The Chargé in Chile (Millard) to the Secretary of State

No. 12,863

Sir: I have the honor to refer to my Despatch No. 12,624 dated August 14, 1945,4 and other Embassy communications touching on the subject of the disposition of enemy patents and trade-marks and to report the latest developments on the subject.

At a recent meeting of the Chilean Controls Commission with representatives of this Embassy called for the purpose of discussing certain economic control matters, the Commission proposed the following policy in disposing of the Axis trade-marks and patents registered in Chile.

All Axis trade-marks would be vested by the Government and divided into two categories for the purpose of their disposition, as follows:

Category I—Trade-marks which definitely connote a German influence or origin in the local market i.e. “Merck”, “Bayer” Bayer Symbol “X” (cross).

Category II—Axis trade-marks which do not convey their origin and are not identified in the public mind with any specific manufacturer although representing products previously manufactured under German trade-marks by the German firms in liquidation.

The Chilean Government proposes in accordance with the policy of eliminating from the commercial life in Chile all Axis influence, to deny future exploitation of the trade-marks within Category I; [Page 782] however, it would permit the exploitation of Category II trade-marks by Chilean firms exploiting the trade-marks as national trade-marks and labelling the Chilean origin of the products.

The specific trade-mark “Bayer Adalina” is singled for the purpose of illustrating the operation of the proposed policy as outlined above; the word “Bayer” and the Bayer symbol “X” (cross) would be abolished immediately; however, the word “Adalina” would be made available to Chilean firms for exploitation. The “Adalina” product would be exploited as the national trade-mark properly indicating the Chilean origin of the product.

The Chilean Controls Commission maintains that the local exploitation of the former Axis trade-marks under this policy eliminates the German control and influence of the product, but nevertheless, permits that the good will represented by those trade-marks not connoting a German origin accrue to the benefit of the local pharmaceutical and drug industry.

It appears that the underlying reason in formulating the exploitation of former Axis trade-marks classified under Category II is that a number of prominent politicians and capitalists, among whom figure Guillermo del Pedregal and Juan Yarur of the Yarur textile mill, etc., are desirous of forming a local pharmaceutical drug enterprise, jointly with American capital and “know how”, to exploit this field. This venture is still in the speculative stage inasmuch as no definite contact has been made with an American industry to the best knowledge of the Embassy. This group has applied pressure on the Controls Commission in order that a favorable policy will be adopted by the Government permitting the exploitation of the former Axis trademarks in a modified form.

The Controls Commission has recently submitted a Memorandum to this Embassy, the British and the Canadian Embassies outlining the policy of the Chilean Government on this subject and requesting the Embassies’ views.

There is enclosed herewith, copy of the Commission’s Memorandum together with a translation thereof.5

By way of background there is also enclosed a copy of the Minutes of the Meeting held on September 275 between the Controls Commission and representatives of the American and British Embassies, at which meeting the disposal of Axis trade-marks was discussed.

The Embassy feels apprehensive regarding the program proposed by the Controls Commission. It appears that the local program is merely a half measure in arriving at a satisfactory disposition of the Axis trade-marks; furthermore, the actual implementation of this policy would in all probability lead to future misinterpretation and abuses by firms exploiting these trade-marks which may fail to act in [Page 783] full cooperation with the program. It is relatively impossible to establish a true standard by which to judge the manner in which the former Axis trade-marks may be exploited consistently with the fundamental objectives of bringing about a total elimination of the Axis influence in the economic and commercial life of Chile.

In view of the above, the Embassy is advocating the complete elimination of all Axis trade-marks registered in Chile thereby preventing absolutely their future exploitation even under the modified form proposed by the Controls Commission.

The Embassy has advised the Controls Commission that this matter is being referred to the Department for instruction before making a final reply to their Memorandum of October [September] 28. Accordingly, the comments of the Department in the premises would be appreciated.

The Controls Commission has furthermore arrived at a policy for disposing of all Axis patents registered in Chile which policy will operate in a manner very similar to the policy adopted by the United States Government under The Office of the United States Alien Property Custodian. Under the local proposed program the Axis patents would be vested by the Chilean Government, subsequently, they would be licensed to local industry in a manner similar to the licensing procedure followed in the United States. The Commission indicated that this policy would make available to the local industry the benefits of all Axis patents registered in Chile and simultaneously would comply with the primary economic controls objective.

The Embassy feels that the proposed policy with reference to the disposition of Axis patents in Chile is totally satisfactory from our economic warfare viewpoint.

Respectfully yours,

Hugh Millard
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