Texas Expands Business Court Powers to Cover High-Stakes IP Disputes with HB 40

This legislative update makes Texas one of the few states in the U.S. to offer a specialized state-level court for complex commercial and IP-related litigation outside of the federal system. While patent infringement claims still remain under federal jurisdiction, HB 40 now allows IP-related contractual disputes and trade secret theft claims to be brought in the Business Court.

Key Enhancements of HB 40 Include:

• Expanded Jurisdiction: The Business Court can now preside over lawsuits related to IP ownership, use, licensing, leasing, installation, and performance, including misappropriation of trade secrets.
• Lowered Thresholds: The minimum monetary threshold for Business Court eligibility has been reduced from $10 million to $5 million, with allowance for aggregating related claims.
• Arbitration Oversight: The Court gains new powers to enforce arbitration agreements and adjudicate related matters, such as appointing arbitrators and confirming or vacating arbitration awards.
• Jurisdiction Clarity: HB 40 directs the Texas Supreme Court to streamline the rules for early determination of jurisdiction, making it easier for businesses to know whether their case qualifies.
• Case Transfer Rules: The bill allows transfer of cases filed before September 1, 2024 to the Business Court with party consent and court approval.
• Sunset Clause Removed: HB 40 removes the automatic “sunset” provision for inactive Business Court divisions, signaling long-term state support for the Court’s expansion.

Legal experts and business advocates have welcomed the legislation, noting that it reinforces Texas’s ambition to become a premier destination for high-stakes commercial and technology-related litigation. For technology companies, research institutions, and innovation-focused businesses, this development could streamline the resolution of complicated disputes without resorting to federal courts.