In our earlier postings “Another Early Chinese ‘Imperial’ Patentee: Young Kie Buell” and “China’s First Overseas Patent Filer?”, we talked about Chinese patentees of early 20th century.  The first patent law in China (“振兴工艺给奖章程”) was issued by Emperor Guang Xu in May 1898, and was abolished just two months later, with the failure of the Hundred Days’ Reform.  One of the first patent cases in China likely involved two foreign entities in Shanghai pursuant to U.S. law, before the Guang Xu patent law was even enacted.

The case was brought by R.W. Mustard and C.C. Bennett against G.H. Wright, the American Cigarette Company and the American Trading Company for breach of contract.  The American Cigarette Co. was a British corporation, with the American Trading Company being its agent.  The decision as reported in the North China Herald and Supreme Court and Consular Gazette (July 2, 1897, at 38).  It was rendered pursuant to extraterritorial jurisdiction of the U.S. consulate, on July 1st, 1897, before T.R. Jernigan, Consul-General, Acting Judicially.

It was part of the contract, that for a period of ten years, from the date of contract, the plaintiffs were to be restricted in certain particulars in the disposition or use of the Bonsack Cigarette Machine.  The limitation period imposed thus exceeded the life of the patent by several years.  The court held that it was not equitable to impose a post-expiration restriction upon use of the patented technology.  The court did not hesitate to impose U.S. law on acts occurring in China, noting that:

“[T]he fact that a United States Court, as this is, sits in China can, in no way, though intimated in the argument to the contrary, depart from a strict enforcement of United States law. Wherever a United States Court sits the law of the United States governs its proceedings and influences its decisions; and though holding its session within the territorial limits of China, the treaty between the United States and China provides that no American citizen residing in China can have his right adjudicated except in the consular courts of his country sitting in the Empire of China, such courts being United States Courts and governed by laws passed by the Congress of the United States.”

Although U.S. law applied, according to Doug Clark (doug@douglas-clark.com), a Hong Kong-based barrister who provided this case to me, both lawyers appearing before the Consul General were British.

The patent at issue, “Bonsack Cigarette Machine,” is likely a patent by James A. Bonsack, the U.S. Patent 238,640 (filed on Sep 4, 1880 and issued on Mar 8, 1881), or the U.S. Patent 247,795 (filed on Jun 21, 1881 and issued on Oct 4, 1881).  In fact, James A. Bonsack filed a number of patents on cigarette machines, since 1880 to 1899.  The North Carolina case discussed in the Shanghai case is Bonsack Machine Co. v. Smith, 70 F. 383  (C.C.W.D.N.C. 1895).  T.R. Jernigan later went on to write China in Law and Commerce (1901) and China’s Business Methods and Policy (1903), amongst other writings.  Tobacco was also to become a major business for foreigners in China, with tens of billions of cigarettes sold by British American Tobacco by the mid 1930’s.