Category: Trademark Law

The Trademark Law of Mongolia is based on first-to-register principle, a simple rule that may often be fair enough. It could, however, serve as incentives to dishonest business practices. This is why the same or comparable special rules have been developed in many countries around the world that prioritise the legitimate interests of the public, consumers and honest business owners against malicious trademark applications. In this regard, the term trademark application in “bad faith” used commonly.

The Draft Law on Trademark, introduced by the Ministry Justice of Mongolia to public debates, purposes many positive changes for better balanced and fair trademark registration rules. The non-use-cancellation rule and the procedure on oppositions against Mongolian trademark applications are examples thereof as they will improve the quality of trademark examination and allow businesses better access to product and service names.

The Draft Law on Trademark, however, does not address the issue of trademark applications in bad faith.

Examples of registrations in bad faith

An owner of a trademark registered in Mongolia finds out that exactly the same product name was registered later in Mongolia for thousands of different products ranging from food, medication and male contraceptive to baby milk. One may ask here whether the trademark was registered with the sole interest of excluding others from the use of a very attractive product name, in order to sell or licence the product name later.

A Mongolian company imports washing powders from abroad together with packaging materials. The company received a cease and desist warning from another Mongolian company, the owner of a big number of trademarks. The trademark owner has never been active in selling washing powders in Mongolia. Generally, the company has never produced or sold any goods. All trademark registrations of the company are related to popular retail product names.

Another company operates in Mongolia by supplying goods under the product name X. Their product name has not being registered as a trademark. The company finds out that a person who had business relationships with them applied for the trademark X for the same goods.

Extension of the list of Art. 5.2 of the Trademark Law

The trademark registrations as shown in the examples above are nowadays very common in Mongolia. As the belief that trademark registration is a money-making opportunity seems to prevail (The Defacto Gazette No. 58), the public register is starting to fill up. Moreover, the current Trademark Law of Mongolia does not provide for prevention of registrations in bad faith.

A simple solution for tackling the issue is adding a new provision to the list of Art. 5.2 of the Trademark Law that “trademarks that have been applied for in bad faith shall not be registered”.

Reasonings

The purpose of the Trademark Law is giving businesses opportunity to participate in the economy through competition on the merits but not through imitation or abuse.

If the Draft Trademark Law, introduced by the Ministry of Justice, passes the Parliament of Mongolia, individuals and companies will be more encouraged to submit oppositions against Mongolian trademark applications. This means, businesses will have more chances to stop the emergence of an unjustified trademark – an exclusive ownership position – already at the stage of trademark application.

Thanks to digitalisation with the support of the World Intellectual Property Office (WIPO), the trademark examination and publication have been improving in Mongolia in recent years significantly. Mongolian Trademark applications are published in the databases of the Intellectual Property Office of Mongolia and the Global Brand Database of WIPO. 

Together with an additional provision in Art. 5.2 on applications in bad faith, the trademark application opposition procedure will substantially contribute to prevention of unnecessary intimidation potentials by dishonest business practices. There is, accordingly, a strong argument for adapting the current Draft Trademark Law by adding a provision on registrations in bad faith. A document published by the WIPO states, moreover, that the prohibition on registration in bad faith is internationally common (WIPO). Excluding trademark applications in bad faith from registration is, therefore, not only nationally desirable but internationally acceptable and, most importantly, beneficial to encouraging a fair competition that is essential to true economic progress and development of our country.

May 2019

First published in The Defacto Gazette No. 7 (96), 10 Jun 2019

Well-known international businesses such as Nike, Coca-Cola, and Facebook—or even local ones like Narantuul, the major wholesale and retail market in Ulaanbaatar—enjoy in Mongolia trademark-law protection without first requiring domestic registration. Unfortunately, the level of trademark protection in Mongolia does not reach the minimum standards set by the international law. That needs to change.

Current Mongolian Law

Mongolia’s current Trademark Law stipulates that a trademark shall not be registered if it is identical or similar to a well-known trademark in a way that it could cause confusion amongst consumers (see Art. 3.1.13 & Art. 5.2.8). Moreover, the owner of a well-known trademark may request the invalidation of another trademark that is in conflict with his/her own trademark (Art. 32.1.2). Such an invalidation request is accepted in Mongolia if it was filed within one year from the date on which the registration of the conflicting trademark was published by the Intellectual Property Office (Art. 32.3). However, Art. 5.5 states that well-known trademarks should be registered and Art. 32.1.4 grants the so-called Dispute Resolution Committee (DRC) with the authority to decide whether or not a trademark is “well-known”.^[1]

Harmonising with International Law

Mongolia is a signatory of both the Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Paris Convention for the Protection of Industrial Property (Paris Convention). But major reforms are needed in Mongolia in order for the current Trademark Law to comply with international law, three of which are outlined below.

Firstly, the Paris Convention and TRIPS Agreement stipulate that well-known marks should enjoy protection based on their reputation without requiring a prior registration or use in Mongolia (Art.6 bis I Paris Convention and Art. 16 II TRIPS Agreement). Since Mongolia’s current Trademark Law provides for recognition of a mark as “well-known” based on a decision by the DRC, the law needs to clarify that official domestic recognition is not a precondition for protection of a well-known mark. The DRC should not have to issue an initial “well-known” ruling on behalf of Nike’s trademarks before Nike can enjoy trademark protection within Mongolia. Furthermore, the filing of a trademark opposition or invalidation request to the DRC, or the submission of an injunction and damage claim to civil court by the owner of a well-known mark, should not be rejected on the grounds that the mark was not first recognised officially as “well-known” by the DRC.

Secondly, the owner of a well-known mark should be entitled to request the invalidation of a registration of a mark which is in conflict with the well-known mark. And the right to file an invalidation request should be granted to the owner of a well-known mark for at least five years from the date on which the fact of registration of the conflicting mark was published by the Intellectual Property Office of Mongolia (Art. 6^bis II Paris Convention). A one-year limit is just too short.

Thirdly, the right to request the invalidation of the conflicting mark and the civil law remedies of injunction and damages should be granted to the owner of a well-known mark without any time limit if the conflicting mark was registered or used in bad faith (Art. 6^bis III Paris Convention). As it stands now, the Trademark Law of Mongolia does not provide for invalidation of registration of a mark in bad faith (The Defacto Gazette No. 7 (96)). Introducing provisions and procedures for prevention and cancellation of trademark registration in bad faith is additionally required in order to harmonise the Mongolian law with the international law.

Actually, there is protection … but not for everyone

In case of a dispute, foreign owners of well-known marks will not be left empty-handed in Mongolia, since the international law of Mongolia is part of our domestic law and thus the provisions of the Paris Convention and TRIPS Agreement should be considered as directly applicable.^[2] However, the international law is primarily applicable to foreign businesses: for example, Mark Zuckerberg and his Facebook Inc. may assert their rights in Mongolia if a local webpage or social network with the name “нүүрном”^[3] was in operation, even though the Mongolian word  “нүүрном” is not a registered trademark.

Unfortunately, domestic firms are not as lucky. Mongolia’s own Narantuul LLC, having established a well-known brand name through hard work and diligence, might face difficulties appealing against a trademark registration that intends to free-ride on the reputation of it’s brand name “Narantuul”, especially if the Trademark Law’s one-year deadline to submit an invalidation request was missed.

The Paris Convention and TRIPS Agreement are drafted for the protection of international parties with the expectation that no national legislature would allow the disadvantage of its citizens and businesses against foreigners within its territory. There should be harmonisation of protection coverage between international and domestic law. As things stand now, Mongolian voters would likely be displeased to learn that within Mongolia Mr. Zuckerberg actually has more trademark rights than a homegrown Mongolian business, especially one that contributes to the national economy by employing its people and paying taxes here. Mongolia’s lawmakers would do well to begin that harmonisation process now.

June 2019

First published in The Defacto Gazette No. 12 (101), 08 Jul 2019

[1] Draft amendments to the Trademark Law have proposed adding fees to such ruling requests.

[2] The Supreme Court of Mongolia ruled that the international law is directly applicable if the national law does not comply with it (Order No. 9 of 2008); Bodenhausen, Guide to the application of the Paris Convention, p. 89 and 90.

[3] Literally “facebook”: нүүр (face) + ном (book)

In a market economy that encourages free and fair competition, everyone should have an opportunity to participate and succeed. Laws meant to regulate business should promote performance competition and combat economic exploitation.

One downside of a competitive economy is the lack of a permanent ownership position: One may lose tomorrow that what she or he gained today. However, despite this insecurity, competitive economies give ordinary people the best chance for economic success, the most thrilling results of which are innovation, creativity, and an entrepreneurial spirit. Indeed, competition is far better than the alternatives we’ve seen, such as feudal, state-controlled, or political party cartel systems, in which only a few control the wealth of a country while the majority struggle with low wages and less opportunity.

And yet, 26 years since the collapse of the socialist system, the notion that the state should encourage free and fair competition is not very clear to many Mongolians. Luckily there is such a mechanism for the promotion of competition in the form of the current Trademark Law of Mongolia.

Trademarks give individuals and businesses the opportunity to own a product or service name by obtaining a state registration. With a registration, one gains the position of excluding others from using the same or similar name for the same or similar product or service. In Europe, for example, this opportunity is not given out for free without obligation; the trademark owner should be an active participant in the economy by producing and selling goods or services under that trademark. If the trademark owner fails to produce or sell goods or services using the registered trademark within a period of time set by law (normally five years), she or he loses the ownership of the trademark. This then gives other businesses an opportunity to use the same or similar name (referred to as “non-use cancellation”). Essentially, with trademarks, it’s “use it or lose it”.

But in Mongolia the Trademark Law does not provide a non-use cancellation requirement. Additionally, the trademark registration, examination, and renewal fees are extremely low. One could say that the Mongolian state is offering the trademark registration services almost for free. Consequently, there is an increasing tendency for enterprises and individuals to register trademarks in Mongolia without a serious interest in actually participating in the Mongolian economy through the production and/or selling of goods or services using their trademark.

Therefore, as a result of the current trademark registration system, enterprises might find out that their product or service names are already registered to someone else. In such cases, these enterprises might be forced to negotiate with the owner of the Mongolian trademark in order to obtain the registration, often by ownership transfer or consent. Start-up companies might end up spending most of their valuable time in legal disputes with a trademark registration owner who does not do any business at all. The belief that trademark registration is a money-making opportunity seems to prevail.

It is, therefore, not surprising when one encounters a Mongolian trademark registration owner who insists on trademark licensing against payment of annual fees, even though she or he did not establish a product or service brand, nor attempt to introduce goods or services to the market. Mongolia would do well to increase its awareness of the actual purpose and benefit of trademark protection—that it encourages fair competition and legitimate contributions to the economy.

August 2018

First published in The Defacto Gazette No. 59. 31 Aug 2018