Rule of law and quality of pharmaceuticals
„One third of all medications and medical equipment in Mongolia is counterfeit. A WHO study reveals that nearly 30 per cent of all medications sold in our country are unregistered and low-quality.”, Jargalsaikhan, Unhealthy healthcare system, The Defacto Gazette No. 24
In the modern world, an efficient intellectual property enforcement that meets the minimum standards set by the Word Trade Organisation (WTO) is necessary to combating counterfeits and insuring the quality of pharmaceuticals and, hence, to the protection of the public health.
Mongolia is a member of WTO since 1997. The first steps towards a new system, which fulfils the minimum standards of WTO (TRIPS Agreement), were implemented when a new Civil Procedural Law (CPL) was introduced in 2002. CPL contains the basic rules that may be served and further developed for the enforcement of the intellectual property rights. The 2002 reform was considered as a success back in 2000s and Mongolia was praised by foreign experts as an example to other transformation economies. Today, after fifteen years, the law enforcement by civil courts does not still have a practical relevance and the socialist time practice of law enforcement by state inspection officials continued to be the only way of enforcement of the intellectual property rights.
The current practice of intellectual property enforcement by state inspection officials (the executive branch of the government) does not fulfil the basic requirements of rule of law and it is, in fact, inefficient and costly both to the state and the right owner (patent and/or trademark owner in case of a pharmaceutical). The current system makes, firstly, the heads of the government authorities the ‘khans’ of modern Mongolia. For example, in case of an infringement of a trademark by a third party, the trademark owner usually files a request to stop the infringement before the IPO according to the current law practice. The judiciary interferes at an ‘aggravated’ stage if the trademark owner was unsuccessful in the procedure before IPO or if a damage to the trademark owner or a third party, including the infringer, was caused due to the infringement proceedings undertaken by IPO. Moreover, the executive branch of the government is organised in a strict pyramid governance structure. Each decision requires approval from the hierarchy. This structure is not efficient, and it is not comparable with courts, where judges decide independently by application of law and facts, whether and how the alleged infringement should be stopped.
The intellectual property enforcement by state officials does not, secondly, fulfil the basic requirement of a fair process (as stipulated in WTO/TRIPS Agreement). For issuing property rights on an invention or a product name, the Intellectual Property Office (IPO) examines the substantial (for example: novelty) and formal requirements. IPO is, additionally, responsible to the intellectual property enforcement. This system, in which patent and trademark issuing office itself is responsible for the law enforcement, creates conflict of interest. The alleged infringer is, for example, in a weak position already from the beginning of the process.
The current intellectual property enforcement system is, thirdly, expensive to the Mongolian state. Each government agency has it’s own area of law enforcement and each has it’s own rules. In case of a trademark infringement IPO, General Customs Office (GCO), The Agency for Fair Competition and Consumer Protection (ACC) and the Criminal Police have authority to enforce the relevant laws. The Involvement of many authorities means in the practice that a conflict or dispute over responsibility between them may create an unclear situation and, therefore, hinder the state to act immediately.
In future, the private property rights, amongst them the intellectual property rights, should be enforced by courts. The transformation from the law enforcement by the executive branch of the government to a law (court) based enforcement is, however, a challenge in Mongolia. Mongolian lawyers do not have direct experience with the law enforcement by courts according to the requirements set by WTO/TRIPS Agreement. The lack of knowledge and experience hinders not only the access to justice of intellectual property owners and the alleged infringers but abets the dominance of executive branch of the government in law enforcement, therefore, is one of the sources of conflict of interest of government officials. Furthermore, Mongolian judiciary is not protected from direct political influence. The President of Mongolia, a politician, who spends millions of dollars to be elected by the people (Jargalsaikhan, The Last President, The Defacto Gazette No. 04), is de facto the head of the judiciary and the Judicial General Council of Mongolia, which has powers related to appointment and disciplinary proceedings of judges, is not an independent body but it is rather comparable with the socialist time Ministry of Courts, as described in my column in The Defacto Gazette No. 13 (The Mongolian Judiciary from Tiger’s to Lion’s mouth?).
To summon up, the transformation to a law based economy, in which the courts take the primary responsibility of enforcing property rights, has not been completed in Mongolia. Mongolia needs to further reform the law enforcement practice towards a market economy and an independent judiciary, in order to protect its citizens from health and security risks of illicit trade.