Sovereign Immunity

• Author: International Law Group

BP Chemicals Ltd. (BP) alleged that Jiangsu Sopo Corporation (Sopo), a government-owned Chinese company, copied trade secret designs in violation of the Lanham Act, international law for the protection of intellectual property, the Missouri Uniform Trade Secrets Act (MUTSA) (which is based on the Uniform Trade Secrets Act), and Missouri common law. According to BP, Sopo obtained and then wrongfully disclosed trade secrets to American engineering firms. These trade secrets relate to BP's proprietary techniques for manufacturing acetic acid through a process called "methanol carbonylation." Acetic acid is a chemical used in making paints, plastics, resins, and other chemical products. All of BP's vendors have a duty to maintain the secrecy of BP's proprietary manufacturing process.

BP discovered the alleged violations in the mid-1990s when Chinese parties requested assistance from a BP vendor for the construction of an acetic acid plant in China. The product specifications mirrored BP's trade secrets and some replicated typographical errors in original BP documents.

BP brought an action against Sopo for alleged violations of intellectual property law. An investigation traced the disclosures to Sopo and another government-owned Chinese entity. The U.S. district court dismissed the action for lack of subject matter jurisdiction because Sopo is owned by the Chinese Government and is thus immune under the Foreign Sovereign Immunities Act of 1976 (FSIA) [Pub.L. No. 94-585, 90 Stat. 2891]. BP appealed.

The U.S. Court of Appeals for the Eighth Circuit reverses and remands for further proceedings. Under the FSIA, a foreign government or its entity may be sued in U.S. court if the claim is "based upon" a commercial activity carried out in the U.S. The Court first turns to the "based upon" requirement. The legal basis of BP's claim, MUTSA, recognizes both theft and improper disclosure as misappropriation. BP alleged that Sopo improperly disclosed the trade secrets.

The Court sides with BP on this issue. "We believe BP's disclosure- type MUTSA claim is 'based upon' Sopo's commercial activity carried on the United States. The claim requires BP to prove Sopo disclosed BP's trade secrets to others without consent, while having reason to know the trade secrets were acquired under circumstances giving rise to a duty to maintain their secrecy. See Mo. Stat. Section...