Unfair Competition in the Use of Intellectual Property Objects:
Problems and ways to protect a Trademark in Mongolia

Mongolia is a member of the World Intellectual Property Organization and has acceded to major treaties and conventions related to intellectual property. Also signed and ratified the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

TRIPS require member states to provide strong protection for intellectual property rights. For example, under TRIPS:

• the copyright terms must extend at least 50 year after the death of the author;
• copyright must be granted automatically, and cannot be contingent on the completion of any formalities such as registration;
• computer programs shall be considered as objects of copyright law and shall be a subject of the same protection;
• national copyright restrictions and list of non-patent objects must be clearly limited;
• patents must be granted in all areas of technology, but exceptions can be allowed to protect the public interest. The term of protection of property rights provided by a patent must be at least 20 years;
• each state shall provide intellectual property rights protection of the citizens of TRIPS countries at the same level as its own citizens.^[1]

The above-mentioned TRIPS rules are reflected in the Law on Copyright and the Law on Patents of Mongolia.

In accordance with the new Intellectual Property Law adopted by the Parliament of Mongolia on January 23, 2020, the following classification of objects of intellectual property are presented, which are divided into two groups: first, copyright and related rights, second, the industrial property right. Industrial property rights consist of the following objects:

• new invention;
• utility model;
• product design;
• trademark; and
• geographical indications.

Despite the fact that the new Intellectual Property Law has been adopted, the objects of intellectual property are regulated by separate laws, for example, the Law on Copyright and Related Rights dated January 19, 2006, the Law on Patents dated January 19, 2006 and the Law on Trademark and Geographical Indication dated June 10, 2010.

As it stated in the Law on Trademark and Geographical Indication, the trademark means a distinctive expression used by an individual or legal entity to distinguish their goods and services from other goods and services. Thus, the trademarks can be expressed in words, shapes, letters, numbers, 3D shapes, colors, sounds, smells, or a combination thereof.

The antimonopoly legislation of Mongolia consists of the Competition Law, the Civil Code and other laws adopted in accordance with the Competition Law.

Prohibitions on arbitrary use of other's trademarks, labels, brand names, quality assurance of goods, assigned names copy and goods packaging, it is included in prohibited activities aimed at the restriction of the competition, as it’s stated in Competition. For a protection of the trademark it is recommended to register a trademark in General Authority of Intellectual property of Mongolia, because trademark registration provides legitimate protection (especially in the event of a conflict between identical or similar trademarks) under the relevant laws. 

Trademark registration

Trademark protection in Mongolia occurs only from the moment of state registration in the General Authority of Intellectual property. By registration, an individual or legal entity protects its trademark from unlawful use of the trademark by others. This rule also applies to foreign goods and services. To register the trademark the applicant shall submit required documents to the Intellectual Property Authority, then the Authority, based on the conclusion of the examination,  shall make a decision on whether to register a trademark within 9 months from the date of submitting of the application, if necessary this period may be extended for up to 6 months. Monopoly or exclusive right to use the trademark is officially established, upon receipt of a trademark certificate. Registration and certification of a trademark creates the exclusive right to use the trademark in the territory of Mongolia. In other words, a trademark similar to the registered trademark shall not be used by another person without a written permission. Trademarks are registered for 10 years. It can be extended for another 10 years upon expiration.

Exclusive rights

The trademark holder shall have the following exclusive rights:

• to own the registered trademark;
• to allow to use the registered trademark by a third party;
• to transfer the registered trademark to a third party;
• to demand cessation of registered trademark use without permission;
• to demand cessation of similar trademark use by a third party which misleads the customers;
• to demand payment for incurred loss due to action stated in (d) and(e).

The only allowed use of the registered trademark under the law is a Licensing agreement. In accordance with the Licensing agreement, trademark holder may allow use of the trademark by a third party. As outlined by the law, the Licensing agreement shall be registered with the Intellectual property authority and only then the agreement shall be considered as valid.

Intellectual Property Authority

The Intellectual Property Authority of Mongolia is the main government agency in charge of intellectual property in Mongolia. The Intellectual Property Authority is responsible for the management of intellectual property, the granting of intellectual property rights, support for their commercialization, and the protection of intellectual property rights from infringement. In addition, government agencies such as the General Department of Taxation, General Department of Customs, Communication Regulatory Commission, Authority for Fair Competition and Consumer Protection, and the Economic Crimes Division of the General Police Department play an important role in protecting intellectual property rights.

Enforcement action by Intellectual property authority: In case of trademark infringement, the trademark holder may file a complaint to the supervisory department of Intellectual property authority. The claim shall be supported by the evidence of trademark infringement. The assigned State Inspector will work on trademark infringement. The inspection shall start within 3 days from submission of the complaint. The inspection shall be carried out within 14 days and can be extended for 30 days, if necessary.

The State inspector can impose following sanctions to the trademark infringement case:

• oblige to cease the use of trademark and undertake corrective action or cease action within defined term;
• oblige to cease sell of product or destroy product; and
• impose a penalty specified in the Law of Offence.

In case the State inspector’s action is not satisfactory to the claimant, he/she can file a claim to the Senior inspector and court.

Enforcement action by the Customs authority: For protecting or fighting with fake products to be supplied and sold in the market, the trademark holder or its authorized entity or individual under the licensing agreement can register the trademark at customs authority on the basis of the registered trademark certificate at its registry. The customs authority shall not clear fake products with registered trademarks through the customs if there is any complaint. The trademark holder can file a claim on ceasing to clear the products by the customs if there is an infringement of its trademark rights and cleared products through the customs illegally, or there are solid grounds that illegal or fake products are under the customs inspection to the Customs authority. The claim shall contain information about trademark holders, intellectual property and detailed description of the products which cleared the customs illegally and defining terms for measures which will be undertaken by the customs authority. The state inspector of the Customs authority is authorized to impose the same sanctions to a trademark infringer.

Enforcement action by courts

1. If the State inspector and its senior inspector have not performed their duties satisfactory to the trademark holder’s claims for protecting its exclusive rights, the trademark holder may file a claim to the court.
2.  If trademark infringement caused a loss in the form of monetary or non-monetary such as damage to the business reputation etc, the trademark holder is entitled to file a claim for compensation of caused loss to the court. However, the caused loss shall be proved by evidence in order to claim the caused loss.
3. The criminal sanction will be imposed on the defaulted entity and individual by the court. In this case, if a defaulted party has manufactured, supplied, sold and stored fake products with the registered trademark; the criminal sanction will be imposed. Trademark infringement shall be classified as an offence or a crime under the relevant law.

Authority for Fair Competition and Consumer Protection

Authority for Fair Competition and Consumer Protection- it is the main authority, which is monitoring the implementation of Competition Law.

Authority is responsible to conduct supervision on the following grounds:

• complaints submitted by legal entities, organizations and citizens;
• information published in the media;
• on its own initiative;
• other grounds provided by law.

The state inspector shall conduct the inspection within 60 days, and if it is not possible to complete the inspection within this period, the period may be extended by the head of the Authority for Fair Competition and Consumer Protection for up to 30 days.

Violation of the legislation shall be investigated and punished in accordance with the procedures set forth in the Law on Violations or a Criminal Code of Mongolia. 

Violation and punishment

According to a Criminal Code of Mongolia, mislead consumers by using other entities trademarks or geographical indications and caused more than a small amount of damage due to the production, storage, transportation, sale or import of counterfeit goods and products across the state border shall be punished by a fine of 2 700 000/app 947 USD/ to 5 400 000 MNT /app 1894 USD/, or 240 hours to 720 hours of community service, or restriction of the right to travel for a 6 months up to 1 year, or imprisonment for 6 months to 1 year.

Small amount of damage, as defined in Criminal Code means damage in the amount of 300 000 MNT /app 105 USD/ or less.

^[1]Overview: the TRIPS Agreement- https://www.wto.org/english/tratop_e/trips_e/intel2_e.htm