File No. 893.54/322.

Chargé MacMurray to the Secretary of State.

[Extract.]
No. 695.]

Sir: Referring to despatch No.554of February 27 last, in which the Legation reported concerning infringements of certain American trade-marks (particularly the Chesebrough Company’s Vaseline trade-mark), I have the honor to enclose for the information of the Department further correspondence in reference to the Vaseline case.

From Shanghai’s despatch of March 27, No. 427, of which a copy was stated to have been forwarded direct to the Department,17 the [Page 243]Legation understood that on the hearing of the case against Yung Chi Hsiang and others the Chinese magistrate of the Mixed Court had concurred in fact in the opinion of the American assessor, but that he was unwilling to join in a judgment of conviction without reference to the higher authorities, in view of the representations which the Japanese Consulate General had made to the Chinese local authorities as well as to our Consulate General. On April 14 last, having been advised by the Consulate General that the special envoy or commissioner of foreign affairs at Shanghai, Mr. Yang Cheng, had directed the magistrate to dismiss the prosecution, the Minister and I called at the Foreign Office and explained to the Minister for Foreign Affairs and his secretary, Dr. Hawkling Yen, the facts of the case and the view that such action as was contemplated would not only be detrimental to the rights of the American firm in interest, but would also establish a precedent under which the rights and duties even of Chinese subjects in respect to the use of trade-marks in China would be subjected to the test not of Chinese law alone but also of the law of any country whose nationals might register in their home trade-mark offices the marks already registered in China and entitled to Chinese protection. The Minister for Foreign Affairs seemed fully appreciative of the fact that the result of such action would be to oust China from a certain measure of its jurisdiction over its own nationals, and he promised to consult with the other interested Ministries with a view to the issuance of instructions to the Shanghai authorities to remove any obstacle to the rendering of a decision by the Mixed Court. Mr. Lou has subsequently informed me that such instructions were in fact issued, in spite of the fact that the Japanese Legation has made formal written protest against the rendering of a decision in the case by the Mixed Court. There appears, however, to have been some misunderstanding by the Chinese authorities at Shanghai, either as to their instructions or as to the wishes of our Consulate General; for as late as June 24, in reply to an inquiry as to the cause of the delay in the decision, Dr. Yen informed me that the commissioner at Shanghai had reported that the case was held in abeyance at the wish of the Consulate General, which was awaiting further instructions from the Legation.

When at last the case was set for decision, on the 17th instant, it appeared that during the period of delay the Mixed Court magistrate had been dissuaded from the opinion which he had theretofore shared with the American assessors, and declared himself in favor of dismissing the case on the ground that the fact of infringement must first be established in a Japanese court. As soon as possible after receiving the report to that effect in the Consulate General’s telegram of July 17, 4 p.m., I wrote Dr. Yen a personal note informing him of this development in the case, and requested him to bring the matter to the attention of Mr. Lou. Considering the views which the Minister for Foreign Affairs has expressed on this subject, I am in hopes that he will at once take steps to counteract the interference of the Japanese authorities which stands in the way of a judgment on the merits of the case. Should no such action be taken, I propose, on receiving from the Consulate General at Shanghai a further report as to the attitude of the magistrate and of the [Page 244]commissioner for Foreign Affairs, to enter a formal protest against the action of a court of Chinese jurisdiction in denying to an American firm the remedies to which they are entitled under Chinese laws for the protection of their treaty rights in the use of their trademark in China.

I have [etc.]

J. V. A. MacMurray.
[Inclosure.]

Minister Reinsch to the Minister for Foreign Affairs.

No. 303.]

Excellency: Referring to the conversation of Wednesday last in which I laid before your excellency certain considerations in regard to the prosecution in the Mixed Court at Shanghai of a certain Chinese dealing in a product bearing an infringement of the vaseline trade-mark which is the property of an American company, I have the honor to enclose herewith for your consideration a memorandum setting forth the essential facts in the case.

I avail [etc.]

Paul Reinsch.
[Subinclosure.]

memorandum.

The trade-mark Vaseline, the property of the Chesebrough Manufacturing Company, an American corporation, was registered for use in China at the registration office maintained by the Maritime Customs at Shanghai, in August of 1908; it was again similarly registered in July 1913, and in the following month a proclamation for its protection was duly issued by the proper Chinese authorities as contemplated by Article 9 of the Sino-American Commercial Treaty of 1903.

The American company was thus entitled under the treaty to the protection of the Vaseline trade-mark against all persons under Chinese jurisdiction and was particularly entitled to seek in the Chinese courts proper civil or penal redress for any infringements of its property right in that trade-mark by persons under Chinese jurisdiction, whether by original imitations of that trade-mark, or by dealing in such imitations wherever originating. In the absence of any evidence that the registration by the American company was invalid because of fraud, there thus accrued to the Chesebrough Company an absolute right to protection arising out of the obligations of the Chinese Government and indefeasible by the action of third parties whether of American, Chinese or other nationality.

In February of the present year the Chesebrough Company brought to the attention of the American Consulate General in Shanghai the fact that certain imitations of its products, of Japanese manufacture, were being sold in China under its trade-mark by certain native firms; and it indicated its intention of prosecuting in the Mixed Court the Chinese dealers guilty of infringing its trade-mark by the sale of imitations in violation of Chinese law. It is understood that objection was made by the Japanese Consulate General at Shanghai to the prosecution in the Chinese court of cases involving an industrial property right which might prove to have become associated with the Japanese products in question by virtue of the registration of the Vaseline trade-mark by the Japanese manufacturers in the registration offices at Tokyo. Under instructions from the Government of the United States, however, the Legation advised the American company, through the Consulate General at Shanghai, that it considered the Mixed Court competent to try persons under Chinese jurisdiction for offenses against Chinese law, and that it could perceive no ground on which third parties could deprive American citizens of their recourse to Chinese judicial agencies for the purpose of vindicating the rights accruing to them from the obligations undertaken by the Chinese Government under the treaty with the United States.

[Page 245]

The Chesebrough Company accordingly instituted criminal action in the Mixed Court against Kuang Sung Chiang, demanding that the accused be fined, that their stock of the infringing product be confiscated, and that they be permanently enjoined from dealing in such products falsely bearing the Vaseline trade-mark. The case came to trial about the middle of March but the decision has hitherto been reserved.

The Legation is now informed by the American Consul General at Shanghai that the special commissioner for foreign affairs at that port has received instructions to dismiss this case.

On the 14th instant the American Minister laid before his excellency the Minister for Foreign Affairs the view that the dismissal of this case would not only deprive the American owners of the trade-mark of the rights granted them by Chinese law in pursuance of the Treaty of 1903, but would also establish a precedent under which the rights and duties even of Chinese subjects in respect to the use of trade-marks in China would be subjected to the test not of Chinese law alone but of the law of any country whose nationals might register in their home trade-mark offices the marks already registered in China and entitled to Chinese protection.

The American Legation accordingly hopes that the Chinese Government will see its way to withdraw any obstacle which may have been interposed to the vindication of the Chesebrough Manufacturing Company’s rights in a court of Chinese jurisdiction.

[Inclosure 2.]

Chargé MacMurray to Consul General Sammons.

No. 1128.]

Sir: The Legation has received the despatch No. 503 of the 9th instant, in which you transmit for its information a memorandum by the assessor dealing with the conclusions arrived at by the Mixed Court in the case of Connell Brothers against Hsu Ho Ching, in the matter of infringement of the Eagle Brand trade-mark. If this memorandum is correctly understood, its purport is that the Mixed Court handed down no decision in the case but confined itself to a recommendation that the principle at issue should be referred to the respective representatives in Peking of the interested parties—American, German and Chinese.

Should this understanding of the action taken by the Mixed Court prove correct, the Legation fears that it may have established a precedent exceedingly dangerous to the trade-mark rights of Americans in China. From the instructions that have been sent you in reference to the Vaseline cases, to which the present case should be assimilated, as indicated in the Legation’s telegraphic despatch of June 4, 2 p.m., it is to be inferred that it is the view of our Government that the judicial protection of American trade-marks in China against the infringement or dealing in infringements by Chinese vendors is an absolute treaty obligation undertaken by the Chinese Government, which cannot be suffered to be questioned or made subject to the veto of the Chinese executive authorities, and in which the consular or diplomatic representatives of a third power can have no locus standi by reason of the fact that the infringements originated in their country. In that view of the case, “the representatives in Peking of the interested parties,” have no competence whatsoever to intervene in the judicial proceedings; and the inclusion in that category of the representatives of German interests begs the question that the nationals of a third country can obtain, by registration of an American trade-mark in their home registration offices, a right to intervene and to obstruct the Chinese Government’s fulfillment of its treaty obligations to the American Government.

The Legation has accordingly telegraphed you that the case should be treated as a judicial matter not subject to review by any executive authorities—particularly by the representatives of German interests—and that the Consulate General should therefore use all proper endeavors to bring about the decision of the case by the Mixed Court.

I am [etc.]

J. V. A. MacMurray.
[Page 246]
[Inclosure 3—Extract.]

Consul Gauss, in charge, to Chargé MacMurray.

Sir: I have the honor to acknowledge the receipt of the Legation’s telegram of July 10, 5 p.m.,17 concerning the case in the Mixed Court at shanghai involving the infringement of the Vaseline trade-mark of the Chesebrough Manufacturing Company.

Mr. Bishop now informs me that he has been able to have the case set down for Saturday, July 17, for final judgment. This is the first opportunity for the hearing of the case under the congested calendar of the Mixed Court. Mr. Bishop has discussed the case at some length with the magistrate and informs me that he believes that a satisfactory judgment can be had.

I have [etc.]

C. E. Gauss.
  1. Not printed.
  2. Not printed.