Sweden's Ikea loses trademark fight in Indonesia to local rattan furniture company

Ikea was founded in Sweden in 1943 by 17-year-old Ingvar Kamprad. The company's name is an acronym derived from the initials of Ingvar Kamprad, Elmtaryd, the farm where he grew up) and Agunnaryd, his hometown in Smaland.

So why is it so important now? Well Ikea seems to have lost its trade mark fight to a little known rattan furniture company in Indonesia that only registered its name in December 2013. This is despite the fact that the furniture giant applied for the right to the brand in Indonesia in 2010.

So how did that happen? Well apparently, the Swedish company had not been actively using the trademark in Indonesia for three consecutive years and as such, it could be deleted and the rights handed over to Ratania Khatulistiwa.

The Indonesian Supreme Court last week published its ruling on its website. According to The Local, the ruling was made in May last year but it was not communicated to either to Ikea or the public.

Inter IKEA Systems BV, a Dutch company that manages IKEA's international franchises said last week that it had not had time to analyse the court's ruling. "The decision rendered by the Supreme Court in Indonesia in May 2015 was notified to our local, Indonesia lawyers yesterday [4 February]."

It further added: "We have therefore not yet had the opportunity to analyse the decision." The company however said that it has taken measures to allow it to continue using the IKEA trademark.

"Despite the Supreme Court's decision, Inter IKEA Systems BV has provided for continued ownership of the IKEA trademark rights in Indonesia. This means that the Indonesian IKEA franchisee has and will be able to continue the IKEA operations uninterruptedly regardless of the Supreme Court's decision."

It however did not say how this was achieved. According to a spokesperson from the franchisor, the ruling does not really affect its operations in Indonesia as it still owns the exclusive rights for the term covering other classes, according to the World Intellectual Property Review.

The Indonesian company claims that its name Ikea stands for Intan Khatulistiwa Esa Abadi, which refers to palm rattan. Rattan is widely used across the country to make furniture. International news agencies claimed that the local company waited until Ikea started works on its first megastore in Indonesia, in Tangerang, west of Jakarta in 2014 before it started legal proceedings over the name. It won the lower court case but Ikea appealed the decision.

The Supreme Court ruling however was not unanimous. One of the three judges who ruled in favour of Ikea noted the size difference between the two companies and how the name Ikea first came about in Sweden.