Reported / Citable
Background
Innovapptive Inc., a Delaware corporation based in Houston, Texas, develops workforce management software sold under the INNOAPTIVE trademark. Innovapte Corporation, a Canadian corporation headquartered in Ontario, sells similar software products. Both companies advertise their products on the SAP Store, and Innovapptive alleged that Innovapte’s use of the name “INNOVAPTE” constituted trademark infringement and unfair competition.
Innovapptive sued under the Lanham Act and Texas common law. Innovapte moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. While Innovapte Canada had a U.S. affiliate (Innovapte USA) with a shared website, U.S. phone number, and listed U.S. address, Innovapte Canada and Innovapte USA had never conducted any business in the United States, made no sales using the disputed mark, and generated no revenue from U.S. operations.
The Court’s Holding
The court granted Innovapte’s motion to dismiss without prejudice, finding it lacked personal jurisdiction under Rule 4(k)(2). Although the trademark infringement claim arose under federal law and Innovapte was subject to jurisdiction nowhere in the United States—satisfying two Rule 4(k)(2) requirements—the defendant lacked sufficient contacts with the United States as a whole. The court applied binding Fifth Circuit precedent from Quick Technologies, Inc. v. Sage Grp. PLC, 313 F.3d 338 (5th Cir. 2002), which held that a foreign corporation’s contacts must involve actual business or sales in the United States to establish jurisdiction in trademark cases.
The court rejected Innovapptive’s arguments that Innovapte’s U.S. website presence, social media posts listing a U.S. address and phone number, Fourth of July patriotic content, trade show sponsorship, and use of U.S.-based platforms (LinkedIn, Twitter/X, GoDaddy) created sufficient contacts. Trademark infringement requires “use of the mark in commerce,” and Innovapte had not used its mark to conduct any business or make any sales in the United States. The court declined to attribute Innovapte USA’s contacts to Innovapte Canada and noted that even if it did, the subsidiary had conducted no business in the U.S.
Key Takeaways
- Foreign defendants must actually conduct business or make sales in the United States using the allegedly infringing mark to establish personal jurisdiction in trademark cases under Rule 4(k)(2).
- Passive U.S. presence—including U.S.-targeted websites, social media, listed U.S. addresses and phone numbers, and even trade show attendance—is insufficient for jurisdiction without commercial activity.
- Trademark infringement claims are distinct from copyright or patent claims for jurisdictional purposes because trademark infringement requires use in commerce; passive advertising alone cannot form the basis for a valid infringement claim.
- Courts will not pierce the corporate veil between a foreign parent corporation and its U.S. subsidiary to establish jurisdiction unless the plaintiff explicitly seeks to do so.
Why It Matters
This decision reinforces a significant limitation on the reach of U.S. trademark law against foreign competitors. Despite Innovapte’s apparent effort to build a U.S. presence through digital marketing and infrastructure, the company’s lack of actual commercial activity in the United States placed it beyond the jurisdiction of the Texas federal courts. For trademark owners, this means that foreign competitors cannot be sued in U.S. courts merely for attempting to enter the U.S. market or maintaining U.S.-facing online presence—they must actually be doing business in the United States using the disputed mark.
The decision also illustrates the distinction between different intellectual property regimes for jurisdictional purposes. While copyright and patent claims can sometimes proceed based on U.S. internet presence alone, trademark claims require the higher threshold of commercial use in the United States. This creates asymmetry in how U.S. courts police different forms of IP infringement by foreign actors, potentially leaving some trademark owners without a domestic remedy against foreign competitors engaged in online advertising to U.S. consumers.