The rapid advancement of information technology has fundamentally transformed commercial activities from conventional transactions into trade conducted through electronic systems (Perdagangan Melalui Sistem Elektronik or (“PMSE”), including transactions conducted through electronic commerce (“e-commerce”) platforms. E-commerce encompasses a broad range of commercial activities carried out electronically, including the online marketing and sale of goods and services. Article 1(1) of Government Regulation No. 80 of 2019 on Electronic Commerce (“GR 80/2019”) defines PMSE as trading activities conducted through a series of electronic systems and procedures.

Under GR 80/2019, an Electronic Commerce Operator (“PPMSE”) refers to a business entity that provides electronic communication facilities used to facilitate commercial transactions. In practice, this refers to e-commerce platform operators that provide a digital marketplace enabling merchants and consumers to engage in online commercial transactions.

Furthermore, Minister of Communication and Informatics Circular Letter No. 5 of 2016 on the Limitations and Responsibilities of Platform Providers and Merchants in User-Generated Content Electronic Commerce (“MCIT Circular Letter 5/2016”) defines a merchant as an individual, group, business entity, or legal entity that utilizes the commercial offering facilities provided by a platform provider, whether through a registered account or as an unregistered content uploader.

The emergence of online marketplaces as Electronic System Providers (“ESPs”) has significantly simplified the process of marketing products to consumers without geographical or temporal limitations. This business model has played an important role in accelerating Indonesia’s digital economy while expanding market access for businesses of all sizes. The convenience offered by online marketplaces has enabled them to compete effectively with, and in many cases surpass, conventional retail channels.

However, alongside these commercial benefits, the rapid growth of e-commerce marketplaces has also given rise to various legal challenges. One of the most significant concerns is the increasing circulation of counterfeit and imitation products that infringe Intellectual Property Rights (“IPRs”).

The sale of counterfeit products through e-commerce platforms may infringe multiple categories of intellectual property rights, including copyrights, industrial designs, and trademarks. Nevertheless, this article focuses exclusively on trademark infringement, as the unauthorized use of registered trademarks on products offered by merchants remains the most prevalent form of intellectual property infringement encountered in Indonesia’s e-commerce ecosystem.

Law No. 20 of 2016 on Trademarks and Geographical Indications (“Trademark Law”) defines a Trademark as any sign capable of graphical representation including images, logos, names, words, letters, numerals, colour arrangements, two-dimensional or three-dimensional shapes, sounds, holograms, or any combination thereof that distinguishes the goods and/or services of one person or legal entity from those of another in commercial activities. The Trademark Law further provides that Trademark Rights constitute exclusive rights granted by the State to the owner of a registered trademark for a specified period, allowing the owner either to use the trademark personally or to authorize another party to use it.

Accordingly, this article focuses on trademark infringement arising from the unauthorized use of registered trademarks. Common examples include merchants offering counterfeit Dior handbags or affixing Nike logos to footwear that is neither manufactured nor authorized by Nike.

The sale of counterfeit products on e-commerce platforms not only causes economic and reputational harm to registered trademark owners but may also prejudice consumers, who purchase products under the mistaken belief that they are genuine. In practice, listings for counterfeit goods bearing well-known trademarks remain readily accessible through marketplace search functions and are widely marketed by merchants to consumers.

This phenomenon demonstrates that technological innovation has not always been accompanied by equally effective regulatory oversight of commercial activities conducted on digital platforms. Consumer complaints concerning counterfeit goods continue to surface through formal reports as well as public discussions across various online forums. This suggests that Indonesia’s ambition to foster a robust digital economy has yet to be fully supported by a sufficiently comprehensive legal framework capable of addressing the challenges posed by online trademark infringement.

From a legal perspective, the merchant is the party directly responsible for marketing and selling counterfeit products and, therefore, bears primary liability for the resulting intellectual property infringement. However, the legal analysis becomes considerably more complex where such infringement continues to occur through an e-commerce platform that provides the infrastructure for transactions, product promotion, payment processing, and sales data management.

This raises an important legal question: to what extent may an e-commerce platform be exempted from liability for unlawful acts committed by merchants through the use of its services?

This issue is closely associated with the safe harbor doctrine, which generally shields digital service providers from liability for the acts of their users, provided that the service provider functions solely as an intermediary and complies with the legal obligations imposed upon it. The doctrine was developed to strike an appropriate balance between protecting the rights of injured parties and encouraging innovation and the continued growth of the digital economy.

Although the term safe harbor is not expressly recognised under Indonesian legislation in the same manner as under the United States’ Digital Millennium Copyright Act (“DMCA”), several Indonesian laws governing electronic systems reflect similar underlying principles. In particular, Government Regulation No. 71 of 2019 on the Operation of Electronic Systems and Transactions (“GR 71/2019”) requires Electronic System Providers to remain responsible for the operation of their electronic systems and to implement appropriate mechanisms for controlling content or information within their control.

Nevertheless, the legal protection afforded to e-commerce platforms should not be interpreted as granting absolute immunity from liability. In practice, e-commerce platforms frequently receive complaints from registered trademark owners regarding counterfeit products offered by merchants. Where a platform has actual or constructive knowledge of an alleged infringement but fails to take appropriate remedial measures, questions arise as to whether the platform may incur civil liability under the doctrine of intermediary liability and the concept of an Unlawful Act as provided under Article 1365 of the Indonesian Civil Code (“ICC”).

Accordingly, determining the point at which an e-commerce platform ceases to function as a neutral intermediary and instead becomes legally responsible for losses arising from trademark infringement has become one of the most significant legal issues in Indonesia’s evolving digital commerce landscape.

Against this background, this article examines the following issues for consideration:

1. To what extent does the safe harbor doctrine limit the civil liability of e-commerce platforms for intellectual property infringement, particularly trademark infringement arising from merchants’ sale of counterfeit products, under Indonesian law?
2. Under what circumstances may an e-commerce platform be held liable under the doctrine of Unlawful Act for its failure to take appropriate action against intellectual property infringements committed by merchants?

A proper assessment of these legal issues requires an understanding of the regulatory framework governing e-commerce, electronic systems, and trademark protection in Indonesia. Accordingly, this article refers to the following principal laws and regulations:

1. The Indonesian Civil Code (“ICC”);
2. Law No. 8 of 1999 on Consumer Protection (“Consumer Protection Law”);
3. Law No. 20 of 2016 on Trademarks and Geographical Indications (“Trademark Law”);
4. Law No. 11 of 2008 on Electronic Information and Transactions (“EIT Law”);
5. Government Regulation No. 71 of 2019 on the Operation of Electronic Systems and Transactions (“GR 71/2019”);
6. Government Regulation No. 80 of 2019 on Electronic Commerce (“GR 80/2019”);
7. Minister of Communication and Informatics Regulation No. 5 of 2020 on Private Electronic System Providers as lastly amended by Minister of Communication and Information Technology No. 10 of 2021 Amending Minister of Communication and Information Technology No. 5 of 2020 on Private-Sector Electronic System Operators (“MOCI Regulation 5/2020”); and
8. Minister of Communication and Informatics Circular Letter No. 5 of 2016 on the Limitations and Responsibilities of Platform Providers and Merchants in User-Generated Content Electronic Commerce (“MCIT Circular Letter 5/2016”).

 

The Safe Harbor Doctrine Under Indonesian Law

Historically, the safe harbor doctrine was developed under the DMCA to address copyright issues arising from the rapid development of internet technologies. Although the doctrine originally evolved within the context of copyright infringement, neither Indonesian nor international legislation expressly extends its application to trademark infringement. Nevertheless, the doctrine provides a useful conceptual framework for determining the extent to which an e-commerce platform, acting as an intermediary, may be held liable for unlawful activities conducted by its users.

Accordingly, the safe harbor doctrine serves as an analytical tool to determine whether an e-commerce platform continues to qualify as a passive intermediary entitled to statutory protection or whether it may incur liability after acquiring knowledge of trademark infringement committed by a merchant and subsequently failing to take appropriate measures to prevent or terminate the infringement.

Under the DMCA, internet service providers are afforded limited immunity from liability, provided that they satisfy certain statutory requirements. These requirements are set out in Section 512(c)(1) of the DMCA, which provides as follows:

“(c) Information residing on systems or networks at direction of users.

1. In general. –A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider-
   1. (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

1. does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and
2. upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.”

In essence, Section 512(c)(1) establishes that an online platform will generally not be liable for monetary damages arising from intellectual property infringement where the following conditions are satisfied:

1. the platform does not possess actual knowledge that the material or activities conducted through its system constitute intellectual property infringement—including, for the purposes of this article, trademark infringement—or, in the absence of such actual knowledge, is not aware of facts or circumstances from which the infringement is reasonably apparent; and
2. the platform does not receive a direct financial benefit attributable to the infringing activity where it has both the right and the ability to control such activity.

However, once the platform acquires actual knowledge or awareness of the alleged infringement, it must act expeditiously by responding to the infringement notice and removing or disabling access to the allegedly infringing material. Failure to do so may result in the loss of safe harbor protection.

Although Indonesian legislation does not expressly codify the safe harbor doctrine in the same manner as the DMCA, its underlying principles have been incorporated into Indonesia’s regulatory framework, particularly through MCIT Circular Letter 5/2016.

Within the Indonesian context, the safe harbor principle operates as a limitation on the liability of ESPs, including e-commerce platforms, provided that they comply with specific legal obligations designed to prevent and address unlawful content. Fundamentally, an e-commerce platform will generally not be held liable for content uploaded by its users, provided that it functions as a neutral technological intermediary rather than as an active participant in the infringing activity.

MCIT Circular Letter 5/2016 complements the regulatory framework established under the EIT Law, by setting out prohibited content, the respective obligations of User-Generated Content (“UGC”) platform providers, and the responsibilities of merchants operating on such platforms.

Under this framework, e-commerce platforms are classified as Electronic System Providers that facilitate UGC. This means that product listings, photographs, descriptions, advertisements, and other commercial content are created and uploaded independently by merchants rather than by the platform itself. Consequently, merchants are generally able to publish commercial content without prior substantive review or verification by the platform operator.

The Indonesian approach to the safe harbor principle is further reflected in the statutory obligations imposed upon e-commerce platforms to maintain secure electronic systems, manage unlawful content, and respond appropriately to legal violations occurring within their platforms. These obligations are primarily set out in MCIT Circular Letter 5/2016, Article 10 of MOCI Regulation 5/2020, and GR 80/2019.

Under MCIT Circular Letter 5/2016, UGC platform providers are required to:

1. Establish and publish terms and conditions governing the use of the platform;
2. Provide a reporting mechanism through which users may submit complaints concerning prohibited content and take appropriate action in response to such complaints;
3. Comply with the prescribed timeframes for removing or blocking prohibited content;
4. Actively monitor and evaluate merchants’ activities conducted through the platform; and
5. Comply with any other obligations prescribed under applicable laws and regulations.

Similarly, Article 10 of MOCI Regulation 5/2020 requires private ESPs operating UGC platforms to:

“1. In order to fulfill the obligations as referred to in Article 9 paragraph (3), User Generated Content PSE in the Private Sector must:

• have governance regarding Electronic Information and/or Electronic Document; and

a. provide reporting tools.”

 

In addition, Article 22 paragraphs (1) and (2) of GR 80/2019 expressly address the liability of Electronic Commerce Operators. Under these provisions:

1. If there are illegal electronic information contents within a PMSE, then the domestic PPMSE and/or foreign PPMSE, as well as the Intermediary Service Organizer, shall be held responsible for the legal consequences or impacts of the said illegal electronic information contents.
2. The provision as referred to in paragraph (1) is not applicable if the domestic PPMSE and/or foreign PPMSE in question quickly acts to remove the electronic link and or illegal electronic information contents after gaining knowledge or awareness.

Accordingly, once an e-commerce platform receives a report concerning alleged trademark infringement but fails to take appropriate remedial action, it may no longer be regarded as a neutral intermediary capable of invoking safe harbor protection.

Although MCIT Circular Letter 5/2016 is not a statute, it remains an important regulatory instrument frequently relied upon by Indonesian courts and legal practitioners when assessing the scope of an ESPs obligations. The Circular Letter also establishes the procedural framework for implementing a notice-and-takedown mechanism, compliance with which constitutes one of the principal requirements for obtaining safe harbor protection.

These limitations are particularly important because, from both a technical and operational perspective, it is practically impossible for e-commerce platforms to manually review every product listing uploaded each day. Nevertheless, safe harbor protection is not unconditional. To benefit from such protection, platforms must implement an effective notice-and-takedown mechanism, under which intellectual property rights holders are entitled to notify the platform of infringing content, and the platform is required to remove or disable access to such content within the timeframe prescribed by applicable law.

As further required under MCIT Circular Letter 5/2016, e-commerce platforms must establish an accessible and effective reporting mechanism through which rights holders and users may report unlawful content. Beyond serving as a consumer protection measure, this reporting mechanism also constitutes a fundamental prerequisite for maintaining safe harbor protection.

Accordingly, an e-commerce platform’s compliance is ultimately assessed by reference to the promptness and adequacy of its response after receiving a valid infringement notice. Where a platform fails to act upon a legitimate complaint within a reasonable period, it may forfeit the legal protection afforded by the safe harbor doctrine. In such circumstances, safe harbor can no longer be invoked as a shield against liability.

Instead, the platform’s failure to remove or disable access to the infringing content, despite having obtained actual or constructive knowledge of the infringement, may be construed as a form of knowing inaction or willful omission. Under Indonesian law, such omission may satisfy the constituent elements of an Unlawful Act, thereby exposing the platform to potential civil liability where the remaining legal requirements under Article 1365 of the ICC are also fulfilled.

 

Civil Liability of E-Commerce Platforms for Trademark Infringement

Within the e-commerce ecosystem, merchants are the primary actors responsible for offering and selling products through online marketplaces. A merchant that markets counterfeit goods by using, without authorization, a trademark that is identical or confusingly similar to another party’s registered trademark constitutes the primary infringer. Accordingly, the merchant bears primary legal responsibility for any trademark infringement arising from the sale of such counterfeit products.

The World Intellectual Property Organization (“WIPO”) defines trademark infringement as the unauthorized use of a registered trademark or a similar sign in connection with identical or similar goods or services, where such use is likely to cause consumer confusion regarding the commercial origin of those goods or services.

Under Indonesian law, trademark protection is principally governed by the Trademark Law. The Trademark Law provides that any person who, without authorization, uses a mark that is identical or substantially similar to another party’s registered trademark may be subject to both civil and criminal liability. Consequently, merchants that sell counterfeit products through online marketplaces constitute the primary perpetrators of trademark infringement.

Nevertheless, the rapid development of electronic commerce demonstrates that intellectual property disputes no longer concern only the relationship between the rights holder and the direct infringer. The operation of digital marketplaces also implicates the respective responsibilities of merchants and e-commerce platforms, particularly in safeguarding consumers’ rights within the digital marketplace.

In this regard, the Consumer Protection Law establishes a number of fundamental consumer rights, including the right to safety and security in the use of goods and services, the right to receive accurate and truthful information, and the right to obtain compensation where goods or services received do not conform to the promised quality or contractual agreement. These statutory rights reinforce the obligation of merchants to conduct commercial activities fairly and responsibly, while also highlighting the broader regulatory interests served by effective marketplace governance.

Against this backdrop, the liability of an e-commerce platform should be assessed through the doctrine of intermediary liability. The central issue is therefore not whether trademark infringement has occurred, that issue is generally attributable to the merchant, but rather whether the platform has fulfilled its legal obligations after becoming aware of the infringing activity. As a general principle, an e-commerce platform acting solely as a neutral intermediary will not incur direct liability for unlawful acts committed by its users.

This allocation of responsibility is further reinforced by MCIT Circular Letter 5/2016, which requires e-commerce platform providers to establish an effective notice-and-takedown mechanism and to respond appropriately to reports concerning unlawful content. Accordingly, where an e-commerce platform receives a valid notification of trademark infringement but fails to remove or disable access to the infringing content within a reasonable period, it may lose the protection afforded by the safe harbor doctrine.

Moreover, where infringing activities continue to occur on the platform after the platform has obtained actual or constructive knowledge of the infringement, and the platform nevertheless fails to take appropriate enforcement measures, such inaction may be regarded as facilitating or tolerating the continuation of the unlawful conduct. In these circumstances, the platform’s conduct may extend beyond that of a passive intermediary and give rise to potential civil liability under Indonesian law.

The foregoing analysis demonstrates that the loss of safe harbor protection does not, in itself, automatically establish civil liability on the part of an e-commerce platform. Rather, whether such liability arises must ultimately be determined by reference to the general principles of Indonesian civil law governing liability for an Unlawful Act.

Under Indonesian law, the principal legal basis for civil liability is Article 1365 of the ICC, which provides that any Unlawful Act causing damage to another person gives rise to an obligation to compensate the injured party.

Within this framework, MCIT Circular Letter 5/2016 may serve as an important benchmark for assessing the standard of care expected of an e-commerce platform. Accordingly, where a platform fails to implement the content moderation and infringement-handling mechanisms generally recognised within the digital industry, such failure may constitute evidence of negligence for the purposes of establishing liability under Article 1365 of the ICC.

To establish an e-commerce platform’s civil liability under Article 1365 of the ICC, a claimant must generally demonstrate the following elements:

1. An Unlawful Act – namely, the platform’s failure to respond appropriately to a valid complaint concerning trademark infringement committed by a merchant.
2. Fault or Negligence – a platform may be considered negligent where it fails to remove or disable access to infringing content after receiving a valid infringement notice.
3. Loss or Damage – registered trademark owners may suffer both economic and reputational losses arising from the unauthorized use of their trademarks, while e-commerce platforms themselves may also experience reputational harm and diminished consumer confidence as a consequence of permitting counterfeit products to remain available on their marketplaces.
4. Causation – the claimant must demonstrate that the loss was caused, or was exacerbated, by the platform’s failure to remove or restrict access to the infringing content.

Where an e-commerce platform fails to take appropriate action in response to a valid trademark infringement notice, such inaction may constitute evidence of legal negligence and may support the argument that the platform has indirectly facilitated the continued infringement. This position is further reinforced by GR 71/2019, which requires Electronic System Providers to ensure that their electronic systems neither contain nor facilitate electronic information that violates applicable laws and regulations.

In these circumstances, the element of fault may be established on the basis that the platform knew or ought reasonably to have known of the infringement but nevertheless failed to take appropriate remedial measures. Likewise, the element of causation may be satisfied where the registered trademark owner’s losses continue or increase because the infringing content remains accessible through the platform.

Beyond Article 1365 of the ICC, liability may also be analysed through the broader legal principles of good faith and the statutory responsibilities imposed upon ESPs. E-commerce platforms derive substantial commercial benefit from the digital marketplace and, correspondingly, are expected to exercise reasonable care to ensure that their services are not used as instruments for intellectual property infringement.

The rapid growth of Indonesia’s digital economy has significantly expanded the role of e-commerce platforms in facilitating commercial transactions. At the same time, however, it has also increased the prevalence of intellectual property infringements, particularly the sale of counterfeit products through online marketplaces. Against this backdrop, the principles of safe harbor and intermediary liability play a critical role in balancing the protection of intellectual property rights with the continued development of digital commerce.

Under Indonesian law, an e-commerce platform’s liability is not determined solely by the existence of counterfeit products on its marketplace. Rather, liability depends on the platform’s knowledge of the infringement, its ability to exercise control over the infringing activity, and the actions it takes after becoming aware of the infringement. As reflected in Indonesia’s regulatory framework, e-commerce platforms remain eligible for safe harbor protection provided that they act as neutral intermediaries, maintain effective reporting mechanisms, and promptly implement appropriate notice-and-takedown procedures upon receiving valid infringement notices.

Accordingly, an e-commerce platform will generally not incur civil liability for trademark infringement committed by merchants, who remain the primary parties responsible for marketing and selling counterfeit goods. Civil liability may nevertheless arise where the platform knew, or ought reasonably to have known, of the infringement, possessed the ability to prevent or terminate it, yet failed to take reasonable and timely action. In such circumstances, the platform’s omission may constitute negligence and give rise to liability under Article 1365 of the ICC.

Conversely, where an e-commerce platform has fulfilled all applicable legal obligations in responding to reports of trademark infringement, a registered trademark owner should not be entitled to seek damages from the platform for losses caused by the merchant’s infringing conduct. Instead, the trademark owner may pursue the civil remedies and other legal actions available under Trademark Law against the infringing merchant.

In light of the foregoing analysis, a number of practical measures may be adopted by e-commerce platforms, trademark owners, merchants, and regulators to strengthen trademark protection and reduce the circulation of counterfeit products within Indonesia’s digital marketplace.

1. For E-Commerce Platforms

E-commerce platforms should strengthen their internal compliance and content moderation frameworks by enhancing monitoring mechanisms, improving the efficiency of complaint-handling procedures, and ensuring the timely implementation of notice-and-takedown measures. Platforms should also establish clear enforcement policies against merchants found to have engaged in trademark infringement, including the suspension or termination of repeat offenders where appropriate.

2. For Registered Trademark Owners

Trademark owners should proactively monitor the use of their trademarks across online marketplaces and promptly report suspected infringements through the reporting mechanisms made available by e-commerce platforms. Where infringement persists despite such reporting, trademark owners should consider pursuing the legal remedies available under Article 83(1) of Trademark Law, including:

1. filing a civil claim for damages; and/or
2. seeking a court order requiring the cessation of all acts involving the unauthorized use of the registered trademark.

 

3. For Legislators and Regulators

From the perspective of legislators and regulators, Indonesia would benefit from a more comprehensive statutory framework governing the application of the safe harbor and intermediary liability doctrines, particularly in relation to intellectual property infringement occurring on e-commerce platforms. Greater legislative clarity would enhance legal certainty regarding the scope of liability borne by Electronic System Providers.

In addition, legislators and regulators should establish a more detailed and uniform notice-and-takedown framework, including clear procedural standards governing the submission of infringement notices, verification requirements, and the timeframe within which e-commerce platforms are expected to respond.

4. For Merchants

Merchants should ensure full compliance with applicable intellectual property laws by conducting adequate due diligence regarding the origin and authenticity of the products they offer. They should also provide accurate product information, refrain from marketing counterfeit goods, and cooperate in good faith with both rights holders and e-commerce platforms in resolving infringement disputes. Where a product is the subject of a legitimate infringement claim, merchants should promptly cease its sale while the dispute is being resolved.

Notwithstanding the foregoing, the liability of e-commerce platforms should not be interpreted as absolute. An overly restrictive regulatory approach could discourage technological innovation, impose disproportionate compliance burdens on digital platforms, and lead to the unnecessary removal of lawful content. Accordingly, an appropriate balance must be maintained between safeguarding intellectual property rights and fostering the continued growth of Indonesia’s digital economy.

Within this framework, e-commerce platforms should strengthen their oversight functions by ensuring that infringement reports are handled promptly, accurately, and consistently, while maintaining transparent enforcement procedures. Platforms that act cooperatively, respond expeditiously to valid infringement notices, and comply with their statutory obligations should continue to benefit from safe harbor protection. Conversely, platforms that knowingly disregard infringement or derive commercial benefit from unlawful activities may be exposed to civil liability under Indonesian law.

Ultimately, the effective protection of trademarks within Indonesia’s digital marketplace requires close collaboration among regulators, e-commerce platforms, trademark owners, and merchants. A coordinated regulatory and commercial approach will better promote a marketplace that protects intellectual property rights while continuing to encourage digital innovation, consumer confidence, and sustainable economic growth.

This publication has been prepared based on the applicable laws and regulations of Indonesia, with reference to relevant principles under the Digital Millennium Copyright Act (DMCA) where appropriate. It is intended solely for general informational purposes and does not constitute legal advice. Readers are encouraged to seek professional legal counsel before taking, or refraining from taking, any action based on the information contained in this publication.