The Ambassador in China (Johnson) to the Secretary of State

No. 953

Sir: I have the honor to refer to the Embassy’s despatch No. 824 of November 5, 1936, with which there was enclosed a copy of an Aide-Mémoire delivered on October 30, 1936, to the Ministry of Foreign Affairs at Nanking by Counselor Peck on the subject of monopoly rights granted to a Chinese corporation to manufacture mentholated and anisated cigarettes from certain recipes, and to enclose a copy of the translation of the Ministry of Foreign Affairs’ undated third person note in reply thereto.74

The note states that exclusive patent rights to use certain recipes in the manufacture of mentholated and anisated cigarettes have been granted to the Philippine Chinese Tobacco Company for a period of five years, but adds that other mentholated and anisated cigarettes, the recipes for which differ from those used by the Philippine Chinese Tobacco Company, are not affected by the exclusive rights granted to this company. The note goes on to state that “There is no intention to effect monopoly control over the tobacco industry”.

Since there is a technical question involved concerning which the Embassy is not competent to express an opinion, I am instructing [Page 628] the Consulate General at Shanghai to request the representatives of the American interests concerned in this matter to give the Embassy the benefit of their views as to whether the granting of an exclusive right to use these recipes will adversely affect the interests of the American firms already in the field. It is the Embassy’s present opinion that if the recipes referred to in the enclosed note differ from those used by the American firms, then no question of monopoly of the market for mentholated and anisated cigarettes would appear to be involved. This situation would, however, be changed if the Chinese Government should grant to a native manufacturer of cigarettes the exclusive patent rights to use the identical recipes used in American mentholated and anisated cigarettes manufactured in China.

Respectfully yours,

For the Ambassador:
F. P. Lockhart

Counselor of Embassy
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