IKEA loses legal battle in Indonesia over rights to trade under the name 'IKEA'

An Indonesian furniture company nabbed the name after the Swedish company failed to use it for three years

IKEA, Indonesia, Jakarta

Muslim women walk by a sign at the IKEA store in Tangerang, Indonesia [AP Photo/Tatan Syuflana]

A furniture manufacturer in Indonesia has managed to swipe the rights to trade as IKEA in the country after a court ruled in its favour. The Swedish flat-pack giant may now have to come up with a new brand identity in the country home to 230m people.

Indonesian company Ratania Khatulistiwa applied to the Jakarta-based authorities to use the world-famous trademark in December 2013, three years after the Swedish superstore had made the same application in 2010. But the Supreme Court sided with the Indonesia company, saying that because the Swedish furniture multinational had not used its trademark for three consecutive years, the rights were once again up for grabs.

The wily Indonesian company snapped them up, claiming that its IKEA was an acronym standing for ‘Intan Khatulistiwa Esa Abadi’, an apparent reference to the Indonesian palm rattan, widely used across the country’s islands to make furniture.

Any comparisons to IKEA, an acronym standing for the Swedish company’s founder (Ingvar Kamprad) as well as the farm and hometown where he grew up (Elmtaryd, Agunnaryd), is purely a coincidence, the company’s lawyer claimed.

The Indonesian IKEA waited until the Swedish original had started constructing its first megastore in the country, located in Tangerang, west of Jakarta, in 2014 before launching legal proceedings. Winning in the District Court, the case continued all the way to the Supreme Court, which made its ruling last May – only announcing it on its website last week.

Inter IKEA Systems BV, the Dutch-based company that oversees IKEA’s 301 worldwide stores and 30 franchises, told The Local that it had taken steps to ensure the company can continue to trade under the name.

"Despite the Supreme Court’s decision, Inter IKEA Systems B.V. has provided for continued ownership of the IKEA trademark rights in Indonesia," a spokesperson said. "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."

For more business news on Newstalk.com, please click here.