BP Chemicals v. Formosa Chemical & Fibre Corp.

• Decision Date: 03 October 2000
• Citation: 229 F.3d 254
• Parties: (3rd Cir. 2000) BP CHEMICALS LTD. (AN ENGLISH CORPORATION) V. FORMOSA CHEMICAL & FIBRE CORPORATION (A TAIWANESE CORPORATION); JOSEPH OAT CORPORATION (A PENNSYLVANIA CORPORATION) FORMOSA CHEMICAL & FIBRE CORPORATION APPELLANT IN NOS. 98-5468 AND 99-5423 JOSEPH OAT CORPORATION APPELLANT IN NOS. 98-5469 AND 99-5451 BP CHEMICALS LTD. (AN ENGLISH CORPORATION) APPELLANT IN NO. 99-5452 V. FORMOSA CHEMICAL & FIBRE CORPORATION (A TAIWANESE CORPORATION); JOSEPH OAT CORPORATION (A PENNSYLVANIA CORPORATION) NOS. 98-5468/5469 and 99-5423/5451/5452
• Court: U.S. Court of Appeals — Third Circuit

Page 254

229 F.3d 254 (3rd Cir. 2000)

BP CHEMICALS LTD. (AN ENGLISH CORPORATION)

V.

FORMOSA CHEMICAL & FIBRE CORPORATION (A TAIWANESE CORPORATION); JOSEPH OAT CORPORATION (A PENNSYLVANIA CORPORATION)

FORMOSA CHEMICAL & FIBRE CORPORATION APPELLANT IN NOS. 98-5468 AND 99-5423

JOSEPH OAT CORPORATION APPELLANT IN NOS. 98-5469 AND 99-5451

BP CHEMICALS LTD. (AN ENGLISH CORPORATION) APPELLANT IN NO. 99-5452

V.

FORMOSA CHEMICAL & FIBRE CORPORATION (A TAIWANESE CORPORATION); JOSEPH OAT CORPORATION (A PENNSYLVANIA CORPORATION)

NOS. 98-5468/5469 and 99-5423/5451/5452

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued February 29, 2000

Filed October 3, 2000

On Appeal From the United States District Court For the District of New Jersey District Judge: Honorable Joseph J. Rodriguez, (D.C. Civil Action No. 97-cv-04554) [Copyrighted Material Omitted]

Attorneys for Appellee/Cross-Appellant BP Chemicals Ltd.: John E. Caruso Montgomery, McCracken, Walker & Rhoads 123 South Broad Street Philadelphia, PA 19109 and Daniel L. Brockett (Argued) Robin G. Weaver Squire, Sanders & Dempsey 4900 Society Center Cleveland, OH 44114-1304

Attorneys for Appellant/Cross Appellee Formosa Chemical & Fibre Corporation: Marc S. Palay (Argued) Winston & Strawn 43 Rue du Rhone 1204 Geneva Switzerland and Jerome W. Pope Winston & Strawn 35 West Wacker Drive, Suite 4200 Chicago, IL 60601 and Jonathan F. Bloom Robert D. Carmignani Stradley, Ronon, Stevens & Young 2600 One Commerce Square Philadelphia, PA 19103

Attorneys for Appellant/Cross-Appellee Joseph Oat Corporation: Allison E. Accurso Jon C. Martin Fox, Rothschild, O'Brien & Frankel, Llp Princeton Pike Corporate Center 997 Lenox Drive, Building 3 Lawrenceville, NJ 08648-2311

Before: Alito and Stapleton, Circuit Judges, and Pollak,^* District Judge

OPINION OF THE COURT

Stapleton, Circuit Judge

This is a trade secret case filed in the United States District Court for the District of New Jersey by BP Chemicals Ltd. (BP), a British corporation, against Formosa Chemical & Fibre Corporation (FCFC), a Taiwanese corporation, and Joseph Oat Corporation (JOC), a Pennsylvania corporation with its principal place of business in New Jersey. BP asserts claims under S 44(b) and (h) of the Lanham Act, 15 U.S.C. S 1126(b) and (h), Articles 2 and 10 bis of the Paris Convention for the Protection of Industrial Property (hereinafter "the Paris Convention"), and New Jersey common law. BP alleges that FCFC misappropriated trade secrets relating to its methanol carbonylation process for making acetic acid by copying elements of an acetic acid plant design that BP's predecessor, Monsanto, had provided in 1980 to a licensee, China Petrochemical Development Corporation (CPDC). BP further alleges that FCFC and JOC entered into a contract whereby JOC would fabricate in New Jersey a number of chemical process vessels and heat exchangers using misappropriated technical specifications for ultimate use in the construction of an acetic acid plant in Taiwan. BP sought a preliminary injunction preventing JOC and FCFC from exporting these vessels to Taiwan. BP's amended complaint made clear that it sought to enjoin FCFC not only from taking possession of the JOC equipment, but from taking possession of any equipment manufactured in the United States by U.S. companies using BP's trade secrets. BP also sought compensatory and punitive damages from FCFC.

FCFC moved to dismiss the claim against it for lack of personal jurisdiction. The District Court deferred ruling on the motion until the conclusion of the five-month preliminary injunction hearing. The Court ultimately denied FCFC's motion to dismiss and ruled that BP had demonstrated its entitlement to preliminary injunctive relief against FCFC and JOC. The injunction entered pertained only to the JOC equipment. Following further submissions of the parties, the District Court established the length and terms of the injunction, limiting the duration to thirty months, beginning April 20, 1998, and ending October 20, 2000. FCFC and JOC filed timely notices of appeal. BP filed a timely cross-appeal.

The undisputed facts are as follows. FCFC is a publicly-traded Taiwanese corporation with its principal place of business in Taipei, Taiwan. FCFC is a subsidiary of a Taiwanese conglomerate known as the Formosa Plastics Group (FPG), which is owned by Y.C. Wang. In 1996, FPG's U.S. operations produced revenue of $2.58 billion. FCFC has a 3.51% stock interest in Formosa Plastics Corporations (FPC), a Delaware corporation with headquarters in New Jersey. In developing the design for its acetic acid plant, FCFC used "ASPEN" software that it leased from Nan Ya Plastics Corporation, another affiliate of FPG.

FCFC has a contract with JOC under which JOC will fabricate vessels in New Jersey for delivery to FCFC in Taiwan. It is performance of this contract that the instant action seeks to enjoin. Correspondence by fax or otherwise between FCFC and JOC regarding this contract has occurred "at least once a week" over a period of a number of months. (A. 19597-600.)

FCFC has contracts for the purchase of equipment for its acetic acid plant with at least eight U.S. vendors in addition to JOC. These vendors received "bid packages" containing specifications that allegedly incorporate misappropriated trade secrets. The process for soliciting bids was that FCFC's engineering team would prepare a bid package and send it to a purchasing group. BP asserts, and FCFC does not dispute, that the purchasing group was actually the purchasing group of FPG, not FCFC. The purchasing group would then send the bid packages to the Taiwanese agents of U.S. vendors, who would in turn send them to their U.S. clients. All meetings between FCFC representatives and representatives of equipment vendors and their agents took place in Taiwan. No FCFC personnel visited the United States for any purpose in connection with the design or construction of the acetic acid plant. There is no evidence that any U.S. vendor received bid packages directly from FCFC, or even from FPG's purchasing group, rather than through Taiwanese agents of the U.S. vendors.

FCFC's contract with Nooter, one of the U.S. equipment vendors, contains a provision requiring arbitration in New York of any disputes concerning that contract. The contracts with the other vendors call for arbitration in Taiwan.

FCFC also has business contacts with the United States that are unrelated to its acetic acid plant project. In the past five years, FCFC entered into four contracts with U.S. companies for the purchase of chemical process technology, at least two of which involved the training of FCFC personnel in the United States. For example, FCFC has recently contracted with ABB Lummus Global, Inc., a New Jersey engineering firm. In performing this contract, Lummus is receiving daily faxes from FCFC in Taiwan.

For more than a decade, FCFC has exported products (primarily rayon and fiber) to customers in the U.S. The parties agree that in 1996, these sales totaled about four million dollars. However, these sales were normally made in Taiwan through Taiwanese agents, and there is no evidence of direct sales by FCFC to purchasers in the United States. FCFC has no sales force, no representative offices, and no warehouses or other facilities in the U.S. There is no evidence that FCFC ever advertised its products in the U.S.

FCFC argues on appeal that the District Court did not have personal jurisdiction over it. Both FCFC and JOC further argue that the District Court erred in issuing the preliminary injunction by (1) determining the likelihood of success on the merits under the law of New Jersey rather than Taiwan, and (2) finding that the injunction was necessary to prevent imminent, irreparable harm. BP cross-appeals, asserting that the District Court erred in limiting the duration of the injunction to thirty months.

I.

The District Court found that "the nature and extent of [FCFC's] contacts with New Jersey and with the United States as a whole allow[ed it] to assert jurisdiction over FCFC under Fed. R. Civ. P. 4(k)(2)." (Dist. Ct. Op. at 10.) We hold that the District Court did not have personal jurisdiction over FCFC.

Rule 4(k)(2) provides that:

[i]f the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.

Fed. R. Civ. Proc. 4(k)(2).

Rule 4(k)(2) thus sanctions personal jurisdiction over foreign defendants for claims arising under federal law when the defendant has sufficient contacts with the nation as a whole to justify the imposition of United States' law but without sufficient contacts to satisfy the due process concerns of the long-arm statute of any particular state.

World Tanker Carriers Corp. v. MV YA Mawlaya, 99 F.3d 717, 720 (5th Cir. 1996). FCFC argues that while the District Court correctly found that FCFC did not have sufficient contacts with New Jersey to justify assertion of jurisdiction under the State's long-arm statute, it incorrectly concluded (1) that BP's cause of action arose under federal law, and (2) that FCFC had sufficient contacts with the United States as a whole to justify assertion of jurisdiction under Rule 4(k)(2). Because we agree that the District Court erred in concluding that FCFC's contacts with the United States were sufficient to warrant the assertion of personal jurisdiction over it, we may assume, without deciding, that BP's claim arises under federal law.¹

Once FCFC moved to dismiss, BP had the burden of coming forth with competent evidence demonstrating that FCFC had sufficient contacts with the United States to justify the court's assertion of either specific or general personal...