intellectual Property Rights (IPR), registered brand is understood as trademark. Trademark is part of IPR, which falls within broader Industrial Property Rights. These rights cover intangible assets referring to assets deemed valuable that are not capable of being perceived by the sense of touch. Hence, intangible IPR.

Trademarks have values and can be controlled by their owners. In Indonesia, a trademark is a material right regulated in the Civil Code Book II on Objects (Benda).

In the comparative system of Civil Law, the stipulations on Materials (Kebendaan) are included in the Property Law consisting of the Law on Absolute Property and the Law on Relative Property. The Law of Objects is an absolute property law because it adheres to the object and is subject to protection.

These principles make a trademark, or other part of IPR, object to be collateral rights, which can be used as collateral to pay off debts.

A brand or trademark functions as an identifier of a product or service. This particular function is very important for business actors because it links a product or service to its producer.

If one type of products is widely known by the public, it can be expected that other products produced by the same producer will be on top the market’s minds as well. Therefore, brands or trademarks are deemed valuable by their owners,

A product can have its brand or trademark widely known to public due to its excellent quality or good marketing efforts. The brand or trademark of such publicly known product can be sold or transferred at a substantial price.

For certain people, a brand or trademark can be very meaningful and valuable. On the other hand, others may not understand why a product name (a brand or a trademark) can be valuable. People’s perception of the value of a brand or trademakr depends on their respective understanding of the essence of a brand or a trademark.

What’s important is that a brand or trademark can be used as an object of collateral rights because it is valuable and intangible material rights.

However, questions remain when it comes to IPR, especially trademarks, as objects of guarantee. Some lingering questions are: which guarantee law is appropriate, how to assess how much a trademark can be priced, how it is implemented, whether it is binding on third parties who hold licenses and so on.

Defining Brand

To determine the right form of guarantee for the brand, we need to re-examine the meaning of brand. The terminology of brand is originated from the word brandr, which means “to burn”. In the past, the Vikings put burn marks on their animals as a form of ownership.

There are several different definitions of brand. According to the American Marketing Association (AMA), a brand is ” a name term, sign, symbol, or design, or a combination of them, intended to identify the goods and service of one seller or group of seller and to differentiate them from those of competition” (Keller 2008: 2). According to Keller (2008), the AMA’s definition of brand – a company’s ability to choose a name, logo, symbol, package design or other attribute that can identify a product so as to differentiate it from its competitors — only refers to some elements of brand.

According to Wheeler (2006:5), “a brand is the nucleus of sales and marketing activities, generating increased awareness and loyalty, when managed strategically“.

Keller (2008: 5) argues that a brand is more than just a product because it has a dimension that differentiates it from other similar products. The differences of such products can be rational and tangible or symbolic, emotional, and intangible.

Based on the definitions above, a brand serves to identify a producer or company that produces a particular product that distinguishes it from other producers or companies that have different values for each brand. Brand can be in the form of a logo, name, a registered brand or trademark, or a combination of these forms.

Article 1 Paragraph 1 of Law No. 20/2016 on Trademarks and Geographical Indications defines a trademark as a sign that can be displayed graphically in the form of an image, logo, name, word, letter, number, color arrangement, in the form of two dimensions and/or three dimensions, sound, hologram, or a combination of two or more of these elements to distinguish goods and/or services produced by persons or legal entities in the activities of trading goods and/or services.

In short, a brand can be just an image, just a word, just a letter, just a number or a combination of these elements.

Trademark as Immaterial Objects

For its owner, a trademark – registered brand – is an intangible asset, meaning that is is valuable but can not be touched or sensed. Based on Article 499 of the Civil Code, objects are anything that is an object of property rights.

In the Civil Code, the terminology zaak has two meanings, namely tangible goods and part of assets. Thus, in the Indonesian civil law system, zaak does not only mean tangible goods, but also intangible goods. The Civil Code does not include all rights in zaak. Most specifically, the Civil Code does not include the rights of intangible goods in zaak.

The law of objects stipulates that objects are anything that can be the object of property rights. Trademark falls within the law of objects. However, it is intangible because the object of property rights is a right of ownership of a human work. The rights are not only the goods produced.

Trademark is part of IPR, which is defined as an ownership right to a human work born from the results of a person’s unique thoughts and abilities. The results of this work are owned by the producer of the work. The results of human thought have a certain value according to their produced qualities, meaning that they can be very valuable or merely mediocre.

Ownership by the producer of the human work is transferable rights in accordance to the law. It refers to the rights of the results of thought, not just the things that are produced. If the object is reproduced with the condition that the ownership is not transferred, the owner of the rights remains considered the producer of the work if ownership.

Following the arguments above, trademark is an intangible object. As an intangible object, a trademark can be owned by the owner. In this case, ownership refers to the right to the trademark, not only to the product.

Fiduciary Guarantee

A trademark is a transferable object. The law of guarantee deemed appropriate for the trademark is the Fiduciary Guarantee because it is a guarantee right for both tangible transferable objects and intangible transferable objects.

Fiduciary guarantee is the transfer of ownership rights to an object based on trust. The object whose ownership rights are transferred remains in the control of the owner of the object. Thus, the ownership rights to the objects given as collateral can be transferred by the owner to the creditor receiving the guarantee. Consequently, the ownership rights to the collateral object are with the creditor receiving the guarantee.

In the case of a trademark, the trademark rights is in the control of the debtor while the creditor holds the Deed of Fiduciary Guarantee of the trademark.

The trademark value can be measured based on a regulation issued by the appraiser association, which has issued the Indonesian Appraisal Code of Ethics (KEPI) and the Indonesian Appraisal Standard (SPI). SPI 320 stipulates the rules for the valuation of intangible assets.

The rules employ several approaches in measuring the value of an intangible asset. For trademark, some basis of the measurement include the number of sales, the period of protection, assets owned, as well as good will, which refers to a prediction of the value of assets in the future.

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