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Penalty for Trademark Infringement



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This article aims to give an overview concerning the trademark infringement in Mongolia and the difference between the infringement and the crime. Pursuant to Article 12.3 of the Law on Trademarks and Geographical Indications of Mongolia, a trademark owner is entitled to exclusive ownership, usage rights, and legal right to demand cessation of unauthorized use, along with monetary damages in compensation for infringing use.

In Mongolia, the violation of trademark ownership rights is addressed in both the Law of Infringement and the Criminal Code of Mongolia, meaning trademark infringement may carry both civil and criminal penalties. As described below, the sanctions set out in these laws differ and the infringement of the trademark owner rights is relatively low compared to the crime:

According to the Law on Infringement, violation of a trademark owners legal rights may result in seizure of property and profits related to the infringement, closure of the infringing operations, and compensation of damages to the trademark owner. Individual’s involved in the infringement may be fined up to 300,000 MNT (USD ~$115) while companies may be fined up to 3,000,000 MNT (~$1150)

If damages caused by infringement are found to be greater than $300,000 MNT (~$115) the matter may be investigated as a crime. Where infringement may be considered a crime, the penalty may include imprisonment for up to 1 year, mobility restrictions, community service requirements, or fines up to 5,400,000 MNT (~$2070). These penalties may be increased if it is found the infringement was coordinated by an “organized criminal group”.

The amount of the loss/damages for the breach of industrial property rights may be proven by means of following common methods:

  1. On the basis of the possible revenue amount that the eligible industrial property right owner could have made
  2. On the basis of the amount of the licensing contract, in case the trademark owner would have used the trademark upon the conclusion of a licensing contract with the trademark owner.

The procedure on addressing the trademark infringement in Mongolia is a subject of regulation by the Law on Infringement procedure and the Criminal Code of Mongolia. The detailed information on the legal measures to be taken, their related dates and the practical challenges will be further addressed in the next article.

Trademarks vs Trade Names: Key Distinctions



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In our previous article we mentioned that although trade names and trademarks sound similar, they have completely different legal implications. In this article we will discuss about legal implications of registering a trademark.

A trademark is a more significant step identified with establishing brand recognition in the marketplace. A trademark can be associated with, or part of, your trade name, and can be used to provide legal protection for the use of names, logos, symbols, words, phrases, slogans, or other designs that help customers identify your company.

A trademark requires separate registration from a trade name. You must register your trademark with the state authority in charge of intellectual property matters. The registration of a trademark guarantees a business the exclusive use of the trademark, establishes legally that the trademark was not already being used by any other business entity or person prior to your registration of it and provides official government protection from any other business subsequently infringing on your registered trademark. In other words, when you register your trademark, you hold several legal rights. You are the only one allowed to use, copy, profit from, distribute the registered trademark, and no other company or person can use that trademark. This process also establishes your ownership of the trademark as a unique and protected element of your business. Your trade name might also be included in the trademark that now has that legal protection. If any other person or company tries to use something similar, you have the right to take legal action. It also provides legal liability protection against someone subsequently claiming that you are infringing on a previously registered trademark.

In registering a trademark, you or your business can directly register the trademark, or you can choose to have a licensed intellectual property agent (IP agent) do it for you. Having an IP agent handle the registration provides an extra layer of insurance that the registration is done properly and completely, and that a thorough investigation has been conducted verifying that the trademark has not been previously registered by any other person or company.

Trademarks vs Trade Names: Differences You Should Know



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When starting a business, there is often some confusion about the registration of business name, in particular confusion between trade names and trademarks. The terms “trade name” and “trademark” sound similar, but it is important for business owners – especially those just starting businesses – to know the difference. Selecting and registering trade names and trademarks is an important part of establishing a brand presence and recognition in the marketplace for a company and its products, so it’s a process that should be considered carefully.

A trade name is your company’s official name under which it does business. A trademark protects the intellectual property of a business. Trademark may include logos, symbols, words, phrases, slogans, or other designs that help customers identify your company. Trademark can also be associated with your trade name. When consumers look for products and services, they often rely on the trademarks to find the items they want. An important reason to distinguish between trade names and trademarks is that if a business starts to use its trade name to identify products and services, it could be perceived that the trade name is now functioning as a trademark, which could potentially infringe on existing trademarks.

Trade name

Registering your company’s trade name is much simpler than registering for a trademark but doesn’t offer the same legal protection. It only serves as the official name of your company. You need to register your company’s trade name with the state registration authority as soon as you decide to incorporate a company. When you do so, your company will gain recognition as a legal entity. The registration process also makes it legal for your company to enter into contracts and participate in other legal forms of business. The practical function of registering a trade name is primarily for administrative and accounting purposes, such as filing taxes, issuing pay to employees, setting up websites and other online presences, advertising, and product packaging, etc. Registration requirements for trade names are really geared more toward making the tax authorities aware of your business than they are toward providing any substantial brand name protection. However, even though registering a trade name does not provide legal protection in the way that registering a trademark does, selecting a trade name should still be done thoughtfully, as it is the initial step in establishing an identity for your company in the marketplace.

Revised Rules of Dispute Resolution Committee of the Intellectual Property Office of Mongolia Comes into Force (Part 2)



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In continuation of our previous article we will continue to highlight and discuss about new regulations provided for in revised Rules of Dispute Resolution Committee (Committee).

Pursuant to new Rules chairman of the Committee shall preside hearings. In his absence a member of the Committee, who was appointed by chairman of the Committee to temporarily perform his duties, shall preside the hearings. Hearings shall be valid upon participation by majority of members of the Committee. Chairman, secretary and members of the Committee shall participate in hearings with the right to make and carry out decisions, and Head of IPOM may participate in hearings with the right to advise. In such case members of the Committee must hear out and take into consideration suggestions and comments of Head of IPOM regarding the case. Under new Rules Secretary of the Committee has new additional duties, such as coordinating internal affairs of the Committee, taking preparation measures for hearings, and keeping records of hearings.

Pursuant to old Rules the Committee issued two types of decisions: conclusion and resolution. Under new Rules the Committee shall issue only resolution. Issued resolution shall be delivered to Head of IPOM within 7 days from date of issuance, and Head of IPOM shall approve the resolution with his/her order within 3 days. If Head of IPOM deems that there are no grounds to approve the resolution, he/she will send an explanation to the Committee in writing. The Committee shall discuss such explanation at hearing and carry out one of following decisions: if agrees with such explanation – shall revise/amend the resolution, if disagrees with such explanation – shall re-deliver the resolution as is to Head of IPOM for approval. The resolution shall come into force when chairman of the Committee reads it out at hearing.

New Rules include new regulations, such as competence and rights of the Committee, rights and duties of participants of dispute resolution case, grounds to challenge a member(s) of the Committee from dispute resolution case. In case if a member(s) of the Committee is challenged and due to this the hearing becomes invalid, Head of IPOM shall appoint new members of Committee to resolve such specific case.

Revised Rules of Dispute Resolution Committee of the Intellectual Property Office of Mongolia come into force (part 1)



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In 2018 the Government of Mongolia has adopted a new revised structure of government agencies, pursuant to which General Authority for Intellectual property and State registration has divided into two separate agencies, General Authority for State registration and Intellectual Property Office of Mongolia, with their own separate functions. Due to this division Intellectual Property Office of Mongolia (IPOM) has started to renew its internal structure and some rules and regulations, in particular Rules of Dispute Resolution Committee. In connection with this, activities of Dispute Resolution Committee of IPOM have been suspended sine die.

On February 13th, 2019 by the order of the Minister of Justice and Home affairs No. A/26 a revised Rules of Dispute Resolution Committee (Committee) of IPOM was adopted and new members of the Committee were appointed. In this article we will highlight main differences between old and new Rules of the Committee and new additions to the Rules.

Pursuant to old Rules chairman and secretary of the Committee were appointed by the Head of IPOM, and members of the Committee were appointed every time when a decision to initiate a dispute resolution case was carried out. And number of members to be appointed were not specified. Pursuant to new Rules the Committee is a non-permanent division and will consist of 11 regular members. By the order of the Minister of Justice and Home affairs No. A/26 dated February 13th, 2019 regular members of the Committee were appointed, and the Committee consists of chairman, secretary and 9 members. The Committee is distinctive because it now includes not only IPOM specialists and inspectors, but also specialist from Ministry of Justice and Home affairs, law school professor and IPOM researcher.

Under new Rules the Committee shall not accept and resolve disputes regarding claims for incurred damages and claims of compensation (payment) for using protected invention as specified in paragraph 28.1 of Article 28 of Law on Patents. Whereas under old Rules the Committee did not resolve requests to recognize the trademark is a well-known trademark, as specified in paragraph 32.1.4 of Article 32 of Law on Trademarks and Geographical indications, now under new Rules it is possible to submit such requests to the Committee.

Under old Rules requests and complaints were submitted in writing to the Committee, and chairman of the Committee carried out a decision whether to initiate a dispute resolution case or not within 14 days from date of submission. Pursuant to new Rules requests and complaints are submitted in writing to chairman of the Committee. Chairman of the Committee shall transfer requests and complaints to one of the members of the Committee for review within 5 business days from date of submission. The member of the Committee shall review and present his/her suggestions and comments to chairman of the Committee within 10 business days from date of receipt. Chairman of the Committee based on suggestions and comments of the member of the Committee shall carry out a decision whether to initiate a dispute resolution case or not.

Before, dispute resolution cases were resolved within 6 months as specified in Law on Patents and Law on Trademarks and Geographical indications, whereas now this period has significantly shortened. New Rules provide for that dispute resolution cases must be resolved within 30 days from date of decision to initiate a case is carried out, and if additional procedures and measures are necessary then this period may be extended once for up to 30 days by chairman of the Committee.

New Online Platform Streamlines Mongolia Government Services



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In 2018 Parliament of Mongolia adopted 4 new laws related to state registration and made corresponding amendments to relevant laws. These new laws and amendments came into force on November 1st, 2018. The advantages of new laws are to facilitate government services for citizens and legal entities by transitioning into providing online services, thereby introducing and implementing new electronic (online) networks to all public (government) institutions and eliminating previous legal overlaps.

General Authority for State Registration has set its main objectives, including reduction of paper-based workflows, implementation of new information technologies and improvement of government services. Within framework of these objectives General Authority for State Registration has introduced and launched new online data system www.burtgel.mn. Purpose of this online system is to provide government services to citizens and legal entities more quickly, without any delay, bureaucracy, excess demands (requirements) and resolve issues directly. Anyone who has access to internet can obtain all government services provided by state registration authority without having to directly communicate with a person. Currently one can obtain instantly more than 10 types of state registration references free of charge using this online system. Furthermore, services related to civil registrations, registrations of legal entities and registrations of property rights will be soon available on this online system as well.

The new law provides that information can be obtained if an individual is identified. There are two ways to be identified. One is with individual’s cell phone, other one is with digital signature. Law on Digital signature was adopted in 2012. Digital signature can be obtained from National data center, authority for communication and information technology, and private companies licensed to grant digital signature certificates.

Individuals who have access to internet using digital signature can obtain any information without any limitations of registration jurisdiction. In other words, an individual is being identified on the internet. Digital signature is the key. This key is password or access code. Basically, in order to obtain necessary information from online data system an individual must be registered in the system. When registering in the system individuals must use their digital signature. However, individuals are not always required to have digital signature. For individuals with smartphones digital signature is not obligatory. It is possible to obtain services and information related to state registration using smartphone chip. Depending on cell phone carrier if individual wants – it is possible to install his/her personal state registration information into his/her smartphone sim.

As for legal entities, they already have started using digital signatures while ago. For example, for submission of online tax reports or when participating in online government procurement biddings.

Basics of Mongolia Unemployment Insurance



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Right to get unemployment compensation

The employee or insurer is entitled to get the compensation if employee were paying the unemployment insurance fees 24 months before he or she get unemployed and moreover employee must be paid the insurance 9 months continuously.  If insurer or employee get unemployment compensation previously, then they must be paid the unemployment insurance fee for 12 months, in this occasion, they are eligible to obtain the compensation. 

Compensation amount

Compensation will be granted considering the period of employee has been paid the insurance and the compensation will be provided as a percentage of below amount of last 3 months’s average salary or equivalent amount of payment. 

Work period of paid insurance Percentage of compensation
Until 5 years 45%
5-10 years 60%
10-15 years 60%
Above 15 years 70%

Minimum standard of compensation is no less than minimum wage of 75 percentage.

Employee or insurer is obliged to register the unemployment with 14 days after completed the handover work with employer, if there is reasonable reason for employee for the delay, it should be registered in 3 months with employment department or social insurance organization.

Employment department or social insurance organization will make a decision whether to grant compensation or not within 14 days after receiving the application and relevant document

The compensation will be granted to the employee or insurer within 76 working days after the registration of unemployment.  The employment department or social insurance organization will calculate the compensation and pay it up to two times per month.

Required documents to get the compensation

Following documents need to be collected in order to obtain the compensation:

  1. Application
  2. Social Insurance Book
  3. Termination order by employer

Reduction for the unemployment insurance

If employer or insurer has not been taken or obtained any compensation from unemployment insurance fund in 5 years, following year’s insurance fee will be reduced by 10 percentage. If employer and insurer continually meeting the above requirement, the reduction will be increased by 10 percentages, but it should not be exceeded 50 percentages. 

Bank Guarantee – a Trade Finance Tool



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In one of our previous articles we wrote about a letter of credit, a trade finance tool that is most commonly used in international trade. In this article we will discuss about another trade finance tool – a bank guarantee.

A bank guarantee is a type of guarantee from a lending institution, usually banks. A bank guarantee means a bank ensures that the liabilities of a debtor (buyer) will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

A bank guarantee and a letter of credit are similar in many ways but they are two different things. Letters of credit ensure a transaction proceeds as planned, while bank guarantees reduce the loss if the transaction doesn’t go as planned. While letters of credit are used mostly in international trade agreements, bank guarantees are often used in real estate contracts and infrastructure projects.

Bank guarantees represent a more significant contractual obligation for banks than letters of credit. A bank guarantee, like a letter of credit, guarantees a sum of money to a beneficiary. However, unlike a letter of credit, the sum is only paid if the opposing party does not fulfill the stipulated obligations under the contract. This can be used to essentially insure a buyer or seller from loss or damage due to nonperformance by the other party in a contract.

There are different kinds of bank guarantees, including direct and indirect guarantees. Banks typically use direct guarantees in foreign or domestic business, issued directly to the beneficiary. The term direct guarantee applies when the bank’s security does not rely on the existence, validity and enforceability of the main obligation. Individuals often choose guarantees for international and cross-border transactions, which can be more easily adapted to foreign legal systems and practices due to not having form requirements. Indirect guarantees occur most often in the export business, especially when government agencies or public entities are the beneficiaries of the guarantee.

Banks, since they are agreeing to take on risk, thoroughly screen buyers interested in bank guarantee. After the bank has determined that the buyer is a reasonable risk, a monetary limit is placed on the agreement. The bank agrees to be obligated up to, but not exceeding, the limit. This protects the bank by providing a specific threshold of risk. Creditworthy buyers are then issued a bank guarantee.

Alternative Dispute Resolution: Mongolian Approach to Mediation



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Mediation a method of alternative dispute resolution parties to any agreement should consider, aside from arbitration. Mediation is essentially a negotiation facilitated by a neutral third party. Unlike arbitration, which takes a form more similar to trial, mediation doesn’t involve decision making by the neutral third party, but seeks to find a mutually acceptable resolution or compromise between the parties. Mediation procedures can be initiated by the parties or may be compelled by legislation, the courts, or contractual terms. When parties are unwilling or unable to resolve a dispute, one good option is to turn to mediation. Mediation is generally a short-term, structured, task-oriented, and “hands-on” process.

In Mongolia the institution of mediation was established by adoption of the Law on Mediation in 2012. Pursuant to Law, mediation may be used in civil legal disputes, individual labor disputes and disputes arising from family relationships, and in some other disputes only if specified by law.

In mediation, the disputing parties work with a neutral third party, the mediator, to resolve their disputes. The mediator facilitates the resolution of the parties’ disputes by supervising the exchange of information and the bargaining process. The mediator helps the parties find common ground and deal with unrealistic expectations. The mediator may also offer creative solutions and assist in drafting a final settlement. The role of the mediator is to interpret concerns, relay information between the parties, frame issues, and define the problems. Unlike the litigation process or arbitration, where a neutral third party (judge or arbitrator) imposes a decision over the matter, the parties and their mediator ordinarily control the mediation process – deciding when and where the mediation takes place, who will be present, how the mediation will be paid for, and how the mediator will interact with the parties.

A mediator is a specialized person, who is certified and registered in the list of mediators. Anyone with higher education may attend training courses for mediators and become a certified and registered mediator. However, currently most certified and registered mediators are usually lawyers or persons with certain legal or economic background. Law on Mediation provides presence of mediation centers at courts of first instance. Law also permits government authorities, NGOs and professional associations to have medication centers in accordance with their direction of professional activity, provided that certified and registered mediators are employed.

New Law Needed to Protect Internet Domain Names as Intellectual Property



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Many companies wish to utilize a national top level domain in their online “URL” to indicate that the company, and products or services offered are local to a specific country. For example, a Mongolian company may utilize “.mn” to indicate to the world it is based in Mongolia, while an international company may establish a separate “.mn” website to target the Mongolia market.

Datacom LLC, a Mongolian company, holds the right to issue “.mn” domain name and has been doing so since 1996. Also, Erdemnet issues “edu.mn” domain name for educational organizations and National Data Center issues “gov.mn” domain name for government organizations.

Currently, there is a domain name registration system operated by the the National Data Center. However, there are many violations of the domain registration process because there is no legislation regarding registration and use of domain names in Mongolia. Many in the Mongolia IT sector have advocated for such a law as it is required to establish the legal basis for registering, possessing and using domain names. Having such law is also critical to avoid and mitigate potential for intellectual property rights infringement.

Illegal circulation of intellectual property in the internet or electronic environment is widespread. In particular, copyright ingringement, namely the music and film are widely copied illegally and available online.

Both the General Authority for Intellectual Property and the State Registration and Communications Regulatory Commission of Mongolia fight againt the copyright’s infringement in the internet and have authority to shut down the domain names which are found to use or make available intellectual property without constant of the owners. However, there is a continous cycle in which a site which finds it’s domain name shut-down quickly re-openeds and posts copyrighted contend under a new domain name. A formal domain name law would help to stop this process.

The Mongolian Parliament adopted the Resolution /No.11/, “List of Laws and Regulations need to be updated by 2020” on 12 January, 2017. According to the resolution, Law on Domain Names is scheduled to be enacted in the near future.