Numerous protests against the decision have been received not only from
companies and associations interested in trade-mark protection but from
others who, while not particularly interested in trade-mark rights, nor
engaged in business in Mexico, have important business transactions with
citizens and residents of Mexico. The companies interested in trade-mark
protection are unanimously of the opinion that the decision contravenes
the provisions of Article 2 of the Convention for the Protection of
Industrial Property of 1883 as amended on June 2, 1911, to which the
United States and Mexico are parties, and they concur in the views
expressed by numerous other companies interested in trade with Mexico,
that the decision, if adhered to, will deny the assistance of Mexican
courts for the enforcement of obligations of citizens or residents of
Mexico to American companies not engaged in business in Mexico unless
the companies concerned comply with the onerous conditions of
registration under the Commercial Code.
In view of the importance of the possible effect of the decision of the
Supreme Court of Mexico on the business interests of the United States
and Mexico if the views set forth above are correct, the Department has
carefully considered the decision and is of the opinion that the
decision contravenes Article 2 of the Convention for the Protection of
Industrial Property signed at Washington on June 2, 1911, and is
contrary to the Mexican Trade-mark Law of 1903 under the provisions of
which the Palmolive trade-mark was registered in Mexico and is also
contrary to the provisions of the Commercial Code. It would also seem to
be clear that the decision, if adhered to, will injuriously affect the
interests of citizens and residents of Mexico who have business dealings
with American companies not engaged in business in Mexico.
The Department hopes that the Mexican Government will share this
Government’s views that the interests of the two Governments will be
furthered by any action which the Mexican authorities may take
effectively to limit the application of the Supreme Court decision
[Page 571]
to companies which are
actually engaged in business in Mexico on the basis of a domicile or an
establishment in that country.
You are, accordingly, requested to discuss the matter informally with the
Foreign Office and to urge its cooperation with a view to effecting a
mutually satisfactory adjustment of the matter which will insure
adequate redress and protection to The Palmolive Company and the
definite exemption from the obligation of registration under the
Commercial Code of companies which do not maintain a domicile or
establishment in Mexico.
The Department desires, if possible, to avoid any discussion of the legal
questions involved in the Court’s decision and hopes that you may be
able to obtain a satisfactory adjustment of the matter without formal
legal argument, but there is transmitted herewith for your information
and possible use in your discussion with the Foreign Office a memorandum
prepared by the Solicitor for this Department, which discusses statutory
and treaty provisions involved in the decision under reference.
[Enclosure]
Memorandum by the Office of the
Solicitor
Discussion of the Effect on Industrial Property and
Other Rights of American Citizens of the Decision of the Supreme
Court of Mexico Handed Down on October 26, 1929, Which Denied the
Right of the Palmolive Company, an American Corporation, To Bring
Suit for Infringement of Its Trade-mark “Palmolive” Which Is
Registered in Mexico, on the Ground That the Corporation was not
Registered in Mexico in Accordance With the Provisions of Article 24
of the Mexican Commercial Code.
Following the receipt of numerous protests against the decision to
which reference is made in the caption, which have been received
from American corporations and attorneys, this office has made a
careful study of the decision and statutory and treaty provisions
which it involves and has concluded that the decision contravenes
the provisions of Article 2 of the Convention for the Protection of
Industrial Property signed at Washington on June 2, 1911, to which
the United States and Mexico are parties, as well as certain
provisions of the Mexican Trade-Mark Law of 1903 and the Mexican
Commercial Code. This conclusion is based on the following
considerations:
Article 2 of the Convention for the Protection of Industrial Property
of 1883, as amended on June 2, 1911, reads as follows:
“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, trade-marks,
[Page 572]
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 any
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.”
Attention is particularly invited to the fact that the protection
provided by the Article above quoted is subject to only one
condition, namely, that the applicant “comply with the formalities
and requirements imposed by the National laws of each State upon its
own citizens”. Immediately following the statement of this condition
is the definite unequivocal prohibition against the imposition of
“any obligation of domicile or of establishment in the country where
the protection is claimed”.
It would seem that, so far as they relate to Mexico, the “formalities
and requirements” referred to in Article 2 of the Treaty of 1911
have relation only to the requirements for the registration of
trade-marks prescribed by the laws of Mexico which provide for such
registration and that when those requirements have been observed the
registrant immediately becomes entitled to the exclusive ownership
and use of the mark in Mexico and to all the remedies provided by
the laws of Mexico for the enforcement of those rights. This view
appears clearly to be established by the provisions of Article 2 of
the Mexican Trade-mark Law of 1903, which was the law in force in
Mexico when The Palmolive Company registered its trade-mark in that
country. That Article reads as follows:
“To obtain the exclusive right to the use of a mark it is
necessary to effect its registration in the Patent and
Trade-mark Office by fulfilling the formalities that the
present law and its regulations establish.”
The trade-mark law of 1903 was enacted long after the Commercial Code
came into force and if registration under the provisions of the Code
had been regarded by the Mexican Legislature as one of the
conditions necessary to the enjoyment of the rights conferred by the
law of 1903, specific provision to that effect would presumably have
been made in the law. However, the law of 1903 not only does not
require as a condition for the enjoyment of its benefits that
registration be effected under the provisions of the Code, but on
the contrary it clearly indicates that the “exclusive right to the
use of a mark” shall be granted to the registrant of the mark who
fulfills “the formalities of the present law”, thus apparently
precluding the setting up of any obligation of registration under
the Commercial Code. Moreover, the law of 1903 contains additional
evidence that trade-mark
[Page 573]
registration and use are not in any sense dependent upon
registration under the Code. This additional evidence is found in
Article 91 of the law of 1903 which provides that trade-marks
registered under the provisions of Article 21, paragraph XIII, of
the Commercial Code should be presented for registration under the
provisions of the trade-mark law of 1903. Article 91 of that law
reads as follows:
“Art. 91. From the date on which this law commences to become
effective, there shall no longer be applicable as to
registration of marks in the Register of Commerce the
proviso in paragraph 1 of Art. 26 of the Code of Commerce;
and there is fixed a term of nine months which cannot be
extended, counting from the same date, so that marks that
are registered in accordance with what is provided in No.
XIII of Art. 21 of the same Code may be presented for their
registration in the Patent Office, with the understanding
that, if such shall not be so carried out, the registrations
made in said Office will be considered as preferential as
respects those effected in the Register of Commerce, even
though these latter may be anterior, as respects date, to
the former mentioned.”
The decision of the Supreme Court of Mexico under reference appears
to be the first decision of that Court which interprets Article 2 of
the Industrial Property Convention of 1911. However, since The
Palmolive case appears to be the first instance brought to the
Department’s attention in which the administrative or judicial
authorities of any country in which the Convention is in force have
construed the Article in the sense of the opinion of the Mexican
Supreme Court under reference, it may fairly be inferred that the
Article has been generally interpreted in the countries of the
Industrial Property Union in the sense that the “formalities”
referred to in the Article relate to the formalities incident to
trade-mark registration. The Article in question was construed in
this sense by the Belgian Court of Cassation in a decision given in
1912 and reported in “Jurisprudence Belgique Cour de Cassation 1912,
page 354” In the case mentioned the lower Belgian court held that an
action for infringement of a trademark instituted by a French
company which carried on its business in France and did not maintain
a manufacturing or commercial establishment in Belgium was not
admissible. The Court of Cassation reversed this judgment and held
the action admissible by virtue of Article 2 of the Industrial
Property Convention of 1911. The Court stated that the purpose of
the Paris Convention as amended in Washington in 1911 was (1) to
provide for complete and mutual protection of the industry and
commerce of the nationals of the contracting countries, and (2) to
extend instead of to limit the internal protection of industrial
property. Referring specifically to the term “formalities and
requirements” found in Article 2 the Court interpreted that term as
referring “only to the procedure applicable to trade-marks
prescribed by the
[Page 574]
laws of
each country and concerns exclusively requirements of registration
of trade-marks.”
Upon complying with the provisions of the law of 1903, The Palmolive
Company was granted registration of its trade-mark in the Patent and
Trade-mark Office of Mexico. This grant of registration constitutes
a declaration by the Mexican Government that The Palmolive Company
was the exclusive owner of the trade-mark “Palmolive” and
exclusively entitled to its use in Mexico and to all the remedies
provided by the laws of Mexico for infringement of that right. The
correctness of this position is established by the provisions of
Article 11 of the law of 1903, which reads:
“The certificate of registration of a mark shall be issued by
the Patent and Trade-mark Office. This certificate, duly
legalized and with the documents thereto annexed, shall
constitute a title deed that accredits the right to the
exclusive use of the mark”.
It is obvious that the “title deed” thus given to The Palmolive
Company would be worthless unless the owner of the title were
permitted to take adequate measures to protect it. These measures
were provided by other provisions of the law of 1903 imposing
penalties for infringement of any registered mark. Articles 18, 19
and 27 stipulate the penalties for infringement and Articles 28, 29,
30, 31, 47, 48, 49, 50, 51, 56, 57 and 65 provide in detail for the
institution of legal proceedings by the owner of the mark.
It is apparent from the foregoing that The Palmolive Company obtained
registration of its mark in conformity with the provisions of the
law of 1903; that as a result of that registration it obtained
official recognition of its exclusive right of ownership and use of
the mark in Mexico and became vested with the right to proceed in
the courts of Mexico to suppress any infringement of the registered
mark and to obtain indemnity for any damage or injuries suffered by
such infringement, and that these rights cannot be destroyed or
impaired so long as the registrant complies with the applicable laws
of Mexico.
The decision of the Supreme Court under reference does not question
the fact that The Palmolive Company is the legal owner of the
trademark in question, or that the mark was infringed by the company
against which the proceedings were instituted. Those facts are so
completely established by the record as to be indisputable. The
court’s decision, therefore, must be construed as a judicial
prohibition against the exercise of legal rights expressly granted
to this American company by the Trade-mark Law of 1903 and in
harmony with the provisions of Article 2 of the Industrial Property
Convention of 1911. The result of this judicial prohibition is that
The Palmolive Company has a “title deed” from the Government of
Mexico certifying that the company is entitled to the exclusive
ownership and use of the trademark “Palmolive” which “title deed” is
rendered worthless by the
[Page 575]
act of the Supreme Court in denying to the company the opportunity
to avail itself of the only means of protecting its title and
punishing infringement thereof.
It is believed that the right of The Palmolive Company to bring suit
in the Mexican courts to suppress infringement of its trade-mark and
to obtain indemnity for damages caused by infringement is
sufficiently established by the provisions of Article 2 of the
original Convention of 1883 and the Trade-mark Law of Mexico of 1903
and that by virtue of the treaty and statutory provisions mentioned
no requirement of registration under the Commercial Code of Mexico
could legally be imposed as a condition for the enjoyment of the
rights granted to The Palmolive Company pursuant to the Treaty of
1883 and the Trade-mark Law mentioned. It is not necessary, however,
to rely on the text of Article 2 as it read in the original
Convention of 1883 before the amendment of that Convention in 1911.
By that amendment an additional clause was added as the conclusion
of Article 2, reading as follows:
“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.”
In order that the clause quoted should not be
regarded as a new conception of the obligation of the signatory
Powers under Article 2 of the Convention, an additional Article was
incorporated in the amendment of 1911 which reads as follows:
“… (b) it is understood that the
provision in Article 2 which dispenses the members of the
Union from the obligation of domicile and of establishment
has an interpretable character and must, consequently, be
applied to all the rights granted by the Convention of March
20, 1883, before the entrance into force of the present
Act.”
The necessary effect of the additional Article quoted is that the
original Article 2 of the Convention of 1883 shall be interpreted as
though it included the final sentence of the Article as amended in
1911. Accordingly, since Mexico was a party to the Convention of
1883, when The Palmolive Company effected the registration of its
trade-mark in Mexico, the Government of Mexico was precluded from
setting up any “obligation of domicile or of establishment” in
Mexico as one of the conditions for the protection of this
trade-mark in Mexico. Moreover, Mexico adhered in 1925 to the
amended Convention of 1911 and was, therefore, a party to that
amended Convention when the proceedings arose which resulted in the
Supreme Court decision under reference, so that Mexico was expressly
obligated to avoid imposing any condition of domicile or
establishment as a condition for the enjoyment of the rights which
it was obligated to confer on American citizens.
[Page 576]
The Government of Mexico appears to have given full recognition to
this obligation and has refrained from imposing any legislative
requirement of domicile or of establishment in Mexico as a condition
for the protection of industrial property. It is submitted, however,
that the decision of the Supreme Court under discussion is
equivalent to an act of judicial legislation imposing a condition
repugnant alike to the laws of Mexico and the provisions of Article
2 of the Convention for the Protection of Industrial Property.
The Supreme Court, however, took the position in its decision that
the registration required by the provisions of the Commercial Code
does not contravene Article 2 of the Convention of 1911 on the
ground that the registration requirements of Article 24 of the
Commercial Code “is distinct from a domicile which depends on other
circumstances.”
This office is unable to concur in this opinion of the Supreme Court
but before discussing this opinion, it desires to point out that the
provisions of the Convention under consideration prohibit not only
“any obligation of domicile” but “of establishment” and it appears
affirmatively from the language of the court’s decision that
registration under the Commercial Code necessarily involves the
“establishment” in Mexico of the registrant. In the second
“Wherefore” paragraph of the court’s decision it is stated that “in
the case of foreign companies the same cannot be
established in accordance with Article 24 except by
compliance with each one of the requirements fixed by said article.”
Later on in the same paragraph the court said:
“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 jurisdiction 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 provision.”
With respect to the court’s opinion that registration under the Code
“is distinct from domicile” it is submitted that registration under
the Commercial Code is legally impossible unless the registrant has
a domicile in Mexico and in support of this view it refers to
Article 18 of the Code, which reads:
“A Mercantile Register shall be kept in the principal town of
the division or judicial district of the
domicile of the merchant, by the officers charged
with the public registry of property; failing these, through
the records of mortgage; and in the absence of both by the
judges of the first instance of the ordinary
jurisdiction.”
It would appear to be clear from the Article just
quoted that unless domicile in Mexico was a prerequisite condition
to registration under
[Page 577]
the
Code the provisions of Article 18 just quoted would be entirely
meaningless.
The foregoing appears to establish definitely that a corporation
could not register under the Commercial Code without having a
domicile or establishment or both in Mexico and such a requirement
is expressly prohibited by Article 2 of the Convention of 1911.
A careful examination of the Commercial Code discloses no provision
which seems to require foreign companies to register under its
provisions unless they are “established” or “domiciled” in Mexico
and it would seem that such establishment or domicile is not
necessary to register a trade-mark or to enjoy the rights incident
to such registration under the trade-mark laws of Mexico or to do
any other act which is not specifically or by reasonable implication
an act of commerce within the definition of Article 75 of the
Commercial Code which defines acts of commerce.
Preliminary to the discussion of this question it should be noted
that Article 4 of the Trade-mark Law of 1903 provides that “any
Mexican or Foreigner” may obtain the benefits of the law and
provides that legal persons may comply with the formalities
prescribed by the law through duly authorized
attorneys. Reference to this provision is made as
additional evidence of the fact that the law of 1903 grants to
foreign companies who have complied with its provisions all the
benefits of the law without the necessity of registration under the
Commercial Code.
The language of Article 24 of the Commercial Code when read in
conjunction with other Articles of the Code appears to establish
that the requirement of registration applies to foreign companies
only when they are engaged in business in Mexico and cannot by any
reasonable interpretation be extended to companies which do not
maintain an establishment or domicile in the country. It is
submitted that there is a marked and clearty understood distinction
between doing business in Mexico and doing
business with persons in Mexico. The foreign
companies which conduct their business outside of Mexico but whose
products are shipped to Mexico either directly or through an
exporting company not established in Mexico or having branches or
agencies in that country certainly cannot be regarded as engaging in
business in Mexico and unless they have an establishment in Mexico
devoted to the conduct of their business the provisions of the
Commercial Code do not require them to register. An examination of
the language of the pertinent provisions of the Code establishes the
correctness of this contention. Article 24 reads:
“Foreign companies which desire to
establish themselves or create branches in the
Republic shall present and enter in the register,
etc.”
[Page 578]
Article 15 provides in part that:
“Companies legally constituted in foreign countries which establish themselves in the
Republic, or have in it any agency or branch, may engage
in commerce subject to the provisions of this Code,
etc.”
Article 265 reads:
“Companies legally constituted in a foreign country that may be established in the Republic,
or have within the same an agency or branch must,
in order to enjoy the right granted to them under Article
15, subject themselves to the following prescriptions.”
Article 267 provides that:
“Foreign companies at present existing
within the Republic may become subject to the
provisions of this chapter in so far as the validity of
their future acts is concerned.”
Article 19 of the Code, to which the court refers in support of its
position that the registration of The Palmolive Company was
“obligatory” necessarily refers to companies engaged in business in
Mexico and cannot be applied to companies like The Palmolive Company
without doing violence to the language of the other articles of the
Code above quoted.
Furthermore, the Commercial Code was designed to have application
only to “commercial acts” and cannot have application to the
registration of a trade-mark or the institution of proceedings
necessary to enforce rights expressly granted by law. Such acts are
not included either specifically or by necessary implication among
the acts enumerated in Article 75 of the Commercial Code which
defines commercial acts. Jacinto Pellares in his work “Derecho
Mercantil Mejicano”, which the Supreme Court cited in its opinion
under discussion, refers to the provisions of Article 21, paragraph
XIII, of the Code of Commerce which, prior to the enactment of the
Industrial Property Laws of June 7, 1890, and November 28, 1889,
required the registration of trade-marks and patents in the
Commercial Register. Referring to the effect of these laws on
Article 21 of the Commercial Code, he said:
“As these laws are of a date subsequent to the Code and as
the execution of a patent or trade-mark is
not a mercantile act but simply an administrative
act that does not involve a civil act … he who obtains from
the Secretary of Fomento one of the said patents in
accordance with the laws aforementioned shall not be obliged
to register the same in the Mercantile Register in order to
exercise his property rights against third parties.”
The quoted statement would have equal application to
trade-marks registered under the provisions of the Trade-mark Law of
1903, which is not specifically mentioned by Señor Pellares.
Furthermore, Article 91 of the Trade-mark Law of 1903 removed the
penalty which was imposed by Article 26 of the Commercial Code for
failure to
[Page 579]
register a
trade-mark under the provisions of Article 21, paragraph XIII, of
the Code and provided that marks which had already been registered
in the Mercantile Register pursuant to the provisions of Article 21
of the Code might be presented for registration in the Patent Office
and that registration in the Patent Office “will be considered as
preferential as respects those effected in the Register of Commerce,
even though these latter may be anterior, as respects date, to the
former”.
This office is of the opinion that the decision of the lower Mexican
courts upholding the right of The Palmolive Company to take adequate
legal steps to protect the rights expressly granted it under the
laws of Mexico, correctly interprets those laws and is in harmony
with the provisions of Article 2 of the Convention of 1911. In this
connection it should be observed that the right of a national of a
foreign country, which is a party to the Industrial Property
Convention of 1883, to bring suit in the courts of the United States
for the protection of the rights granted by the Convention was
expressly recognized by the Supreme Court of the United States in
the case of the French Republic v. Saratoga Vichy Spring Company (191 U. S.
427).
It is submitted that the decision of the Supreme Court of Mexico
under reference not only invalidates rights to which citizens of the
United States are entitled by law and treaty and in harmony with the
accepted principles of international law, but that the decision, if
adhered to, cannot fail injuriously to affect the legitimate
interests of citizens and residents of Mexico who have business
dealings with companies not engaged in business in Mexico and who
therefore are not registered under the provisions of the Commercial
Code.
