BP Chemicals Ltd. v. Formosa Chemical & Fibre Corp.

Opinions of the United

2000 Decisions States Court of Appeals

for the Third Circuit

10-3-2000

BP Chem Ltd v. Formosa Chem & Fibre Corp.

Precedential or Non-Precedential:

Docket 99-5452

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2000

Recommended Citation

"BP Chem Ltd v. Formosa Chem & Fibre Corp." (2000). 2000 Decisions. Paper 212.

http://digitalcommons.law.villanova.edu/thirdcircuit_2000/212

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2000 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Filed October 3, 2000

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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

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)

On Appeal From the United States District Court

For the District of New Jersey

(D.C. Civil Action No. 97-cv-04554)

District Judge: Honorable Joseph J. Rodriguez

Argued February 29, 2000

Before: ALITO and STAPLETON, Circuit Judges, and

POLLAK,* District Judge

_________________________________________________________________

* Honorable Louis H. Pollak, Senior United States District Judge for the

Eastern District of Pennsylvania, sitting by designation.

(Filed: October 3, 2000)

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 Appellee/

Cross-Appellant BP Chemicals Ltd.

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 Formosa Chemical

& Fibre Corporation

2

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

Attorneys for Appellant/

Cross-Appellee Joseph Oat

Corporation

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 underS 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

3

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

4

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

5

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

6

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 jurisdiction. See Stranahan Gear Co. v. NL Indus.,

Inc., 800 F.2d 53, 58 (3d Cir. 1998). Specific personal

jurisdiction exists when the defendant has "purposefully

directed his activities at residents of the forum and the

litigation results from alleged injuries that `arise out of or

related to' those activities." Burger King Corp. v. Rudzewicz,

471 U.S. 462, 472 (1985). General personal jurisdiction

exists when the defendant's contacts with the forum,

whether or not related to the litigation, are "continuous and

systematic." Helicopteros Macionales de Columbia v. Hall,

_________________________________________________________________

1. Great Britain and the United States are signatories to the Paris

Convention. BP characterizes its claim as arising under Articles 2 and 10

bis of the Paris Convention and S 44 of the Lanham Act. Article 2

provides that nationals of signatory countries "shall, as regards to the

protection of industrial property, enjoy in all the other countries of the

Union the advantages that their respective laws now grant, or may

hereafter grant, to nationals." Paris Convention, Art. 2, I.E.L. IV-A.

Article 10 bis provides that "[t]he countries of the Union are bound to

assure to nationals of such countries effective protection against unfair

competition." Id. Art. 10 bis. In L'Aiglon Apparel, Inc. v. Lana Lobell,

Inc.,

214 F.2d 649 (3d Cir. 1954), we found that S 44 subsections (b) and (h)

were intended by Congress "to implement international agreements [like

the Paris Convention] that are not self-executing" and "to fashion a

remedy to coincide with rights growing from the . . . substantive

provisions of [those] agreements." Id. at 654. BP thus asserts that as a

matter of federal law it is entitled to the same protection that New

Jersey

law affords to U.S. citizens. Its pleadings expressly disavow any right to

relief based on conduct of FCFC in Taiwan so it claims no extraterritorial

effect for the Lanham Act. Compare Van ity Fair Mills, Inc. v. T. Eaton

Co.,

234 F.2d 633, 644 (2d Cir. 1956). Given FCFC's limited contacts with

the United States, we find it unnecessary to decide whether BP's claim

against it arises under federal law and, if so, whether it states a claim

against FCFC upon which relief could be granted.

7

466 U.S. 408, 416 (1984). We examine in turn whether the

District Court has specific or general personal jurisdiction

over FCFC.

A.

FCFC's contacts with the United States do not give rise to

specific jurisdiction. The constitutional touchstone of due

process analysis is "whether the defendant purposefully

established `minimum contacts' in the forum." Burger King

Corp., 471 U.S. at 474. "[T]he foreseeability that is critical

to due process analysis . . . is that the defendant's conduct

and connection with the forum . . . are such that he should

reasonably anticipate being haled into court there." Id.

(quoting World-Wide Volkswagen Corp. v. Woodson , 444

U.S. 286, 295 (1980)). "It is essential in each case that

there be some act by which the defendant purposely avails

itself of the privilege of conducting activities within the

forum . . . , thus invoking the benefits and protections of its

laws." Id. at 475 (quoting Hanson v. Denckla, 357 U.S. 235,

253 (1958)). "This `purposeful availment' requirement

ensures that a defendant will not be haled into a

jurisdiction solely as a result of `random,'`fortuitous,' or

`attenuated' contacts . . . ." Id. (quoting Keeton v. Hustler

Magazine, Inc., 465 U.S. 770, 774 (1984)).

The Supreme Court has given several reasons why a

forum may legitimately exercise jurisdiction over a

nonresident who "purposefully directs" his activities toward

forum residents. "A State generally has a `manifest interest'

in providing its residents with a convenient forum for

redressing injuries inflicted by out-of-state actors." Id. at

473 (quoting Keeton, 465 U.S. at 776). "Moreover, where

individuals `purposefully derive benefit' from their interstate

activities, it may well be unfair to allow them to escape

having to account in other States for consequences

that arise proximately from such activities." Id. at

473-74. Finally, "because `modern transportation and

communications have made it much less burdensome for a

party sued to defend himself in a State where he engages in

economic activity,' it usually will not be unfair to subject

him to the burdens of litigating in another forum for

disputes relating to such activity." Id. at 474 (quoting

8

McGee v. International Life Ins. Co., 355 U.S. 220, 223

(1957)).

"With respect to interstate contractual obligations, [the

Supreme Court] ha[s] emphasized that parties who `reach

out beyond one state and create continuing relationships

and obligations with citizens of another state' are subject to

regulation and sanctions in the other State for the

consequences of their activities." Id. at 473 (quoting

Travelers Health Ass'n v. Virginia, 339 U.S. 643, 647

(1950)). On the other hand, "[i]f the question is whether an

individual's contract with an out-of-state party alone can

automatically establish sufficient minimum contacts in the

other party's home forum, . . . the answer is clearly that it

cannot." Id. at 478. The Supreme Court has endorsed "a

`highly realistic' approach that recognizes that a `contract' is

`ordinarily but an intermediate step serving to tie up prior

business negotiations with future consequences which

themselves are the real object of the business transaction.' "

Id. at 479 (quoting Hoopeston Canning Co. v. Cullen, 318

U.S. 313, 316 (1943)). "It is these factors--prior

negotiations and contemplated future consequences, along

with the terms of the contract and the parties' actual

course of dealing--that must be evaluated in determining

whether the defendant purposefully established minimum

contacts within the forum." Id.

"Once it has been decided that a defendant purposefully

established minimum contacts within the forum . . . , these

contacts may be considered in light of other factors to

determine whether the assertion of personal jurisdiction

would comport with `fair play and substantial justice.' " Id.

(quoting International Shoe, 326 U.S. at 320). "Thus courts

`in appropriate case[s]' may evaluate `the burden on the

defendant,' `the forum State's interest in adjudicating the

dispute,' `the plaintiff's interest in obtaining convenient and

effective relief,' `the interstate judicial system's interest in

obtaining the most efficient resolution of controversies,' and

the `shared interest of the several States in furthering

fundamental substantial social policies.' " Id. at 476-77

(quoting World-Wide Volkswagen, 444 U.S. at 292). "These

considerations sometimes serve to establish the

reasonableness of jurisdiction upon a lesser showing of

9

minimum contacts than would otherwise be required." Id.

at 477. "On the other hand, where a defendant who

purposefully has directed his activities at forum residents

seeks to defeat jurisdiction, he must present a compelling

case that the presence of some other considerations would

render jurisdiction unreasonable." Id."Nevertheless,

minimum requirements inherent in the concept of`fair play

and substantial justice' may defeat reasonableness of

jurisdiction even if the defendant has purposefully engaged

in forum activities." Id. at 477-78.

Applying these principles in Burger King, the Supreme

Court found jurisdiction proper where the defendant,

"[e]schewing the option of operating an independent local

enterprise, . . . deliberately `reach[ed] out beyond' [his home

forum] and negotiated with a Florida corporation for the

purchase of a long-term franchise and the manifold benefits

that would derive from affiliation with a nationwide

organization." Id. at 479-80. The Court emphasized that he

entered "a 20-year relationship that envisioned continuing

and wide-reaching contacts with Burger King in Florida,"

which relationship could be viewed as neither "random,"

"fortuitous," or "attentuated." Id. Moreover, the Court stated

that the Court of Appeals, in finding jurisdiction improper,

"gave insufficient weight to provisions in the various

franchise documents providing that all disputes would be

governed by Florida law." Id. at 481. The Court reasoned

that "[a]lthough such a provision standing alone would be

insufficient to confer jurisdiction, . . . when combined with

the 20-year interdependent relationship [the defendant]

established with Burger King's Miami headquarters, it

reinforced his deliberate affiliation with the forum State and

the reasonable foreseeability of possible litigation there." Id.

In this case FCFC's alleged misappropriation and

improper use of BP's trade secrets have occurred and

continue to occur in Taiwan. The primary alleged injury to

BP has occurred and continues to occur in Great Britain.

See Horne v. Adolph Coors Co., 684 F.2d 255, 259-60 (3d

Cir. 1982) (holding that in a trade secret case, the injury

occurs to the owner of the trade secret wherever he

resides). Thus, the primary tortious conduct giving rise to

BP's claim against FCFC and to the injury caused thereby

10

is unrelated to the United States. The only FCFC contacts

with the United States that are in any way related to BP's

claim against it are that (1) it placed orders in Taiwan with

eight United States based equipment suppliers to enable it

to build the offending plant in Taiwan, (2) in furtherance of

those orders it has sent correspondence from Taiwan into

the United States, and (3) in one of those eight orders it

agreed to arbitrate with that supplier in New York. Thus, in

substance, this is a case where FCFC availed itself of the

assistance of eight U.S. based companies who solicited its

business in Taiwan in order to build a plant in Taiwan

allegedly with resulting injury to BP in Great Britain.

Accordingly, we find no act by which FCFC "purposefully

avail[ed] itself of the privilege of conducting activities within

the forum . . . , thus invoking the benefits and protections

of its laws." Burger King, 471 U.S. at 475.

Burger King teaches that "a non-resident's contracting

with a forum resident, without more, is insufficient to

establish the requisite `minimum contacts.' " Sunbelt Corp.

v. Noble, Dentor & Assoc., Inc., 5 F.3d 28, 32 (3d Cir. 1993).

The same is true of "informational communications in

furtherance of [such a] contract." Id. at 32. Besides the

contracts and implementing correspondence, there are no

significant contacts here with the United States. The fact

that these contracts were for a one-time purchase of

equipment that was to be shipped to Taiwan and were

solicited and negotiated through the Taiwanese agents of

the U.S. vendors seems to us to negate any inference of

"purposeful availment."

In our view, FCFC's undertaking, in its contract with

Nooter, to arbitrate in New York any disputes arising under

the contract is the single fact that offers most substantial

support for the proposition that the manner in which FCFC

conducted its program of purchases of American equipment

for its acetic acid plant reflected a measure of acquiescence

in the possible need to submit to the jurisdiction of

American courts, should disputes arise. But we think that

this fact is not sufficient to carry the day. We of course

recognize that, in the event of a dispute between FCFC and

Nooter, the contractual agreement between FCFC and

Nooter would probably -- and properly -- be regarded as a

11

waiver of objections to judicial jurisdiction as well, whether

that jurisdiction was to be exercised by a New York state

court or, in the alternative, by a federal court, located

anywhere in the United States, with respect to a claim

arising under federal law. But the dispute in the case at bar

does not involve Nooter, and the FCFC-JOC contract

contains no comparable venue-selection provision. More to

the point, the provision in the FCFC-Nooter contract only

involved venue selection. It was not a provision stipulating

that New York law, or the law of any other American

jurisdiction, would govern such disputes as might arise.

Accordingly, we are not persuaded that the provision

constitutes purposeful availment of the benefits and

protections of United States law. Given the attenuated

connection between the arbitration clause and the instant

litigation, it is insufficient to make the Court's exercise of

jurisdiction comport with "traditional notions of fair play

and substantial justice." Cf. Kahn Lucas Lancaster v. Lark

Int'l Ltd., 956 F. Supp. 1131, 1138-39 (S.D.N.Y. 1997) (New

York arbitration clause is insufficient basis for jurisdiction

over suit even between the parties to the contract

containing the clause until the plaintiff indicates a desire to

arbitrate the suit).

Finally, we note that the United States has, at best, a

very limited interest in adjudicating this dispute between

two non-citizens, which is primarily a dispute regarding

acts that took place in Taiwan that caused an injury in

Great Britain. Although BP emphasizes that this suit seeks

only to enjoin and recover damages for FCFC's actions in

the United States, and not its acts of misappropriation in

Taiwan, it cites no authority for the proposition that a

plaintiff can strengthen the relationship between the

defendant, the forum and the litigation by limiting the relief

sought. Regardless of whether BP seeks relief for the

actions of FCFC in Taiwan, the fact remains that FCFC has

done nothing of substance other than contract in Taiwan

with the Unites States based vendors to make one-time

deliveries of equipment in Taiwan. Under Burger King, those

purchases and the associated correspondence sent from

Taiwan are insufficient to create specific personal

jurisdiction.

12

We find substantial support for our holding in Burlington

Indus., Inc. v. Maple Indus., Inc., 97 F.3d 1100, 1103 (8th

Cir. 1996). The plaintiff there brought a claim for

misappropriation of trade secrets in the Eastern District of

Arkansas. As a basis for specific jurisdiction, the plaintiff

pointed to the fact that the four machines incorporating the

misappropriated trade secrets were purchased from a third-

party Arkansas resident. See id. However, none of the

defendant's employees went to Arkansas to negotiate their

purchase or supervise their manufacture. See id. The Court

acknowledged that telephone calls between the defendant

and the vendor, numbering at least one hundred,"can be

evidence of a continuous and systematic business

relationship," but it found that while these phone contacts

"remain a consideration, they are insufficient, alone, to

confer personal jurisdiction." Id.

B.

We conclude, as well, that FCFC's United States contacts

are not such that an assertion of general personal

jurisdiction comports with the demands of due process. As

we have noted, even where the connection between a

defendant's contacts and the litigation are insufficient to

give rise to specific jurisdiction, general jurisdiction will be

available where the defendant's contacts unrelated to the

litigation are "continuous and systematic." Helicopteros

Nacionales de Colombia v. Hall, 466 U.S. 408, 416 (1984).

While FCFC exports its products to the United States, it

is undisputed that it has no personnel or facilities here and

there is no evidence that it has in any way advertised or

solicited business here. As a result there is simply no basis

for concluding that it has a continuous presence in the

United States.

Contrary to BP's suggestion, FCFC's relationship with

FPG and its chairman, Mr. Wang, does not provide the

requisite presence here. FCFC is a legally separate entity.

The mere fact that FCFC had an arrangement with FPG,

the details of which are not revealed in the record, whereby

FCFC would submit bid packages to FPG's purchasing

group, who would in turn submit them to other agents, and

13

the fact that FCFC leased software from Nan Ya, another

FPG affiliate, is not a sufficient basis on which to pierce the

corporate veil and assert jurisdiction over FCFC on the

basis of the United States contacts of other FPG affiliates.

See Cohn v. Insurance Co., 54 F.3d 1108, 1116 (3d Cir.

1995) ("party seeking to pierce corporate veil must establish

that controlling corporation wholly ignored separate status

of controlled corporation and so dominated and controlled

its affairs that separate existence is a mere sham").

Moreover, FCFC's passive ownership of 3.5% of the stock of

a Delaware corporation cannot constitute the kind of

continuous and systematic business contacts that give rise

to general jurisdiction. See Shaffer v. Heitner , 433 U.S. 186,

213 (1977); Grimes v. Vitalink Communications Corp., 17

F.3d 1553, 1559 (3d Cir. 1994). Finally, the fact that FCFC

has entered into four other recent contracts for the

purchase of chemical technology, two of which involved

FCFC personnel traveling to the United States for training,

is insufficient. See Helicopteros, 466 U.S. at 416-17 (visits

in connection with training and purchases, even if

occurring at regular intervals, are insufficient basis for

general jurisdiction). Even considering the cumulative effect

of these various contacts together, the requirements for

general jurisdiction are not met.

II.

"In order to obtain a preliminary injunction, the moving

party must show (1) irreparable injury, (2) a reasonable

probability of success on the merits, (3) the harm to it

outweighs the possible harm to other interested parties,

and (4) harm to the public." Frank Russell Co. v. Wellington

Management Co., 154 F.3d 97, 101 (3d Cir. 1998). A

District Court then balances these four factors to determine

if an injunction should issue. See id. JOC asserts that the

District Court erred in finding that BP had demonstrated

both imminent and irreparable injury and a likelihood of

success on the merits.

A.

We find that the record supports the District Court's

conclusion that an injunction was necessary to prevent

14

imminent and irreparable harm. The District Court did not

clearly err in crediting BP's witness who testified as to the

damage that would be done to BP's reputation, credibility

and ability to license its technology if FCFC's plant became

operational, giving rise to the public perception that BP was

unable to protect its proprietary trade secrets. Such

injuries to reputation are difficult to calculate, and thus

money damages are an inadequate remedy. See Ferrero v.

Associated Materials Inc., 923 F.2d 1441, 1449 (11th Cir.

1991) (holding that injury to goodwill is irreparable).

Moreover, although the evidence suggests that FCFC's plant

would not have become operational for at least a year after

the injunction was issued, the history of the instant

proceedings belies JOC's unsupported assertion that a year

was ample time to obtain a trial on the merits in Taiwan in

the event that the equipment were allowed to leave this

country. See Geritrex Corp. v. Dermarite Indus., LLC, 910 F.

Supp. 955, 966 (S.D.N.Y. 1996); Wright et al., Federal

Practice and Procedure S 2948.1, at 139 (2d ed. 1995)

(explaining that imminence requires that the harm will

occur before a trial on the merits can be had). The

operation of FCFC's plant is not so remote in time as to be

uncertain or speculative. See Continental Group, Inc. v.

Amoco Chems. Corp., 614 F.2d 351, 359 (3d Cir. 1980).

Finally, the District Court's finding that any delay on BP's

part in filing suit "was caused by BP's conscientious

decision to fully investigate the very serious charges before

filing suit" is not clearly erroneous. BP Chems., Ltd. v.

Formosa Chem. & Fibre Corp., No. 97-cv-4554, at 41 (D.N.J.

Sept. 15, 1998). To the extent that delay can justify denial

of a motion for a preliminary injunction, see, e.g., Citibank,

N.A. v. Citytrust, 756 F.2d 273, 276 (2d Cir. 1985), "a delay

caused by a plaintiff's good faith efforts to investigate an

infringement" or to determine how serious an infringement

is does not preclude a finding of irreparable harm. Tom

Doherty Assocs., Inc. v. Saban Entertainment, Inc. , 60 F.3d

27, 39 (2d Cir. 1995).

B.

In determining whether BP had shown a likelihood of

success, however, the District Court concluded that New

15

Jersey had the most significant relationship with the case

and applied New Jersey law in analyzing each issue. We

conclude that it erred in doing so.2

BP bases its claim against JOC on the following

Restatement rule to which it maintains the New Jersey

courts are committed:

One who discloses or uses another's trade secret

without a privilege to do so is liable to the other if . . .

(c) he learned the secret from a third person with

notice of the facts that it was a secret and that the

third person discovered it by improper means or that

the third person's disclosure was otherwise a breach of

duty to the other.

Restatement (First) of Torts S 757 (1939); see also Williams

v. Curtiss-Wright Corp., 681 F.2d 161, 164 & n.3 (3d Cir.

1982) (holding that New Jersey has substantially adopted

Restatement section 757(c)).

JOC does not dispute, as we understand it, that New

Jersey courts follow this rule.3 It stresses, however, that

_________________________________________________________________

2. FCFC and JOC argued before us, under appropriate argument

headings, that BP had not shown a likelihood of success on the merits

and, under appropriate subheadings, that the record would not support

a finding (1) that any information Tu gave FCFC was a trade secret, or

(2) that Tu breached a duty by giving information to FCFC. Both briefs

(see FCFC's opening brief at 50 and JOC's opening brief at 17-18) took

the position that, contrary to the ruling of the District Court, both of

these issues are governed by Taiwanese law. FCFC's brief cited authority

in support of this position, and JOC expressly incorporated that

authority. Having considered the conflicts of law issues thus raised, we

have concluded that the District Court has entered an injunction, and is

currently proceeding to the merits issues, based on an erroneous view of

the law. Under these circumstances, we deem it appropriate and prudent

to advise the District Court at this time regarding our view of the

conflicts of law issues.

3. It does dispute the application of the rule to the facts of this case,

asserting that JOC did not have notice that FCFC had discovered the

secret by improper means at the time it learned the secret from FCFC,

and that therefore Restatement section 758 rather than section 757

applies. Section 758 governs where the defendant does not have notice

that the third party who disclosed the secret obtained it by improper

16

under New Jersey's flexible "governmental-interest analysis,

. . . the determinative law is that of the state with the

greatest interest in governing the particular issue to be

decided." Veazey v. Doremus, 510 A.2d 1187, 1189 (N.J.

1986) (emphasis supplied); accord O'Connor v. Busch

Gardens, 605 A.2d 773, 774 (N.J. Super. Ct. App. Div.

1992) ("[C]hoice of law decisions can and should be made

on an issue-by-issue basis, and thus the law of different

states can apply to different issues in the same case.); see

also Restatement (Second) of Conflict of LawsS 145, S145

cmt. d. JOC points out that in addition to issues regarding

its knowledge and conduct, the likelihood of BP's success

on its claim depends on whether it can establish (1) that it

had a protectable interest in its proprietary information --

i.e., a "trade secret" (and, in particular, that Monsanto and

CPDC took the requisite security measures to protect the

methanol carbonylation technology) and (2) that FCFC

tortiously acquired BP's trade secret (and, in particular,

that FCFC's consultant, Mr. Tu, owed a duty of

confidentiality with respect to the technology and that

FCFC had knowledge of a breach of duty in receiving and

using BP's technology). Thus, while it appears to be

undisputed that New Jersey law governs the issues of

JOC's knowledge and conduct, this does not necessarily

signify that New Jersey law -- as opposed to Taiwanese law

-- applies to the two additional issues necessary to BP's

case against JOC.

JOC has tendered affidavits tending to show that

Taiwanese law governing the protectability of commercially

valuable information and what constitutes a tortious

_________________________________________________________________

means until after the defendant learns the secret. See Restatement (First)

of Torts S 758 & cmt. a. Section 758 protects from liability an innocent

third party who learns of the secret if prior to receiving notice "he has

so

changed his position that to subject him to liability would be

inequitable." Id. S 758(b). JOC argues that its substantial investment of

time and money in the manufacturing process thus precludes liability.

The events from which the District Court inferred notice, however, all

occurred prior to JOC's entering into its contract with FCFC. Thus,

sections 757 and 758 do not differ in any respect that is relevant to the

issue before us in this appeal.

17

conversion of such a protectable interest is different from,

and more difficult for BP than, the New Jersey law

governing those issues. As to the issue of protectability, the

affidavits indicate, for example, that "[a] single unprotected

disclosure [by either BP, Monsanto, CPDC or other

Monsanto licensees] of the secret terminates its trade secret

status immediately (like a needle hits a balloon)," (A. 6024),

and that "BP is required to show that CPDC actually took

steps to safeguard the information," (A. 1046 (emphasis

added)). As to the issue of whether FCFC tortiously

acquired the information from Tu, the affidavits indicate

that:

BP is required to show that CPDC actually entered into

a confidentiality agreement with Mr. Tu. There must be

evidence that Mr. Tu was put on notice or instructed

as to what materials he should consider confidential.

Under Taiwanese law, corporate obligations do not

attach to a corporation's employee. The employee has

to be subject to [sic] specific agreement or clear

instructions as to exactly what he was required to keep

confidential.

(A. 1046).

We recognize that BP has tendered conflicting affidavits

tending to show that JOC's affidavits do not accurately

characterize Taiwanese law and that Taiwanese and New

Jersey law are the same as to these issues. It is enough for

present purposes, however, to find that there is record

evidence that, if believed, would support a finding that

there are relevant differences in the laws of the two

sovereigns that the parties claim to be governing. This

requires us to determine whether Taiwan or New Jersey has

the more substantial interest in determining:

(1) whether proprietary information licensed by its

purported owner for use in Taiwan was protectable and

whether at the time of its alleged conversion in Taiwan

it had been returned to the public domain; and

(2) whether FCFC's acquisition of the alleged trade

secret in Taiwan was wrongful.

In both instances, we conclude based on the current record

that Taiwan had the more substantial interest in having its

18

law applied and that a New Jersey court would apply that

law in a case like this.

We believe Taiwan has the greater interest in setting the

standards regarding whether information that has been

licensed by a British company to a Taiwanese company has

been sufficiently safeguarded to warrant legal protection or

whether it has entered the Taiwanese public domain. This

issue implicates policy judgments regarding the appropriate

balance between protecting trade secrets, thereby

encouraging both the development of new technology and

the willingness of foreign companies to share their

technology with Taiwanese businesses, and free

interchange and access to information, which also has

profound implications for the health of the Taiwanese

economy. New Jersey's interest, on the other hand, would

appear to be virtually nil. As we have previously pointed

out, BP, the purported owner of the trade secret, is not a

resident of New Jersey and, while it may suffer some

marginal injury there, New Jersey is assuredly not the

principal situs of either the direct or the indirect injury

inflicted.4 Moreover, we are doubtful that a New Jersey

court would apply New Jersey law even if BP were a New

Jersey corporation. A state's interest in protecting its

citizens from injury by protecting intellectual property

which they choose to license to foreign companies cannot

outweigh the interests of the foreign sovereign in setting the

standards for the protection of intellectual property within

its own borders. Cf. O'Connor, 605 A.2d at 775.

The New Jersey Superior Court's decision in O'Connor is

instructive. There, a New Jersey resident was injured in

Virginia. The injuries were allegedly caused by both the

New Jersey plaintiff's and the Virginia defendant's

negligence. The issue was whether the court should apply

Virginia's strict rule of common-law contributory negligence

_________________________________________________________________

4. As we have previously pointed out, Great Britain, where BP is

domiciled, is the principal situs of the injury alleged by BP. However, as

we point out below, conventional choice of law doctrine ordinarily does

not give great weight to the place of injury in cases, like the case at

bar,

arising out of claims of misappropriation of trade values. In any event,

no party has suggested that British law governs any of the issues

presented in this case.

19

or New Jersey's comparative negligence rule, which afforded

more protection to the injured plaintiff. The court held that:

New Jersey's concern for its injured citizens is also

legitimate, but it cannot exempt them from other

states' law setting standards for local conditions and

conduct. If New Jersey's comparative negligence

doctrine followed [the plaintiff] [i]nto. . . Virginia, it

would follow her into every other state as well, and

would supplant local liability rules wherever she went.

That would be an impermissible intrusion into the

affairs of other states.

Id.; cf. Restatement (Third) of the Foreign Relations Law of

the United States SS 402, 403 (1987) (discussing bases of

and limitations on the jurisdiction to prescribe law with

respect to a person or activity having connections with

other states). Similarly, in this case, neither New Jersey nor

Great Britain's concern for their injured citizens can

outweigh Taiwan's interest in setting standards for the

protection of intellectual property in Taiwan.

Similarly, Taiwan has the greater interest in having its

law applied to determine whether FCFC, a Taiwanese

company, acted tortiously in acquiring information in

Taiwan from CPDC, another Taiwanese company, and, in

particular, as to the circumstances under which a

Taiwanese company's actions have created a duty of

confidentiality in its employees. Again the law in this area

reflects a delicate balance of competing interests that has

the capacity to profoundly affect the Taiwanese economy,

and any interest that New Jersey would have in protecting

trade secret holders who export their intellectual property

to Taiwan is greatly outweighed by Taiwan's interest in

setting the standards that govern the conduct of its own

citizens regarding intellectual property that is present

within its borders.

The conclusion that Taiwan's interest in both of these

issues is greater than New Jersey's finds further support in

the Restatement (Second) of Conflict of Laws , to which New

Jersey courts have often looked for guidance. See, e.g.,

Veazey, 510 A.2d at 251; Rose, 293 A.2d at 367-77;

O'Connor, 605 A.2d at 774. The Restatement suggests that

20

the following factors should be taken into account in

determining which state has the most significant

relationship with a particular issue in tort law:

(a) the place where the injury occurred,

(b) the place where the conduct causing the injury

occurred,

(c) the domicile, residence, nationality, place of

incorporation and place of business of the parties, and

(d) the place where the relationship, if any, betw een

the parties is centered.

Restatement (Second) of Conflicts S 145 (1971).

"[T]he place where the conduct occurred is given

particular weight in the case of torts involving . .. unfair

competition." Id. S 145, cmt. (e), at 420. Moreover, while the

general rule is that in determining whether an interest is

entitled to legal protection, "the applicable law will usually

be the local law of the state where the injury occurred," id.

S 158 (emphasis added), the Restatement qualifies this rule,

stating:

"[s]ituations do arise, however, where the place of

injury will not play an important role in the selection of

the state of applicable law. . . . This will . . . be so

when . . . there may be little reason in logic or

persuasiveness to say that one state rather than

another is the place of injury, or when, such as in the

case of multistate defamation, injury has occurred in

two or more states.

Id. The Restatement further states that"the place of injury

is less significant in the case of . . . such unfair competition

as consists of false advertising and the misappropriation of

trade values." Id. S145 cmt f. The Restatement's

explanation for the unimportance of the place of injury in

cases of misappropriation of trade values is directly

applicable here:

The injury suffered through false advertising is the loss

of customers or of trade. Such customers or trade will

frequently be lost in two or more states. The effect of

the loss, which is pecuniary in its nature, will normally

21

be felt most severely at the plaintiff's headquarters or

principal place of business. But this place may have

only a slight relationship to the defendant's activities

and to the plaintiff's loss of customers or trade.

The situation is essentially the same when

misappropriation of the plaintiff's trade values is

involved, except that the plaintiff may have suffered no

pecuniary loss but the defendant rather may have

obtained an unfair profit.

Id. Equally applicable here is the conclusion that in such

cases, "the place of injury does not play so important a role

for choice-of-law purposes . . . as in the case of other kinds

of torts[ and that i]nstead, the principal location of the

defendant's conduct is the contact that will usually be given

the greatest weight in determining the state whose local law

determines the rights and liabilities that arise." Id.

The vast majority of the conduct that is relevant to these

two issues occurred in Taiwan.5 BP licenced the trade

secrets to CPDC in Taiwan. To the extent that BP and

CPDC took measures to safeguard those secrets in CPDC's

hands, those measures were taken in Taiwan. FCFC

acquired whatever information it acquired in Taiwan,

designed its plant in Taiwan, prepared the bid packages

with the specifications for the equipment in Taiwan, and

delivered those packages to Taiwanese agents of U.S.

companies in Taiwan.

Moreover, while neither BP nor JOC is Taiwanese, which

by itself weighs against the application of Taiwanese law,

both have established significant relationships with Taiwan,

BP by licensing its technology to a Taiwanese company and

JOC by maintaining agents in Taiwan for the purpose of

soliciting Taiwanese business. These relationships are

centered in Taiwan, and these relationships gave rise to the

events that are at issue here.

We hold that Taiwan has the greater interest in having its

_________________________________________________________________

5. Although BP has alleged misconduct occurring in New Jersey, namely

JOC's fabrication of equipment using misappropriated technical

specifications, this conduct has no relevance to either of the issues

regarding which JOC asserts that Taiwanese law applies.

22

law govern the issues of whether BP had a protectable

interest in the information licensed to CPDC and whether

FCFC acted unlawfully in acquiring it. Therefore, to the

extent that there is a conflict of law on these issues,

Taiwanese law should govern.

As we have previously noted, there is evidence in the

current record that, if believed, would support a conclusion

that Taiwanese and New Jersey law do not differ in any

respect material here. The District Court had no occasion to

resolve the conflict presented in the affidavits before it

because it erroneously concluded that New Jersey law

governed all issues. While we conclude that we are

authorized to resolve that conflict, see Fed. R. Civ. Proc.

44.1 (the content of foreign law is an "issue of law");

Franzen v. Equitable Life Assurance Soc'y, 33 A.2d 599, 602

(N.J. 1943) (same), we believe the District Court is in the

best position to determine what at this point is essentially

a credibility issue -- i.e., which expert to believe. The

District Court will thus be required to determine hereafter

whether Taiwanese law differs from that of New Jersey. It

may address this issue in the context of a renewed

application for a preliminary injunction and/or in the

context of a merits determination. In either context, it will

have discretion to supplement the existing record with

testimony or otherwise and/or to conduct its own

independent investigation regarding Taiwanese law. See

Fed. R. Civ. Proc. 44.1; N.J. R. Evid. 201(a); Franzen, 33

A.2d at 602.

III.

We will reverse the District Court's order of May 14,

1999, and direct that it: (a) dismiss FCFC for want of

personal jurisdiction, and (b) conduct further proceedings

with respect to BP's claim against JOC in a manner

consistent with this opinion.6

_________________________________________________________________

6. Because we are setting aside the injunction entered by the District

Court and remanding for further proceedings, we need not address the

question, posed by BP's cross-appeal, whether the District Court erred in

limiting the duration of the injunction to thirty months.

23

ALITO, Circuit Judge, concurring in the judgment:

Except with respect to the comments below, writing

separately in this case would not serve a useful purpose. I

do not join part IIIB of the opinion of the Court. Both FCFC

and JOC merely mentioned the choice-of-law issue in

passing in their briefs. See FCFC Br. At 41, 50 n.7; JOC Br.

At 17. " `[A] passing reference to an issue . . . will not suffice

to bring that issue before this Court.' " Laborers' Int'l Union

of N. Am. v. Foster Wheeler Corp., 26 F.3d 375, 398 (3d Cir.

1994) (citation omitted) (ellipsis in original). I would hold

that no choice-of-law issue is properly before the Court in

this appeal. Without full briefing from the parties, I am

unwilling to join the Court's novel application of New Jersey

choice-of-law principles.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

24