UK Defendant’s Interactive Website Insufficient To Establish Personal Jurisdiction In Texas
On December 8, 2020, the U.S. District Court for the Eastern District of Texas (EDTX) unsealed its November 30, 2020, order granting dismissal without prejudice for lack of personal jurisdiction. TriOptima AB v. Quantile Techs. Ltd., Case No. 2:19-cv-00390-JRG, Dkt. No. 154 (E.D. Tex. Dec. 8, 2020); TriOptima AB v. Quantile Techs. Ltd., Case No. 2:19-cv-00390-JRG, Dkt. No. 149 (E.D. Tex. Nov. 30, 2020). The EDTX found that the United Kingdom-based defendant was not subjected to specific personal jurisdiction in Texas by providing financial services that can affect Texas interests through a secure customer portal website.
On November 26, 2019, TriOptima AB filed a complaint against Quantile Technologies Limited in the EDTX alleging infringement of seven patents relating to centralized systems for compressing and optimizing large volumes of “over the counter” derivative transactions. Defendant is formed under the laws of the UK and based in London. Plaintiff alleged that Defendant is subject to personal jurisdiction in EDTX because it had minimum contacts with Texas based on (1) its “highly interactive” customer portal, (2) its services that “invariably touch Texas parties, Texas assets and Texas laws,” and (3) its delivery of products into the stream of commerce. Defendant moved to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2). The EDTX granted Defendant’s Motion.
First, relying on Federal Circuit precedent, the EDTX found that the existence of Defendant’s secure portal, without more, is insufficient to show that Defendant had minimum contacts with Texas. The EDTX rejected Plaintiff’s argument that jurisdiction existed because many of Defendant’s clients had operations in Texas and much of Defendant’s business and customer relations were managed though the secure portal. None of Defendant’s clients are based in Texas, and Defendant does not seek out Texas customers. There was also no evidence that anyone in Texas had access to the secure portal. It did not matter that Defendant’s secure portal was hypothetically accessible in Texas; the jurisdiction inquiry focuses on whether the use of the secure portal was purposefully directed to and used by Texans—which was not the case.
Second, the EDTX rejected Plaintiff’s argument that jurisdiction exists because Defendant’s services most likely terminate Texas-related derivative contracts and involve oil and gas commodities trading, for which Texas is a center. The EDTX acknowledged that Texas interests may be implicated by Defendant’s activities, but it found that Defendant’s contacts with Texas are merely incidental to the fact that Defendant’s customers use its services to trade on thousands of derivative contracts from all over the United States.
Finally, the EDTX rejected Plaintiff’s argument that Defendant’s delivery of “proposal files” to customers through its secure portal is sufficient to establish minimum contacts under the stream of commerce theory. Defendant disputed that such files were even products because the files are requested by and tailored to each customer that receives them, not injected into the stream of commerce for purchase by the public. However, the EDTX found it more significant that none of the persons authorized to receive proposal files through Defendant’s secure portal were located in Texas, so none of the proposal files would be purchased in Texas.