The Lanham Act and the Paris Convention

BP Chemicals Limited v. Jiangsu SOPO Corporation (Group) Limited, --- F.Supp.2d ----, 2006 WL 1134636 (E.D. Mo.)

Though the plaintiff won the jurisdictional battle, it lost the substantive war against allegedly unfair competition by a Chinese corporation that stole its trade secrets.

Plaintiff BP makes, among other things, acetic acid through a process known as methanol cabonylation. It licenses this process in many countries, and has taken extensive precautions to keep the process a trade secret. The Chinese defendant SOPO, which has significant ties to its local Communist Party, allegedly stole BP’s technology and disclosed its trade secrets to a number of US vendors, who used those trade secrets to make and provide components for SOPO’s acetic acid plant in China. The defendant argued for dismissal on the grounds of international comity (based on a case involving many of the same facts that BP filed recently in China) and forum non conveniens, and for a stay on the ground of international abstention. The court, respecting BP’s choice of forum and reasons for preferring the US, rejected all these arguments.

BP alleged that SOPO’s misappropriation of trade secrets was actionable under the Lanham Act because the Lanham Act implements the Paris Convention against unfair competition. The Lanham Act extends protection to foreign nationals whose countries of origin are parties to the Paris Convention “to the extent necessary to give effect” to the convention, “in addition to the rights to which any owner of a mark is otherwise entitled by this chapter.” 15 U.S.C. § 1126(b). Such persons are “entitled to effective protection against unfair competition, and the remedies provided in this chapter for infringement of marks shall be available so far as they may be appropriate in repressing acts of unfair competition.” 15 U.S.C. § 1126(h).

The court concluded that, while the Lanham Act incorporates the substantive law of the of Paris Convention, that convention does not create a general tort of unfair competition and therefore provides no rights against theft of trade secrets under the Lanham Act. But what about that “in addition to” language? The court ruled that this statutory provision creates the possibility that treaties or conventions would give foreign nationals more than regular rights under the Lanham Act. But the Paris Convention itself, the court held, does not create new rights. Nor does the Paris Convention federalize the state law of unfair competition. Rather, the Convention requires national treatment for foreign nationals; since the Lanham Act doesn’t give trade secret protection to US citizens, it doesn’t require more for foreign nationals. “Unfair competition,” a phrase that appears in the Paris Convention and in §1126(h), doesn’t specify what’s covered, and the Convention’s reference to “any act contrary to honest practices” is too general to include all possible torts of unfair competition under state common or statutory law.

SOPO also challenged BP’s trade secrets claim brought under Missouri statutory law, which only applies to misappropriation that began after August 28, 1995. Some of SOPO’s misappropriation began before that date, but BP argued that separate acts involving a second acetic acid plant occurred in 2000-2003. The court found that the improper acquisition of BP’s trade secrets occurred in 1994, and so using them to build a second plant wasn’t new wrongful conduct.