Mongolia's First-to-File System and the Risk of Bad Faith Trademark Registrations

Introduction

Mongolia operates a first-to-file trademark system. Rights in a trademark are acquired through registration, not through use. A brand that has traded internationally for decades — and whose name is recognised worldwide — has no automatic protection in Mongolia unless it has been registered with the Intellectual Property Office of Mongolia (IPOM).

This principle has a straightforward consequence: the first party to file for a given mark in Mongolia acquires priority, regardless of who has been using that mark, for how long, or on what scale. For foreign brand owners who have delayed filing in Mongolia, this creates a concrete and sometimes costly risk — the risk that a third party files first.

The First-to-File System in Practice

In most established markets, trademark rights arise from a combination of registration and use. Prior use can establish common law rights, defeat later registrations, and provide grounds for cancellation. Mongolia does not operate on this basis. Protection is registration-based, and the register determines priority.

Under Article 6.7 of the Law of Mongolia on Trademarks and Geographical Indications (Trademark Law), where two or more parties file for identical marks covering identical goods or services, the rights of the party that filed first are protected. Article 12.1 confirms that exclusive rights arise upon registration with the IPOM.

The practical consequence is one we have seen repeatedly in our practice. A foreign company begins distributing products in Mongolia, signs a licensing agreement with a local partner, or announces market entry — and only at that point discovers that an identical or similar mark has already been registered locally by a third party. That registration may have been filed months or years earlier, in anticipation of exactly this moment.

Bad Faith Registrations — A Real and Growing Risk

Not all conflicting registrations arise by coincidence. Some are filed deliberately, by parties who have identified a foreign brand operating without Mongolian trademark protection and have registered the mark — or a close variant of it — with the specific intention of extracting a commercial benefit. This practice, commonly referred to as trademark squatting, is a recognised problem in first-to-file jurisdictions worldwide, and Mongolia is not immune to it.

The pattern typically follows one of two forms.

Market entry squatting

A local party monitors foreign brands entering or about to enter the Mongolian market and files for the mark before the foreign brand owner does. When the brand owner arrives or appoints a licensee, the squatter asserts their registered rights — demanding payment, threatening legal action, or seeking to prevent the brand from operating in Mongolia.

Licensee or distributor squatting

A local distributor or business partner, having been given access to the brand and its materials, registers the trademark in their own name rather than that of the foreign brand owner. When the relationship breaks down, the local party uses the registration as leverage.

We have acted directly for international clients facing both scenarios — including a well-known international television format registered in anticipation of its Mongolian launch, and a leading international media brand whose distinctive trade dress was replicated by a Mongolian publisher.

The Legal Framework — Before and After 2021

Prior to the September 2021 amendments to the Law of Mongolia on Trademarks and Geographical Indications (Trademark Law), bad faith was not expressly recognised as a ground for refusing or invalidating a trademark registration. Challenging opportunistic filings required relying on other grounds, which were less direct and less certain.

The 2021 amendments changed this position fundamentally. Article 5.2.11 was added to the Trademark Law, providing that an application filed with the intent to gain an unfair advantage shall not be registered. This introduced bad faith as an explicit ground for:

• Refusing a trademark application at examination (Art. 5.2.11, Trademark Law)
• Opposing a published application — for national applications, within three months of the filing date; for Madrid designations, within five months of the date of international publication (Art. 8.10, 11.9, Trademark Law)
• Invalidating a registered trademark (Art. 33.1.1, Trademark Law)

Time limit for invalidity: General invalidity requests under the Trademark Law must be filed within one year of publication in the Official Gazette (Art. 32.3). The Trademark Law does not specify a separate time limit for bad faith invalidity under Art. 5.2.11, which may provide a longer window for challenge in squatting cases — though prompt action is always advisable.

This reform significantly strengthened the position of foreign brand owners facing opportunistic registrations. However, it does not eliminate the risk. Invalidity proceedings take time, require evidence, and involve cost. Prevention through early registration remains by far the most effective and most cost-efficient strategy.

What Constitutes Bad Faith Under the Trademark Law

Article 5.2.11 of the Trademark Law provides that an application filed with the intent to gain an unfair advantage shall not be registered. The concept is not exhaustively defined in the legislation, but in practice evidence of bad faith typically includes:

• Prior knowledge of the foreign brand's existence and reputation at the time of filing
• The timing of the filing in relation to the foreign brand's market entry, licensing arrangements, or public announcements
• The absence of any genuine commercial intention to use the mark in Mongolia
• The identity of the filer — particularly where they are or were a business partner, distributor, or agent of the foreign brand owner
• Conduct following the filing — such as approaching the foreign brand owner to sell the registration or threatening legal action to extract payment

Building a successful bad faith case requires careful evidence gathering and legal argument. We advise clients on the strength of their position before committing to proceedings, and handle all aspects of opposition and invalidity actions before the IPOM.

Protecting Against the Risk — Practical Steps

File early

The most effective protection against both first-to-file risk and bad faith registrations is to file in Mongolia before the risk materialises. For brands with any current or anticipated exposure to Mongolia — whether through distribution, retail, licensing, or digital services — early filing should be a standard element of the global trademark strategy.

Monitor the register

Regular monitoring of the Mongolian trademark register allows foreign brand owners to identify conflicting applications or registrations promptly, while options for challenge are still available. We provide monitoring services for clients with registered marks in Mongolia.

Structure licensing and distribution agreements carefully

Any agreement with a Mongolian partner should include explicit provisions prohibiting the partner from registering the brand owner's trademarks in their own name, and should require the partner to cooperate with and support the brand owner's trademark registration and enforcement activities in Mongolia.

Act promptly on discovery

Where a conflicting registration is discovered, the available options — opposition, invalidity, negotiation — are generally more effective the sooner they are pursued. General invalidity requests under the Trademark Law must be filed within one year of publication in the Official Gazette (Art. 32.3). Do not delay.

How Alimaa IP Law Can Help

We advise foreign brand owners, foreign law firms, and in-house legal teams on all aspects of trademark protection and enforcement in Mongolia. Our work in this area includes:

• Trademark clearance searches and registration to secure protection before problems arise
• Assessment of the strength of bad faith claims against existing registrations under Art. 5.2.11 of the Trademark Law
• Opposition and invalidity proceedings before the IPOM on bad faith and other grounds
• Cease and desist action against infringing use
• Advice on the structure of licensing and distribution arrangements to protect brand ownership in Mongolia

All matters are handled directly by qualified lawyers, without the involvement of intermediaries or non-lawyer service providers.