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Pursuing Criminal Charges for Trademark Infringement



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In our previous blogs (here and here), we stated that the question whether the infringement of the trademark owner’s rights constitutes an infringement or criminal case will be determined by virtue of the damage amount arisen out of such action, and also that there are different sanctions to each scenario.

In order to determine whether this action is the crime of ‘Violation of the rights of trademark owner and geographical indication” stated in Article 18.16, the damage incurred out of the action of confusing consumers through production, storing, transportation, sales and crossing of the state frontier by using trademark or geographical indication shall be more than 300,000 MNT (115 USD)and above.

If it is proven that the damage amount equals or exceeds the amount stated in the Criminal procedure law of Mongolia, the following measures with regard to criminal case filing may be taken.

  • The owner of trademark or geographical indication shall file a complaint and information about the crime to the police inspector. For such purpose, there should be a sufficient proof that the activities of the infringers are indeed a crime with loss/damage with more than 300 000MNT (115USD). The police inspector may take the following inspection measures to determine if the case stated in the compliant and information contains the elements of a crime within  5 days upon the receipt of the complaint and information:
  • Examination
  • Lab inspection of  samples and finger prints
  • Take testimony from witness
  • Seizure of the crime-related transportation, money and products
  • Confiscation of properties and belongings
    • After the receipt of the complaint immediately or after the conduct of the inspection operations stated above the inspector shall make one of the decisions:
  • To initiate a criminal case
  • To submit a proposal to the prosecutor on the refusal to initiate a criminal case
  • To submit a proposal to the prosecutor to the transfer the case according to the jurisdiction of the case and the law does not provide the duration
  • In case the inspector decided to initiate the case, he/she shall immediately inform the prosecutor about the decision and register the case at the central registry of the prosecutor and introduce the resolution to the prosecutor within 72 hours after the registry of the case at the central registry of the prosecutor. This shall be deemed as justification for the conduct of the criminal procedure. The general time for the criminal case filing, i.e. operations starting from initiating the case until the prosecution of the accused shall be one month and may be extended for up to three months by the prosecutor. 

Also, we have to take into account that in case the prosecutor decides that the initiation of the criminal case by the inspector is not justified, he/she shall invalidate the case filing.

Procedures for Investigating Trademark Infringement



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The procedures for addressing trademark infringement in Mongolia are regulated by the Law on Infringement Procedure and by the Criminal Code of Mongolia. Detailed information on the legal measures to be taken in cases of infringement, their related dates and the practical challenges will be further addressed in the next article.

As mentioned in our previous blog, the penalty for infringement of a trademark is set out in the Law of Infringement or Criminal Code of Mongolia depending on the amount of the damage and loss actually caused. It is critical in any trademark infringement action to take steps to prove that the damage caused by the trademark violation exceeds 300,000 MNT (~$115), in order to initiate a criminal investigation by the police.

With today’s article, we will briefly introduce the Law on Infringement Procedure of Mongolia (the Law). The Law sets out rules and procedures for potential infringement investigation and penalty, starting from the initial inquiry of a potential infringement case. The Law also sets rules for the prosecutor’s supervision of the investigation process and results and procedures for dispute settlement at the court.

Pursuant to the Article 6.14 of the Law, the state officer for intellectual property shall be responsible for matters related to the intellectual property, in particular trademark infringement. The authorized inspector shall carry out the inquiry into the alleged the infringement case upon the receipt of the complaint and information about the trademark infringement. Upon receiving a complaint, the inspector shall decide whether to initiate the infringement case. based on the claims and evidence provided. After the investigation is complete, the authorized official shall make the decision on whether to terminate the case without penalty, or to impose penalties

Prosecutor has an oversight role and may invalidate the decision to terminate the infringement case in instances where it is determined that the infringement case has an element of a crime or it is obvious that infringement has occurred. If the prosecutor decides that the matter has an element of crime, he/she shall prosecute the infringer as defendant.

Where infringement of a trademark is found, the infringer shall execute the imposed penalties within 15 days after the receipt of the decision. Should the infringer disagree with the decision and imposed penalties, there is an opportunity for appeal. 

Even though the violation of the intellectual property in Mongolia is a common practice, most violations are investigated as trademark “infringement” under the Law, and not as a crime. As the penalties for such infringement violations are relatively low and the investigation procedure is not reliable, the occurrence of such violations is not effectively deterred. Such persistent infringement causes challenge and burden both to the intellectual property owners and the respective authorities.

We will take a look at criminal investigation procedure next week.

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.