The Internet and Personal Jurisdiction:

When Can a Non-resident be Sued in Texas Courts Based on Its Website?

Whether as a source of in­formation, a marketplace, or something in between, a business's website can be one of its most valuable as­sets. While websites endow businesses with invaluable marketing and sales benefits, many businesses are un­aware of the jurisdictional consequences of their Inter­net presence.

Even when a business is not organized under Texas law, does not maintain an office in Texas, has never sent a representative to Texas, or has never even had a tele­phone conversation with someone in Texas, that busi­ness may still be subject to personal jurisdiction in Texas courts based solely on its web presence. Merely maintaining a website that may be accessed in Texas, however, does not necessar­ily serve by itself as grounds for personal jurisdiction. 

To determine jurisdiction based solely on Internet presence, Texas courts will assess where the particular website falls along a spec­trum of interactivity. In this regard, Texas courts have identified three primary types of websites: com­mercially active, passive, and interactive.

Commercially Active Websites

At one end of the Internet jurisdiction spectrum are parties with "commercially active" websites. These websites are clearly used to transact business over the Internet. Commercially active websites incorporate e-commerce functionality, allowing parties residing outside of Texas to enter into contracts with Texas residents in transactions involving the knowing and repeated transmission of computer files over the Internet, allowing purchase orders to be placed on the website and processed automatically.

Transactions with Texans that have actually been con­summated through a web-site in sufficient quantity over a sufficiently long pe­riod of time are a factor that a Texas court may consider in determining whether the site is cornmercially active and whether the court can exercise juris­diction over the non-resident defendant. Texas courts have held that commercially active websites will by themselves support a Texas court's exer­cise of personal jurisdiction over the party operating the site.

Passive Websites

At the other end of the spec­trum are parties with purely "passive" websites. These websites merely provide in­formation to interested par­ties. They exist exclusively for basic identification pur­poses, and do not incorporate any interactive components—not even the ability to e-mail the party operating the site. Contact with Texas residents through the operation of pas­sive websites has been con­sidered incidental rather than purposeful by Texas courts. Accordingly, while there may be exceptions, passive web-sites generally tend to be in­sufficient on their own to give rise to personal jurisdiction in Texas.

Interactive Websites

In between commercially ac­tive websites and passive websites are "interactive" websites,  party operating the site. When a website does not clearly fit into either the com­mercially active category -or the passive category, Texas courts consider a number of factors in evaluating the de­gree of interactivity between the parties via the site and the effect of that interactivity on personal jurisdiction. Gener­ally, the more commercially interactive the site, the more likely it is to subject the party operating the site to personal jurisdiction in Texas.

By Michael R. Steinmark

This entry was posted in Insurance Defense. Bookmark the permalink.

Leave a Reply