Wellogix, Inc. v. SAP America, Inc.
2014 U.S. Dist. LEXIS 158434
| S.D. Tex. | 2014Background
- Wellogix developed specialized "Purchase-to-Pay" software for oil & gas and entered a Powered by SAP NetWeaver Cooperation Agreement (NetWeaver Agreement) with SAP in March 2005 to integrate its technology via SAP’s NetWeaver middleware.
- Wellogix alleges SAP (and Accenture/BP) accessed Wellogix confidential materials uploaded to a portal during joint pitches and used those trade secrets to develop complex services functionality for customers.
- In 2008 Wellogix sued SAP (and others); Judge Ellison dismissed Wellogix’s trade-secrets claims against SAP under a mandatory forum-selection clause in the NetWeaver Agreement specifying Frankfurt, Germany.
- In 2010 SAP filed a declaratory judgment action in federal court seeking noninfringement/invalidity of Wellogix patents; later Wellogix amended counterclaims to add trade-secrets claims, which were severed into a new case (H-14-741).
- SAP moved for summary judgment seeking dismissal of Wellogix’s trade-secrets claims based on (1) claim/issue preclusion and (2) enforcement of the NetWeaver forum-selection clause (forum non conveniens). The court addressed preclusion and forum clause enforcement and granted summary judgment for SAP.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SAP waived the right to enforce the NetWeaver forum-selection clause by filing the declaratory action in Texas | SAP’s suit in Texas waived the forum clause; filing in this forum consented to adjudicate related claims here | No waiver: SAP did not intend to relinquish clause rights and did not substantially invoke process to Wellogix’s detriment | No waiver. Court finds no intentional relinquishment and no prejudice; SAP retained right to enforce clause |
| Whether the NetWeaver forum-selection clause covers Wellogix’s trade-secrets claims | Trade-secrets claims are independent and not within the clause’s scope | Clause covers disputes "arising out of or in connection with" the Agreement, including trade-secrets tied to the Agreement | Clause covers the trade-secrets claims; their resolution depends on the Agreement’s construction |
| Whether the clause is mandatory and applies to SAP America as well as SAP AG | Wellogix disputes application to SAP America | Clause is mandatory (as previously held) and applies to both SAP AG and SAP America | Clause deemed mandatory and applicable to both defendants (preclusive effect given to prior ruling) |
| Whether enforcement of the forum-selection clause is unreasonable or forum non conveniens dismissal is unwarranted | Enforceability would be unfair; public-interest factors favor Texas | Clause is enforceable (Bremen/Atlantic Marine standards); Germany is available and adequate; public-interest factors do not overwhelmingly disfavor dismissal | Clause enforceable; under Atlantic Marine balancing public-interest factors do not defeat dismissal; case dismissed for forum non conveniens (to Germany) |
Key Cases Cited
- Atlantic Marine Constr. Co. v. U.S. Dist. Court, 134 S. Ct. 568 (2013) (forum-selection clauses control except in unusual cases; plaintiff’s choice of forum merits no weight)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses prima facie valid; resisting party bears heavy burden to show unreasonableness)
- Allen v. McCurry, 449 U.S. 90 (1980) (collateral estoppel precludes relitigation of issues necessary to prior judgment)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) (forum non conveniens analysis requires alternative forum that is available and adequate)
- Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999) (broad forum clauses reach disputes having a significant relationship to the contract)
- Braspetro Oil Servs. Co. v. Modec (USA), Inc., [citation="240 F. App'x 612"] (5th Cir. 2007) (scope-of-forum-clause analysis looks to contract language and causal connection)
- Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d 600 (7th Cir. 1994) (claims that arguably depend on contract construction fall within clause scope)
- In re ADM Investor Servs., Inc., 304 S.W.3d 371 (Tex. 2010) (Texas test for waiver of forum-selection clauses requires substantial invocation of the judicial process to the other party's prejudice)