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
Dr Uyanga Delger, attorney-at-law