812.543 Palmolive Company/11

The Chargé in Mexico (Johnson) to the Secretary of State

No. 2132

Sir: I have the honor to refer to my despatch No. 1994 of November 12, 1929, relative to the case of the Palmolive Company in the Mexican courts, and the Company’s complaint that consideration had not been given by the courts to the Convention for the Protection of Industrial Property, revised at Washington June 2, 1911, to which both the United States and Mexico are signatories. For the Department’s further information in regard to this matter, I have the honor to forward herewith enclosed a copy of a letter, dated January 10, 1930, which I have received from Basham & Ringe, attorneys in Mexico City for the Palmolive Company, together with a translation of the decision of the Supreme Court in this case, the translation being furnished by Basham & Ringe.

I have [etc.]

Herschel V. Johnson

Basham & Ringe to the Chargé in Mexico (Johnson)

Dear Mr. Johnson: As promised you sometime ago, we are enclosing herewith a translated copy of the decision in the Palmolive case.

[Page 563]

We are unable to agree that this decision gives due compliance to the Washington Agreement of 1911. Article 2 of this Agreement speaks of “domicile” and “establishment”. We have underlined a portion of the decision on page 969a where the Supreme Court says in effect that in order for a Company to become established in Mexico it must register in accordance with the provisions of the Commercial code. We therefore believe it is plain that the Supreme Court considers the registration demanded by the Commercial Code to be synonymous with establishment. It is significant, therefore, that in the final part of the decision and in speaking of the treaty, the Supreme Court only refers to “domicile” and makes no mention of “establishment”.

Yours very truly,

Basham & Ringe
R. R. Billings

Decision of the Supreme Court of Mexico in the Case of The Palmolive Company vs Messrs. Campderá & Ayala, October 26, 1929

Mexico, Federal District. Decision of the Third Chamber on the 26th day of October, 1929. Having reviewed the proceedings in the suit for amparo brought by The Palmolive Company against the Magistrate of the First Circuit for violation of the constitutional guarantees contained in Article 14; and

Whereas: First. In the part referring to the law in the complaint for amparo, it is stated: that The Palmolive Company is an American Corporation, organized under the laws of the State of Delaware, United States of America, which is the State in which [it] was constituted and where it has its domicile; and it registered in the Patent and Trade Mark Office of Mexico, industrial trademarks No. 18446 on the 19th of July, 1920, and 25033 on August 3, 1925, which gave it the right to the exclusive use of the word “Palmolive” on perfumery products and to its translation in any language, written in letters of gold on a black band on a green background; that being protected by the industrial registrations above mentioned it has manufactured and placed on the market throughout the world the soap known as “Palmolive”; that Messrs. Campderá and Ayala, with the object of profiting from the goodwill of Palmolive soap and from the advertising in connection therewith, manufactured a soap which is of the same colour, dimensions and form and they placed the same on the market wrapped in green paper with a black band on which was written in letters of gold, identical with those of the word “Palmolive”, the legend “Palmayolivo” which is nothing more than a Spanish translation of the said mark and for the purpose of increasing the confusion [Page 564] the words were joined together like a single word; that as this infringement damaged the complainant Company and violated its rights, it requested the Third Supernumerary District Judge, in accordance with Articles 18 and 30 of the Law of Industrial Trademarks, to embargo the product of the infringers, and which embargo was effected; that Messrs. Campderá & Ayala asked for amparo against the order of embargo on the ground that The Palmolive Company is a foreign corporation not registered in Mexico, and therefore, does not exist, because the legal existence of foreign companies in the country arises through the registration thereof in the Public Register of Commerce; inasmuch as The Palmolive Company did not exist in Mexico it did not have any juridical capacity to appear before the Mexican Courts and the crime of infringement was not committed because there was no victim, and therefore, the act of imitating the mark referred to was a legitimate one; that the District Judge denied the amparo requested, on the ground that foreign companies need not be registered in Mexico in order to enjoy the rights granted under industrial or commercial trademarks; that within the 15-day period provided in Article 31 of the Trade Mark Law, the plaintiff presented a complaint against Messrs. Campderá & Ayala for the crime of infringement of industrial trade marks and also initiated a summary Federal civil suit for damages sustained by virtue of the infringement; that the defendants in this suit raised the question of the capacity of the plaintiff and of its representative to sue alleging the same fundamental reasons as in the amparo interposed against the order of attachment; that the District Judge in charge of the case passed on the question of capacity to sue and overruled the motion, because the registration required under the Commercial Code is not for the purpose of creating foreign companies, as this depends upon the laws of their country, but for the purpose of carrying on business in Mexico, and the act of registering a trade mark or defending the rights derived therefrom is not a mercantile act; that the Judge also based his decision on the ground that even admitting that registration was necessary, the failure to do this did not give rise to an exception as to capacity to sue, but that this point constituted subject matter for the decision in the main case; that against this decision the defendants appealed, said appeal being admitted without suspending the proceedings of the main case, as is provided in Article 75 of the Law of Industrial and Commerical Trade Marks; that the Magistrate of the First Circuit decided the appeal by reversing the decision appealed from and held that the exception was well taken. In that portion of the complaint referring to the violation of the individual guarantees contained in Article 14 of the Constitution, it is stated that the decision appealed from holds that Articles 15, 24, 26 and 264 of the Commercial Code are applicable to the case because they are the ones which govern the [Page 565] juridical capacity of foreign companies, that is to say, the legal right to enjoy and exercise their rights; that Article 15 referred to, instead of establishing the requirement as to the existence of foreign companies, presupposes the validity thereof in accordance with the laws of the country in which they are organized, and limits itself to imposing upon foreign companies the obligation of registering in accordance with the provisions of Article 24 of the said Code, not for the purpose of establishing the existence thereof, and to enable them to exercise their rights, but as is clearly stated in Article 15 “to carry on business” so that when the act is not mercantile, and such acts are only the ones mentioned in Article 75, it may be affected without the necessity of protocolization or of registration; and if they are empowered to do things, they are also entitled to enforce the rights derived therefrom and for this purpose may address themselves to the Mexican Courts; that the responsible authorities inexactly applied Articles 15, 24 and 26 of the Commercial Code; that in the Commercial Code there is no chapter which refers especially to foreign Companies, as in Book 2 of said Code there exists a chapter which only contains three Articles, 265, 266 (which contains the penalty for violation of the previous Article), and 267 which refers to foreign companies existing in the Republic at the time of promulgation of the Code; that this chapter in no way speaks of the capacity of foreign companies, inasmuch as Article 275 fixes their obligation to register and to publishing an annual balance sheet, in order to enjoy the privileges conferred by Article 15, and which privileges do not consist in that they be recognized as having a status in Mexico, but as being capacitated to carry on business; that in the case of acts of commerce, the act is not null when it is done by a foreign company which has not complied with the provisions of Article 265, as the only penalty is the one contained in Article 276, therefore the act is valid and the Company does exist as otherwise the same would not be obligated; that inasmuch as our Commercial Law does not contain any provisions governing the existence and capacity of foreign companies, they should be controlled by the general principles contained in the preliminary part of the Civil Code and Articles 14 and 16 thereof preserve the doctrine of locus regit actum, it being sufficient then that a Company be legally organized in a foreign country for it to exist in Mexico and it may have rights and contract obligations in the Republic; that if it may acquire rights it should be capacitated to enforce the same before the Courts; that to deny juridical status to a Company because said Company is null or does not exist, is not, properly speaking, denying its juridical capacity but denying the action; that it has been clearly demonstrated that The Palmolive Company is organized in accordance with the laws of the State of Delaware, United States of America, which is the place where the [Page 566] same was organized, as the relative part of the certified copy of the power of attorney presented in the suit says literally:

“The said Charles S. Pierce presented a certified copy of the Certificate of Incorporation of The Palmolive Company, certified by the Secretary of the State of Delaware as a true and complete copy of said Certificate of Incorporation, from which I certify that The Palmolive Company has been duly and legally organized and now exists under and by virtue of the laws of the State of Delaware.”

That the power of attorney was duly legalized and protocolized and is entitled to full faith and credit in Mexico, in accordance with the provisions of Articles 11, 264, 332 and 336 of the Federal Code of Civil Procedure; that Article 4 of the Law of Industrial and Commercial Trademarks grants every foreign Company the right to register its trademarks without the necessity of complying with any special requirements, as the intention of the legislature was to facilitate registration as may be seen from the fact that a simple power of attorney is sufficient in order to establish capacity to act; that the registration of a trade mark is not a mercantile act and the certificate of said registration constitutes, in accordance with Article 11 of the Law of Industrial and Commercial Trademarks, the title deed which gives the right to the exclusive use of a trade mark, and if such a right exists it must also have the right to exercise the same and for which purpose it may be necessary to appeal to the Courts; that Article 2 of the Convention for the Protection of Industrial Property executed in Washington on June 2, 1911, which amended the Paris agreement of 1883,70 and to which Mexico became a party by decree of March 13, 1925, published in No. 84 of Vol. 29 of the Diario Oficial of April 14, 1925, says:

“The subjects or citizens of each of the contracting countries shall enjoy, in all the other countries of the Union, with regard to patents of invention, models of utility, industrial designs or models, trademarks, trade names, the statements of place of origin, suppression of unfair competition, the advantages which the respective laws now grant or may hereafter grant to the citizens of that country. Consequently, they shall have the same protection as the latter and the same legal remedies against infringements of their rights, provided they comply with the formalities and requirements imposed by the National laws of each State upon its own citizens. Any obligation of domicile or of establishment in the country where the protection is claimed shall not be imposed on the members of the Union.”

That the First Supernumerary Judge of the Federal District correctly applied this Article in deciding the amparo, presented before him by Messrs. Campderá & Ayala against the order of attachment, but the Magistrate of the First Circuit did not give due compliance [Page 567] to the Convention referred to and thereby committed a new violation of the guarantees contained in Article 14 of the Constitution.

Second. The authority designated as the responsible one, in its report justifying its action, forwarded a certified copy of the decision appealed from.

Third. The District Judge pronounced his decision denying the amparo and protection of federal justice to the plaintiff who not being satisfied therewith appealed, alleging as errors the reasons which were taken into consideration in the application for amparo. The Agent of the Federal Public Attorney designated by the office of the Attorney General who intervened in this matter, requested that the decision appealed from be reversed.

Wherefore: First. The act complained against and which consists in the decision of August 26, 1927, rendered by the Magistrate of the First Circuit in the appeal interposed by Messrs. Campderá & Ayala against the interlocutory decision pronounced by the Third Supernumerary District Judge of the Federal District, in connection with the exception as to the capacity of the plaintiff to sue in the summary federal suit brought by The Palmolive Company against Campderá & Ayala for infringement of industrial trademarks, appears as proven by the report submitted by the responsible authorities and the certified copies contained in the record.

Second. In order for a foreign Company to have juridical existence in the Republic it is necessary for it to comply with all the requirements imposed by the law as it is not sufficient that the same has been constituted in accordance with the laws of the country in which it was organized; without fulfilling these requirements it cannot be properly said that the foreign company is subject to rights and obligations in Mexico. The registration of a mercantile company is not optional, as in accordance with Article 19 of the Commercial Code, it is obligatory because, as stated by the authors of the Spanish Code, cited by Jacinto Pallares, mercantile registration constitutes the only proof of juridical existence and of true civil status. In general, “the purpose of the law in establishing the mercantile register is in order that the juridical situation of a merchant may be made a matter of official and authentic record, i. e., the total obligations and rights which he may have contracted or acquired and which of necessity affect his assets and liabilities, and to disclose to persons desiring to effect operations or to extend credit to the merchant referred to, the extent of the safety they may have in executing these acts, in order that good faith and confidence, and the guarantees of what is known may predominate in all transactions connected with business.” In the case of foreign companies the same cannot be established in accordance with Article 24, except by complying with each one of the requirements fixed by said Article. That is to say, in order for the [Page 568] juridical capacity of foreign companies to be recognized in Mexico and for them to exist in this way, it is necessary previously to comply with various acts which the law requires as the guarantee for the dynamic security referred to by Demogue. The fact that under Article 15 of the Commercial Code companies legally organized in a foreign country and which establish themselves in the Republic or have agencies or branches therein are obligated to subject themselves to the special provisions of the said Code with regard to everything concerning the creation of their establishments within the National territory, their mercantile operations, and the jurisdiction of the Courts of the Nation, does not signify that registration is required for this purpose alone, as Article 24 of the chapter referring to the Registry of Commerce has the characteristics of a general precept with whose provisions a foreign company should comply in order to be recognized in Mexico and to effect any juridical act. The only thing established by Article 15 is to determine the rights and conditions under which a foreign company may carry on business in the country, once its existence has been recognized through registration, in accordance with Article 24 of the Commercial Code. Article 265 of the said Code, which in the opinion of the plaintiff supports his contention, in reality sustains the interpretation set forth in this decision because it establishes a refusal to recognize the juridical capacity of an unregistered company inasmuch as it makes the persons who contract in its name individually responsible. The only way in which third parties may know if a foreign company is constituted and existing in accordance with the laws of its country, and to know its juridical and economical capacity, is through registration in accordance with Article 24 of the Commercial Code and for this purpose the law has provided that in order to become established in Mexico it must comply with the requirements of the said provisions. As The Palmolive Company did not prove in the proceedings that it had complied with the laws of the country by registering the documents referred to in Article 24, it must be concluded that it has no existence in Mexico and could not bring any suit before the Courts, and therefore the decision appealed from in sustaining this point and holding that the exception of the lack of judicial capacity in the plaintiff, was well taken and gave due compliance to the provisions previously referred to without violating the individual guarantees of the plaintiff.

Third. With regard to the argument based on Article 2 of the Convention for the Protection of Industrial Property executed in Washington on June 2, 1911, there is no justification therefor as in order to extend the protection and the remedies which the law concedes to Nationals it is necessary to comply with the conditions and formalities imposed on the latter, and the fact that no obligation of domicile may be imposed upon the individuals of the Union in the [Page 569] country where the protection is sought, does not mean that the Company need not previously prove its juridical existence by registration as such existence is distinct from a domicile which depends upon other circumstances.

Fourth. The reasons above set forth would lead to a denial of the amparo requested by The Palmolive Company, but as it is also seen that the plaintiff is not absolutely deprived of his rights to initiate the suit in accordance with the terms of the decision appealed after having complied with the legal requirements, it follows that with regard to the question of the propriety of the amparo, Section 3 of Article 107 of the Constitution should be applied, and moreover, as the act complained against is one of procedure not comprised within Article 108 of the Law Regulating Amparo Suits, it is in order to decree dismissal based on the legal articles mentioned, in connection with Section 8 of Article 143 of the Regulatory Law, and Section 3 of Article 44 of said law. In view of the foregoing, and based moreover on Articles 86 to 91 of the Regulatory Law, of Articles 103 and 104 of the Constitution, it should be and is decided:

  • First: The decision pronounced in the amparo suit by the District Judge in the State of Hidalgo which denied amparo and the protection of federal justice to The Palmolive Company against the resolutions of August 26, 1927, of the Magistrate of the First Circuit in the appeal presented by Messrs. Campderá & Ayala against the interlocutory decision pronounced by the Third Supernumerary District Judge of the Federal District, with regard to the lack of capacity to sue of the plaintiff, in the summary Federal suit brought by this plaintiff against the said persons for the infringement of industrial trade marks, is reversed. (This means that the decision is reversed because of the fact that the Judge should not have decided the case on its merits but should have dismissed the same.)
  • Second: As this is not a proper case for amparo the same is dismissed.
  • Third: Let this be notified and published, let a certified copy of this decision together with the original record be returned to the court of origin, and in due course file the same. This draft was drawn up in accordance with the instructions of Magistrate Ruiz and was approved in today’s session by five votes unanimously, and was signed by the President and Magistrates who make up the Chamber, together with the Secretary who certifies the same.

F. Díaz Lombardo

Franco H. Ruiz
Joaquín Ortega

A. Vazquez del Mercado

J. J. Sánchez

H. Guerra
  1. Post, p. 568.
  2. Malloy, Treaties, 1776–1909, vol. ii, p. 1935.