IKEA loses the right to its own name in Indonesia

The Swedish furniture giant lost the dispute to PT Ratania Khatulistiwa, an Indonesian rattan furniture company

IKEA has lost the right to its own name in Indonesia (JEFF PACHOUD/AFP/Getty Images)

IKEA has lost a trademark battle in Indonesia after the country’s highest court ruled the name was owned by a local company, according to court documents released this week.

The Swedish furniture giant lost the dispute to PT Ratania Khatulistiwa, an Indonesian rattan furniture company, which registered its IKEA trademark in December 2013.

It's an acronym of the Indonesian words Intan Khatulistiwa Esa Abadi, which refers to the rattan industry.

The Supreme Court ruled on the decision in May 2015 but the ruling only emerged this week.

IKEA, which had registered its trademark in Indonesia in 2010, had not actively used it in three consecutive years, according to courts documents. This means it could be deleted under Indonesia’s trademark law.

The court decision could make foreign companies more cautious about investing in Southeast Asia's biggest economy, which is already growing at its weakest pace since the global financial crisis.

"The clear message is that any business wanting to open up in Indonesia has to be very careful to register all its trademarks so they don't get hijacked," said Keith Loveard, head of risk analysis at Jakarta-based Concord Consulting.

IKEA opened its first Indonesian store in the outskirts of Jakarta in 2014.

The options now for IKEA are to file an appeal to the same court, change its name, or pay royalty fees to the Indonesian company, according to a Reuters legal expert.

Additional reporting by Reuters