The Ambassador in Chile (Philip) to the Secretary of State

No. 10

Sir: I have the honor to refer to the Department’s instruction No. 142 of April 30, 1935 (File No. 825.542/8[7]) and the Embassy’s despatch No. 377 of June 10, 1935 with reference to discrimination against foreign applicants for patent and trade mark registration in Chile, resulting from the imposition of a gold surcharge on foreign applications 400% higher than the fees assessed Chilean applicants.

In the despatch under reference the Department was informed that a draft bill designed to remove this inequality of treatment was pending the consideration of Congress. No action was taken by the ordinary session of the national legislature, but the project of a revised trademark and patent registration law, considerably modified by the Finance Commission of the Chamber of Deputies, was placed upon the agenda of the extraordinary session of Congress convoked by the President on October 28th. A translation of this draft bill, which appeared in Session Bulletin No. 3038, is enclosed.16 With the project of law went an Executive Message which expressed the opinion that the basic Decree Law No. 65 of June 23, 1932 (cf. Despatch No. 275 of January 21, 1935) was unconstitutional, on the grounds that

“The surcharge established by Decree Law No. 65 implies a disregard of the constitutional precept which assures the equal assessment of taxes and contributions, and constitutes an exception without basis within Law No. 5434”.

In the debate on the bill which took place in the Chamber of Deputies on November 6th the Vice-President of the Chamber, Sr. Fuenzalida, refuted this portion of the Executive Message by pointing out that Decree Law No. 65 provides for the 400% gold surcharge only for persons or corporate entities resident outside the Republic, whereas [Page 428] the constitutional provision for equality of treatment in taxation applies only to “the inhabitants of the Republic”.

In spite of some defense of the Government’s advocacy of the revised trade marks bill, the cogent point of Sr. Fuenzalida that should the bill be passed the income of the State would be reduced by some 400,000 pesos a year—pesos derived from foreign registrants under existing legislation—served to defeat the motion, which was rejected by a vote of 20 to 11.

It appears, therefore, that in spite of the best efforts of the Government to eliminate the discriminatory features of Decree Law No. 65 the existing unsatisfactory situation will continue as it has during the past three years. The one avenue by which possible escape from the onerous anti-foreign 400% surcharge might be realized would seem to be suggested by Sr. Fuenzalida himself, when he said that the Constitution guarantees equality of taxation for all inhabitants of the Republic. Applicants for patents or trade marks who are inhabitants of Chile, whether of alien nationality or not would appear to be entitled to pay the lower fees now demanded of Chilean citizens. Decree Law 65 itself states that the surcharge on patent and trade mark applications shall be exacted only from “persons or commercial or industrial firms resident outside the territory of the Republic”. There would therefore seem to be no objection to a foreign applicant for a patent or trade mark presenting his application through the medium of an agent resident in Chile. In the case of large American firms their local branches are incorporated under Chilean law and are, within the terms of Decree Law No. 65, to be considered as juridical persons inhabitants of Chile.

Respectfully yours,

Hoffman Philip
  1. Not printed.