Trademark License Agreement Between Parent And Subsidiary Template for Indonesia

When you operate a parent-subsidiary business structure in Indonesia, you need a formal Trademark License Agreement to legally authorize your subsidiary's use of company trademarks. This agreement ensures compliance with Indonesian intellectual property law while protecting your valuable trademark rights and establishing clear usage parameters between related entities.

When do you need this document?

You need this agreement when establishing new subsidiary operations in Indonesia that will use your parent company's trademarks, whether for products, services, or brand marketing. The document becomes essential when formalizing existing informal trademark usage within your corporate group to ensure legal compliance. You'll also require this agreement when restructuring corporate arrangements, expanding subsidiary operations to new product lines, or when Indonesian regulatory authorities request formal documentation of trademark licensing relationships. Additionally, this agreement is crucial for transfer pricing compliance, as it establishes arm's length terms for intra-group trademark licensing transactions.

Key legal considerations

Your agreement must clearly define the scope of trademark usage, including specific marks covered, permitted products or services, and geographical limitations within Indonesia. Quality control provisions are critical, as you must maintain standards to protect trademark validity and ensure the subsidiary's use doesn't damage your brand reputation. You should include detailed termination clauses that protect both parties' interests while ensuring smooth business transitions. The agreement must address licensing fees or royalty arrangements, even between related entities, to satisfy Indonesian transfer pricing regulations and tax requirements. Consider including provisions for trademark enforcement, infringement protection, and coordination of legal actions to maintain trademark strength.

Legal requirements in Indonesia

Under Law No. 20 of 2016 on Marks and Geographical Indications, trademark licensing agreements must be registered with the Directorate General of Intellectual Property to be legally enforceable against third parties. Your agreement must comply with Government Regulation No. 36 of 2018, which provides detailed licensing procedures and documentation requirements. The document must satisfy Indonesian Civil Code requirements for contract validity, including legal capacity of parties, lawful objectives, and proper consideration. Law No. 40 of 2007 on Limited Liability Companies governs the corporate relationship aspects, requiring board approvals and compliance with corporate governance standards. You must ensure the agreement includes proper Indonesian language translations if required and addresses local tax implications, including withholding tax on royalty payments and transfer pricing documentation requirements under Indonesian tax law.