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Revised June 9, 1999
UNITED STATES COURT OF APPEALS
for the Fifth Circuit
97-50709
ELECTROSOURCE, INC.,
Plaintiff-Appellant,
versus
HORIZON BATTERY TECHNOLOGIES, Limited,
Defendant-Appellee.
Appeal from the United States District Court
for the Western District of Texas
May 24, 1999
Before WIENER and DENNIS, Circuit Judges.*
DENNIS, Circuit Judge:
Electrosource, Inc. ("Electrosource") appeals the district
court's dismissal of its suit against Horizon Battery Technologies
Limited ("HBTL") for lack of personal jurisdiction. Concluding
that Electrosource has established a prima facie case that HBTL is
subject to in personam jurisdiction in Texas, we reverse and
*Judge John Minor Wisdom was a member of the original oral
argument panel that heard this case, but he died on May 15, 1999.
This matter is being handled by a quorum. 28 U.S.C. § 46(d).
1

remand.
FACTS AND PROCEDURAL HISTORY
Electrosource Inc., a Delaware corporation with its principal
place of business in Texas, is the owner and licensor of an
electrical storage battery known as the "Horizon Battery."
Electrosource developed its patented battery technology in Texas.
In 1993, Electrosource participated in discussions with
Metropolitan Industries, Inc. ("Metropolitan"), an Indian company,
concerning the purchase of a license permitting the manufacture and
distribution of the Horizon Battery in India and Asia. These
discussions led to the parties signing a preliminary Memorandum of
Understanding. The Memorandum of Understanding provided that
Electrosource and Metropolitan had agreed to create a joint venture
agreement in the future. Ultimately, however, the parties did not
fulfill the agreement and a joint venture was not created at that
time.
Thereafter,
licensing
discussions resumed between
Electrosource and HBTL, another Indian company apparently
affiliated with Metropolitan. HBTL was not licensed to do business
in Texas and had no offices, agents, or employees in Texas. During
this round of negotiations, six different HBTL representatives made
a series of six trips from India to Texas. Furthermore, during the
negotiations, correspondence was sent from India to Electrosource
in Texas. As before, these negotiations centered around licensing
the Horizon Battery technology that was developed in Texas.
2

The fruit of these extensive negotiations was a "Know-How
License Agreement" ("Agreement") that was signed by both
Electrosource and HBTL in Texas in 1994. The Agreement
specifically provided that confidential know-how would be provided
to HBTL at the offices of Electrosource in Texas and HBTL employees
and consultants would be trained in Texas in matters associated
with the Horizon Battery. Although the choice-of-law clause called
for Indian law to govern the agreement, the parties agreed that the
laws of Texas governed the arbitration clause of the Agreement.
Additionally, the Agreement included a provision that allowed
Electrosource to inspect HBTL's manufacturing facilities in order
to maintain uniformity and quality control for the duration of the
license.
The Agreement directed that a number of implementation
agreements had to be negotiated and executed before licensing would
take place. The Agreement also required HBTL to pay a licensing
fee and obtain a Letter of Credit to secure the fee. The parties
also expressly provided in the Agreement that unless these
conditions precedent were fulfilled within one year after its
signing, the Agreement was to have no force and effect.
Soon after the Agreement was executed, Electrosource began
preparation of the preliminary design review ("PDR") in Texas. The
items to be presented in the PDR were preliminary versions of
controlling documents, such as the Quality Assurance Plan,
Equipment Design and Procurement Plan, Construction Project
3

Management Plan and a Cost Pricing Analysis. The PDR was a
necessary predicate to the implementation agreements. In the
meantime, HBTL made several payments for various equipment and
testing devices to Electrosource at its bank in Texas. HBTL,
however, only made partial payments for the work completed in
Texas. Because HBTL did not make full payment, Electrosource did
not complete the PDR. After a year passed, Electrosource decided
that the Agreement had been terminated because HBTL had not
complied with any of the condition precedents.
HBTL responded by demanding that Electrosource either perform
the contract or pay five million dollars in damages. HBTL also
threatened to invoke the arbitration clause in the Agreement and
implied that it was the licensee of the Horizon Battery.
Electrosource filed a petition in Texas state court for a
declaratory judgment that the Agreement had no force and effect.
After the case was removed by HBTL, the district court granted
HBTL's motion to dismiss Electrosource's action for want of in
personam jurisdiction over HBTL. Electrosource appealed.
STANDARD OF REVIEW
Absent any dispute as to the relevant facts, whether in
personam jurisdiction can be exercised over a defendant is a
question of law and subject to de novo review. Ruston Gas
Turbines, Inc. v. Dondaldson Co., Inc., 9 F.3d 415, 418 (5th Cir.
4

1993).
When jurisdictional facts are disputed, all factual
conflicts are resolved in favor of the party seeking to invoke the
court's jurisdiction. Id.
IN PERSONAM JURISDICTION
To exercise personal jurisdiction over a nonresident
defendant, two requirements must be met. First, the nonresident
defendant must be amenable to service of process under a State's
long-arm statute. Jones v. Petty-Ray Geophysical, Geosource, Inc.,
954 F.2d 1061, 1067 (5th Cir. 1992). Second, the assertion of in
personam jurisdiction must be consistent with the 14th Amendment's
due process clause. Id. Because Texas' long-arm statute has been
interpreted to extend to the limits of due process, we need only
determine whether subjecting HBTL to suit in Texas would offend the
due process clause of the 14th Amendment. Schlobohm v. Schapiro,
784 S.W.2d 355, 357 (Tex. 1990).
Due process requirements are satisfied when personal
jurisdiction is asserted over a nonresident corporate defendant
that has "certain minimum contacts with [the forum] such that the
maintenance of the suit does not offend `traditional notions of
fair play and substantial justice.'" International Shoe Co. v.
Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158 (1945), quoting
Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343 (1940).
5

MINIMUM CONTACTS
The Due Process Clause protects an individual's liberty
interest in not being subject to the binding judgments of a forum
with which the individual has established no meaningful "contacts,
ties, or relations." Burger King Corp. v. Rudzewicz, 471 U.S. 462,
474, 105 S.Ct. 2174, 2183 (1985), citing International Shoe, 326
U.S. at 319, 66 S.Ct. at 159. In requiring that individuals have
"fair warning that a particular activity may subject [them] to the
jurisdiction of a foreign sovereign," Shaffer v. Heitner, 433 U.S.
186, 218, 97 S.Ct. 2569, 2587 (1977) (Stevens, J., concurring), the
Due Process Clause "gives a degree of predictability to the legal
system that allows potential defendants to structure their primary
conduct with some minimum assurance as to where that conduct will
and will not render them liable to suit." Burger King, 471 U.S. at
474, 105 S.Ct. at 2183, citing World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567 (1980).
Where a forum seeks to assert specific jurisdiction over a
nonresident defendant who has not consented to suit there, this
"fair warning" requirement is satisfied if the defendant has
"purposefully directed" his activities at residents of the forum,
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct.
1473, 1478 (1984), and the litigation results from alleged injuries
that "arise out of or relate to" those activities. Burger King,
471 U.S. at 472, 105 S.Ct. at 2182.
6

In determining when a potential defendant should "reasonably
anticipate" out-of-state litigation, the court frequently has drawn
from the reasoning of Hanson v. Denckla, 357 U.S. 235, 253, 78
S.Ct. 1228, 1239-40 (1958):
The unilateral activity of those who claim some
relationship with a nonresident defendant cannot satisfy
the requirement of contact with the forum State. The
application of that rule will vary with the quality and
nature of the defendant's activity, but it is essential
in each case that there be some act by which the
defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus
invoking the benefits and protections of its laws.
Id., citing International Shoe, 325 U.S. at 319, 66 S.Ct. at 159.
(Emphasis added).
The Supreme Court stated that this purposeful availment
element "ensures that a defendant will not be haled into a
jurisdiction solely as a result of `random,' `fortuitous,' or
`attenuated' contacts, or of the `unilateral activity of another
party or a third person.'" Burger King, 471 U.S. at 475, 105 S.Ct.
at 2183. The contacts with the forum State must be such that it is
foreseeable that the defendant "should reasonably anticipate being
haled into court there." World-Wide Volkswagen, 444 U.S. at 297,
100 S.Ct. at 567.
7

A contract with an out-of-state party alone, although
relevant, does not automatically establish sufficient minimum
contacts. Burger King, 471 U.S. at 478, 105 S.Ct. at 2185. A
"highly realistic" approach is called for, recognizing that a
contract is ordinarily but an intermediate step serving to tie up
prior negotiations and future consequences which themselves are the
real object of the business transaction. Id. The factors of prior
negotiations and contemplated future consequences, along with the
terms of the contract and the parties' actual course of dealing
must be evaluated in determining whether the defendant purposefully
established minimum contacts within the forum. Id.
As in the franchise transaction in Burger King, the actual
course of dealing between Electrosource and HBTL involved wide
reaching contacts and contemplated future consequences within the
forum state. HBTL was attempting to acquire technology from
Electrosource in Texas for the establishment of manufacturing
centers in India. As an essential part of the Agreement
Electrosource contracted to train HBTL employees, aid in designing
HBTL's manufacturing facilities, provide technical support and
regulate quality control of HBTL's products. Electrosource and
HBTL planned to participate in each of these functions either
wholly or in substantial part in Texas.
HBTL sent several employees and documentation to Texas during
the extensive negotiations of the Agreement. At least six
different representatives of HBTL made a series of six trips to
8

Texas from India for negotiations and planning. HBTL employees
came to Texas and joined Electrosource in the laborious process of
creating and compiling the PDR. Furthermore, the parties
contemplated that the PDR would be fully completed in Texas, and
HBTL took significant action toward this end in Texas before the
Agreement was terminated. Therefore, we conclude that through the
negotiations, consummation, and partial performance of the
Agreement with Electrosource, HBTL purposefully availed itself of
the privilege of conducting activities within Texas invoking the
benefits and protections of its laws. Hanson, 357 U.S. at 253, 78
S.Ct. at 1239-40 (1958). As a result of its actions related to the
Agreement, HBTL engaged in such "continuing and wide-reaching
contacts" with Electrosource in Texas, and committed itself to such
future contacts in the forum, that it should reasonably have
anticipated being haled into court there. Burger King, 471 U.S. at
480, 105 S.Ct. at 2186.
In dismissing the claim against HBTL for lack of personal
jurisdiction, the district court relied heavily upon this Court's
decisions in Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700
F.2d 1026 (5th Cir. 1983) and Jones v. Petty-Ray Geophysical,
Geosource, Inc., 954 F.2d 1061 (5th Cir. 1992). In citing these
cases, the district court emphasized two factors in finding a lack
of personal jurisdiction: (1) the choice-of-law clause provided
that Indian law governed the Agreement and (2) the expected place
of manufacture of the batteries by HBTL was in India. These
9

decisions rested on facts dissimilar to those of the present case,
however, and do not govern our conclusions here.
In Hydrokinetics, an Alaskan corporation, Alaska Mechanical,
purchased equipment from a Texas corporation. In negotiations for
the purchase, some of the employees of Alaska Mechanical came to
Texas and visited the plant to inspect the equipment. The
contract, which was a purchase order, stated that Alaskan law would
apply. Upon attempted delivery of the equipment in Alaska, Alaska
Mechanical rejected it as unsuitable. The Texas corporation sued
Alaska Mechanical in Texas for breach of the purchase agreement.
This court stated that it was "significant that only a single
transaction is involved in this case, governed by Alaska law, which
is [Alaska Mechanical's] sole contact with the state." Id. at
1029. Furthermore, we stated that "no performance by Alaska
Mechanical was to take place in Texas, other than perhaps the
payment for the goods." Id.
The district court in the present case cited Hydrokinetics in
placing decisive weight on the requirement of the choice-of-law
clause that Indian law would govern. But, the Supreme Court has
indicated that a choice-of-law provision should neither be ignored
nor considered sufficient alone to confer jurisdiction. Burger
King, 471 U.S. at 482, 105 S.Ct. at 2187. Thus, the choice-of-law
clause is one factor among others that may determine whether the
forum State has jurisdiction over a nonresident defendant.
Accordingly, in Hydrokinetics, this Court took into consideration
10

not only the choice-of-law clause, but also the fact that the
contract at issue was simply a sale of a product, and that all
foreseeable contacts were to cease after delivery, in finding that
Alaskan Mechanical did not have minimum contacts with Texas.
In the present case, although the Agreement contained a
choice-of-Indian-law clause, the multitude of contacts between HBTL
and Texas substantially outweighs the law choice factor. The
Agreement calls for an acquisition of knowledge, skill and
technology that envisions "continuing and wide-reaching contacts"
by HBTL with Electrosource in Texas. Burger King, 471 U.S. at 480,
105 S.Ct. at 2186. The parties contemplated Electrosource's
training of HBTL personnel in Texas, Electrosource's providing
assistance and advice in design of manufacturing facilities to HBTL
in Texas, and Electrosource's monitoring of HBTL's product
uniformity and quality control through activities in both Texas and
India. Furthermore, even though the Agreement provided that Indian
law would govern generally, the parties stipulated that Texas law
was to apply to disputes settled by arbitration. Thus, HBTL
purposefully invoked the benefits of Texas' laws in many respects.
Burger King, 471 U.S. at 482, 105 S.Ct. at 2187.
In Petty-Ray Geophysical, the plaintiff brought a wrongful
death action in Texas against Petty-Ray Geophysical, Geosource,
Inc. ("Geosource"), an international corporation with an office in
Texas. The plaintiff alleged that her husband had been killed
while he was employed by Geosource in the Democratic Republic of
11

Sudan. Geosource attempted to implead a French corporation, Total
Exploration, as a third-party defendant. The district court held
that it did not have personal jurisdiction over Total Exploration
and dismissed the third-party claim. We affirmed. Petty-Ray
Geophysical, 954 F.2d at 1070.
The present case is distinguishable from Petty-Ray Geophysical
because in that case Total Exploration, the French third-party
defendant, had only attenuated contacts with Texas. In Petty-Ray
Geophysical we stated that:
With regard to performance under the contract between
Total Exploration and Geosource, the only Texas activity
that Plaintiff has shown is unilateral activity by
Geosource. ... Total Exploration negotiated with
Geosource's United Kingdom office for exploration work in
the Sudan, and the fact that Geosource has a Houston
office is nothing more than a mere fortuity.
Id., 954 F.2d at 1068-69.
On the other hand, HBTL purposefully initiated multiple
continuing contacts with Electrosource in Texas for the purpose of
acquiring the know how and the franchise to make the Horizon
batteries in India. The contacts that accompanied the Agreement
between HBTL and Texas cannot "be viewed as `random,' `fortuitous,'
or `attenuated.'" Burger King, 471 U.S. at 480, 105 S.Ct. at 2186.
HBTL sought out Electrosource for a particular technology that had
12

been developed in Texas, negotiated for its acquisition in Texas,
entered into an agreement for the transfer of technology in Texas,
and began the process of training, designing, and preparation in
Texas necessary to the transfer of the technology. These contacts
display that HBTL purposefully availed itself of the privilege of
conducting activities within Texas, thus invoking the benefits and
protections of its laws. Burger King, 471 U.S. at 475, 105 S.Ct.
at 2183. HBTL's purposeful, multiple and continuing contacts with
Electrosource in Texas cannot be ignored simply because HBTL's
unsuccessful plan was to use Electrosource's Texas technology to
make Horizon batteries in India.
Moreover, the district court's reliance on language in Petty-
Ray Geophysical for the proposition that the place of the
performance of a contract is automatically determinative of whether
or not a forum has jurisdiction over a non-resident defendant was
misguided. The Supreme Court long ago rejected the notion that
personal jurisdiction might turn on "mechanical" tests or on
"conceptualistic ... theories of the place of contracting or of
performance." Burger King, 471 U.S. at 478, 105 S.Ct. at 2185,
citing Hoopeston Channing Co. v. Cullen, 318 U.S. 313, 316, 63
S.Ct. 602, 605 (1943).
FAIRNESS
After concluding that HBTL had sufficient contacts with
13

Electrosource in Texas to warrant in personam jurisdiction, we must
now decide if it is fair to force HBTL to litigate in Texas. The
imposition of jurisdiction cannot offend "traditional notions of
fair play and substantial justice." International Shoe, 326 U.S.
at 316, 66 S.Ct. at 158.
The factors we consider in the fairness analysis are:
[(1) t]he burden upon the nonresident defendant; (2) the
interests of the forum state; (3) the plaintiff's
interest in securing relief; (4) "the interstate judicial
system's interest in obtaining the most efficient
resolution of controversies"; and (5) "the shared
interest of the several States in furthering fundamental
substantive social policies."
Wilson v. Belin, 20 F.3d 644, 647, n.3 (5th Cir.), cert. denied,
513 U.S. 930, 115 S.Ct. 322 (1994).
The burden on HBTL of litigating in Texas may be considerable.
However, HBTL voluntarily came to Texas, negotiated, entered the
Agreement and began to participate in the performance of the
contract in Texas. Additionally, HBTL made payments to Texas
banks, and HBTL's representatives also visited Texas and joined
Electrosource in performing work on the PDR.
Undoubtedly, the most efficient forum for the resolution of
this conflict would be Texas. Even though Indian law will be used
in interpreting the Agreement, the vast majority of the witnesses
14

will be found in Texas, the partial preparation for and termination
of the PDR occurred in Texas, HBTL employees were trained in Texas,
partial payments to Electrosource were made through a Texas bank,
and other evidence concerning the alleged breach is located in
Texas. Indeed, HBTL may suffer an inconvenience in defending a
suit in Texas, but not a burden that amounts to a denial of due
process. See McGee v. International Life Insurance Co., 355 U.S.
220, 224, 78 S.Ct. 199, 201 (1957).
CONCLUSION
For the reasons assigned, we conclude that Electrosource has
made a prima facie case that HBTL is subject to in personam
jurisdiction in Texas. Therefore, the order entered by the
district court granting HBTL's motion to dismiss for lack of in
personam jurisdiction is reversed and the case is remanded for
proceedings consistent with this opinion.
REVERSED and REMANDED.
15