File No. 893.54/324.

Chargé MacMurray to the Secretary of State.

[Extract.]
No. 748.]

Sir: In continuation of despatch No. 695 of July 20 last, with which the Legation forwarded for the information of the Department certain correspondence in regard to the infringement of the Vaseline trade-mark, I now have the honor to enclose copies of further correspondence on this subject.

I regret that, by reason of the necessity of despatching the pouch in time to catch the S. S. Manchuria, I must forward this correspondence without awaiting the fuller report on the case which is being sent by Consul Gauss. I must therefore confine myself at this time to such comment as is necessary to explain the recent developments of the case, reserving for the future such conclusions and recommendations as I anticipate it will be necessary to bring to the attention of the Department.

In the phase of the case which was reported in my No. 695 of July 20, the efforts of Mr. Gauss were primarily directed towards disabusing the minds of the special commissioner for foreign affairs, and the magistrate of the Mixed Court of an impression which they seemed to have derived during the period before Mr. Gauss assumed charge of the Consulate General in early July, that the matter was one on which the American Government had no decided views and to which it attached no importance. The efforts of the Legation were similarly directed towards impressing upon the Foreign Office a realization of the fundamental importance and significance of the case, alike from the viewpoint of American trade-mark rights under the treaties and from that of the Chinese Government as involving a new encroachment upon its sovereignty. As indicated in my previous despatch, the Minister of Foreign Affairs received these representations with apparently complete and sympathetic appreciation of the issues involved, and repeatedly gave satisfactory assurances in reply to my various requests that the Shanghai authorities be instructed [Page 247]in the sense of the views which he apparently shared with the Legation. In making these requests, I endeavored to make it plain that the Legation assumed no right to influence the decision of the Mixed Court on the merits of the case, but desired and insisted solely that no other outside influence should be permitted to cause the court to renounce its obligation to give justice to the American complainants as against persons under its jurisdiction violating Chinese law as established in accordance with our treaty rights. These representations were apparently so successful that on August 11 Dr. Hawkling L. Yen, his secretary, took occasion to inform me that on the previous day the Minister for Foreign Affairs had telegraphed through the special commissioner for foreign affairs at Shanghai the specific and categorical instruction that the Mixed Court should exercise full jurisdiction in the case. It was therefore not surprising, though very gratifying, to receive from the Consulate General at Shanghai the telegram of August 19 reporting that the Mixed Court had given judgment in favor of the American owners of the trade-mark, sustaining the principle of priority as against the Japanese contention that the rights of the American owners in China had been annulled by the action of Japanese manufacturers in registering the mark as their own in Tokyo.

It was, on the other hand, a matter of the keenest disappointment and chagrin to receive the telegram of August 23 in which the Consulate General reported that, after the departure of the American assessor on leave, it had been discovered that the Chinese version of the judgment was radically different, and even contradictory to the English judgment as reported to the Consulate General by the assessor. I took prompt occasion to see the Minister for Foreign Affairs and sought to impress upon him the incompatibility of this Chinese judgment with the instructions which he had sent to Shanghai,

The report from Consul Gauss, under date of August 25, was received on the 28th ultimo. I at once brought the substance of this report to the attention of Dr. Yen, orally, and asked for an appointment to discuss it with the Minister. In the meanwhile, I addressed to the Foreign Office a note under date of the 30th ultimo, upholding the position taken by the Consulate General; namely, that the English text of the judgment, as discussed between the American assessor and the magistrate, and agreed upon between them, and read and recorded by the assessor, should be considered and executed as the authoritative text.

It proved impossible to arrange an appointment with Mr. Lou until the 31st ultimo; he outlined to me a “full report” that he had received from Magistrate Kuan, which made no mention at all of the English judgment, but reported that the judgment as drafted and read and entered by him in Chinese was fully concurred in by the American and Japanese assessors. I reminded Mr. Lou that the Japanese assessor was not sitting in the case and had no locus standi in reference to it; and in regard to the concurrence of our assessor, I pointed out that the magistrate’s statement on that point was flatly negatived by the directly contradictory judgment which Mr. Bishop had read and entered on the English charge sheet. The Minister then talked of the unfortunateness of the misunderstanding that had arisen, and said that it would require a great deal of investigation [Page 248]to clear up; and he said he would ask the magistrate to report concerning the English judgment to which he had omitted to make reference in his despatch, and offered to communicate with me further when that supplementary report should have been received. I remarked that the immediate question was whether or not Americans could obtain from a Chinese court the enforcement of their rights under the treaties. Mr. Lou asked what could be done; and I repeated the suggestion contained in my note of the previous day, that the English judgment should be regarded as authoritative, and so executed, the magistrate meanwhile amending his unsigned Chinese version so as to bring it into accord with the English judgment that had in fact been agreed upon. I went on to say that after all it was not for our Government to devise a way out of the difficulty, but simply to hold the Chinese Government to full compliance with our treaty rights by whatever means might be available under the Chinese system; and, in conclusion, I remarked that it was essential to know whether we could count upon Chinese sovereignty to enforce our rights, or whether that sovereignty was disposed to renounce in favor of a foreign government the fulfilment of its obligations towards the United States. I could obtain from the Minister for Foreign Affairs, however, no more definite statement than that he would look into the matter diligently and see what could be done.

The telegram from Consul Gauss under date of the 4th instant, and his despatch No. 583 of the same date report what appears to be the final settlement of the case. I can not but concur in his decision that this final compromise judgment must be accepted as the best result obtainable under the circumstances.

J. V. A. MacMurray.
[Inclosure 1—Extract.]

Consul Gauss to Chargé MacMurray.

Sir: Until such time, in the next few days, as I am able to obtain a copy of the Chinese text of the judgment of the Mixed Court and a copy of a seven-page protest filed by the Japanese assessor, I quote for your information the English text of the judgment as written on the charge sheet by Assessor Bishop and by him communicated to me this afternoon:

The Court finds that the plaintiff’s goods were first used and are therefore entitled to protection. The Court further finds that the goods of the defendant are so similar to those of the plaintiff as to constitute a violation of the rights accorded to the plaintiff by the treaty. The verdict is therefore that the defendants are guilty. The goods of the defendant are to be held by the Court, and the defendants cautioned against the future use of similar articles.

Mr. Bishop informs me that the Japanese assessor made a most strenuous objection to the proposed decision in favor of the plaintiffs.

I have [etc.]

C. E. Gauss.
[Inclosure 2—Telegram—Paraphrase.]

Consul Gauss to Chargé MacMurray.

It has been ascertained that the Chinese version of the judgment in the Vaseline case does not agree with that of the assessor, but confirms the Japanese contention. Investigating.

[Page 249]
[Inclosure 3—Telegram—Paraphrase.]

Chargé MacMurray to Consul Gauss.

Referring to the foregoing telegram, the Legation advises the Consulate General that the Minister for Foreign Affairs has promised to telegraph the authorities at Shanghai asking for explanations and urging them to take such steps as may still be feasible in order to avoid the serious situation which would be created by the handing down of a garbled Chinese version of the judgment.

[Inclosure 4—Extract.]

Consul Gauss to Chargé MacMurray.

No. 574.]

Sir: With reference to my telegram of August 23, I have now the honor to submit for the Legation’s consideration a report on the judgment in the case of the Chesebrough Manufacturing Co. vs. Tsang San Daung et al., in the Mixed Court at Shanghai on August 19.

On August 14, Mr. Bishop had an interview with Magistrate Kuan and reported to me that the latter was willing to agree to the judgment as desired by this Consulate General and that Thursday, August 19, had been set for the date of delivering such judgment.

On Wednesday, August 18, while at a reception at the Austro-Hungarian Consulate General, Magistrate Kuan mentioned to Vice Consul Perkins that this case was coming up on the following day and that he had a compromise judgment to propose of which he requested that Mr. Bishop be informed. Something interfered to interrupt this conversation, but Mr. Perkins informed me of it promptly and the following morning I saw Mr. Bishop, informed him that Magistrate Kuan had spoken of having a compromise judgment and that he should be careful not to agree to any judgment that did not fully lay down the principle of priority of use, et cetera, for which we had been contending.

On Thursday evening Mr. Bishop came into my office from the Court and reported that he had finally succeeded in having the judgment rendered; that the judgment as delivered supported the principle of priority of use; and he indicated that the Chinese text of the judgment had gone even so far as to say that the priority had been established by twenty years use on the market.

Mr. Bishop reported that at the protest of the Japanese assessor the goods of the defendant which it had originally been agreed to “confiscate” had been “held for the consideration of the court” which might be said to be practically equivalent since no disposition of them could be made without our consent. He also said that as this case was a criminal one, the magistrate had held that an injunction could not properly issue, but that he had agreed instead to a warning.

I instructed Mr. Bishop to obtain copies of the English and Chinese texts of the judgment, for transmission to the Legation and the Department, and also a copy of the written Japanese protest which I understood had been put in.

On Friday afternoon, I asked Mr. Bishop whether he had yet obtained the judgment from the Mixed Court, as I had requested. He replied that he had the English text, which he handed to me and to Attorney Davies and said that the Chinese text and the copy of the Japanese protest were being sent to him by the court.

On Saturday noon there was handed to me a letter from Magistrate Kuan to Mr. Bishop with attached copy of the Chinese text of the judgment of the court which was evidently in direct contradiction of the judgment as reported to me by Mr. Bishop.

Mr. Bishop had left for Japan on vacation early Saturday morning, so I could not consult him on the matter.

If the Chinese text of the judgment is permitted to stand, serious harm will have been done to the American contention of principle in these cases.

I have, therefore, instructed Vice Consul Perkins, who is resuming his duties as assessor during the absence of Mr. Bishop, to write to the magistrate protesting [Page 250]against the Chinese text of the judgment as not representing the real judgment which, apparently, from the endorsement of the assessor on the charge sheet, had been agreed upon by him with the magistrate.

The attorney for the Chesebrough Manufacturing Company will consider the advisability of immediately bringing a similar action against other Chinese.

I have [etc.]

C. E. Gauss.
[Subinclosure—Translation.]

Judgment of the Mixed Court in Chesebrough Manufacturing Co. v. Yung Kee Chiang et al. for infringement of trade-mark.

After questioning, it has been clearly shown by the plaintiff that this kind of vaseline has been in the Shanghai market for over 20 years, and it is alleged that the goods which the defendants have been selling were bought from the Osaka Japanese merchant, Sung Peng Tz’u Lang, and imported to Shanghai.

As to whether these goods are an infringement of the trade-mark of the plaintiff, this question belongs to the Japanese courts for an authoritative decision.

Inasmuch as the defendant’s goods now held in the court somewhat resemble the plaintiff’s mark, the stock is to be detained for examination and consideration.

The present case being a criminal action, this court does not deem it fit to grant the application of the plaintiff for an injunction against the sale of the defendant’s goods.

Should the plaintiff file any further suits against the defendants, we will institute further inquiries and deal with the case according to its merits.

The defendants are hereby released and the case finished.

[Inclosure 5.]

Chargé MacMurray to the Minister for Foreign Affairs.

Excellency: I have on several occasions had the honor to discuss with your excellency the principle of jurisdiction involved in the case, recently pending in the Mixed Court at Shanghai, in which an American firm, the Chesebrough Manufacturing Company, was prosecuting certain Chinese citizens, Messrs. Yung Kee Chiang et al., for knowingly passing off an imitation of the Vaseline trade-mark belonging to the American company and entitled, under the terms of Article IX of the Treaty of Commerce concluded between the American and Chinese Governments in 1903, to the protection of the Chinese Government to the full extent of Chinese jurisdiction. Your excellency will recall that I have had occasion to urge, and to note your concurrence in the view, that the present case admits of no legal locus standi in favor of third parties of other nationality, inasmuch as it concerns only the treaty obligation of Chinese sovereignty to protect American trade-mark rights from abuse by persons subject to that sovereignty, whether by direct infringement or by giving currency to such infringements originating elsewhere.

This Legation has now received from the American Consulate General at Shanghai a report to the effect that on August 19 the judgment in this case, as agreed upon by the magistrate and the American assessor, was delivered in favor of the American plaintiffs, and was noted in English upon the charge sheet by the American assessor in the following terms:

Judgment. Chesebrough Manufacturing Co. v. Yung Kee Chiang et al.

The Court finds that the plaintiff’s goods were first used and are therefore entitled to protection. The Court further finds that the goods of the defendant are so similar to those of the plaintiff as to constitute a violation of the rights accorded to the plaintiff by the treaty. The verdict therefore is that the defendants are guilty. The goods of the defendant are to be held by the court, and the defendants cautioned against the future use of similar articles.

[Page 251]

It is with the utmost chagrin, however, that the Legation has learned that the judgment which the magistrate entered upon the Chinese charge sheet is essentially different from that upon which he had agreed with the American assessor and in which he acquiesced when it was read by the assessor as the final decision in the case, and gave judgment in the following terms in favor of the defendants on the ground that the fact of infringement must be determined, even as between American and Chinese citizens, by a Japanese court:

[Translation from the Chinese text.]

Judgment of the Mixed Court in Chesebrough Manufacturing Co. vs. Yung Kee Chiang et al. for infringement of trade-mark.

After questioning, it has been clearly shown by the plaintiff that this kind of vaseline has been in the Shanghai market for over twenty years, and it is alleged that the goods which the defendants have been selling were bought from the Osaka Japanese merchant, Sung Peng Tzu Lang, and imported to Shanghai.

As to whether these goods are an infringement of the trade-mark of the plaintiff, this question belongs to the Japanese courts for authoritative decision.

Inasmuch as the defendant’s goods now held in the court somewhat resemble the plaintiff’s mark, the stock is to be detained for examination and consideration.

The present case being a criminal action, this court does not deem it fit to grant the application of the plaintiff for an injunction against the sale of the defendant’s goods.

Should the plaintiff file any further suits against the defendants we will institute further inquiries and deal with the case according to its merits.

The defendants are hereby released and the case finished.

Dated the 19th day of the 8th moon, 4th year of the Chinese Republic.

Your excellency will not fail to note that between the English judgment agreed upon between the magistrate and the assessor, and entered by the latter upon the English charge sheet, and the Chinese version put forth by Magistrate Kuan, there is a discrepancy not merely accidental but fundamental: whereas the judgment agreed upon gives the decision in favor of the plaintiff in recognition of the rights and obligations of Chinese sovereignty for the purpose of jurisdiction in such cases, the Chinese version of it acquits the defendants on the ground that the obligations of the Chinese Government to citizens of the United States under the terms of the Treaty of 1903 are subject to the determination of courts of Japanese jurisdiction.

Such a decision, even if regularly rendered and valid, could scarcely be accepted by my Government as consonant with its treaty rights; and the refusal of a Chinese court to take jurisdiction for the protection of American treaty rights against abuse by citizens of China cannot but be regarded as a denial of justice.

It is the fact, however, as admitted by Magistrate Kuan in an interview with American Vice Consul Perkins, that the Chinese version of the judgment in this case is not the actual judgment of the Mixed Court, inasmuch as it does not accord with the understanding reached between the magistrate and the assessor, and does not bear the signature of the assessor or the seal of the Court. The Legation therefore fully approves the contention set forth by Mr. Perkins, acting as American assessor, in a communication addressed to Magistrate Kuan on the 24th instant in the following terms:

Sir: By your letter of August 19 you transmit to this office a Chinese text which you say is the decision rendered after consultation in the above case.

I have the honor to point out that this Chinese version is directly opposed to the English version of the judgment of the Court as it was read in open court, in your presence and with your evident sanction and approval, by the American Assessor, Bishop, who sat in the case.

The judgment of the Court as read by Mr. Bishop appears in his handwriting on the English charge sheet.

The Chinese text submitted by you is distinctly opposed to all principles of right and justice.

Furthermore it has not been sealed by the Court nor signed by the Assessor. It is, therefore, not to be considered as authentic.

That the American Assessor did not agree to such judgment but arrived at an entirely different agreement with the Court would appear from his endorsement made at the time on the English charge sheet.

I am accordingly instructed to inform you that the endorsement of the Assessor on the charge sheet, having been read in open court as the judgment of the Court in the case, in your hearing and with your apparent approval and consent, will be considered by this Consulate General as the binding judgment of the Court.

I am [etc.]

M. F. Perkins,
American Assessor.

In accordance with this view, I have the honor to request that your excellency may be so good as to take such action as may prove feasible in order to assure that the actual judgment of the Mixed Court, as read and entered [Page 252]on the English charge sheet by the assessor in the case, may be recognized as effective, and duly executed in spite of the contradiction inherent in the garbled Chinese version thereof.

In making this request, I beg to reserve for eventual consideration such action as the Government of the United States may deem to be necessary in the event of a denial of justice to its nationals, as also such representations as it may seem fit to make in reference to the conduct of Magistrate Kuan.

I avail [etc.]

J. V. A. MacMurray.
[Inclosure 6—Telegram—Paraphrase.]

Consul Gauss to Chargé MacMurray.

Mr. Gauss reports that after a prolonged discussion the magistrate has omitted from the Chinese text in the Vaseline case the sentence in regard to the fact of infringement being a matter for determination by the Japanese courts; and that Magistrate Kuan and Assessor Bishop have signed the English and Chinese judgments, the two texts to be considered as representing the opinion of the court, save for the fact that the sentence “verdict of guilty” has been deleted from the English text; this was a concession to the magistrate, in order to induce action to break the persistent deadlock, it being considered that the fact of the defendant’s guilt appears from the sense of the judgments.

It seemed desirable to accept the settlement above outlined, in view of the weakness of the excuse of misunderstanding made by the assessor.