Texas House Bill 40, passed last summer and effective as of September 1, 2025, significantly expanded the jurisdiction of the Texas Business Court – the specialized courts launched in September 2024 to handle high-stakes commercial litigation.
The latest round of changes lowers the dollar threshold for several categories of commercial disputes, adds new intellectual property claims, and makes it easier for small to mid-sized Texas businesses to access the courts for qualifying cases.
For companies that rely on software, data, licensed technology, or proprietary processes – and for any business navigating a significant commercial dispute – this is a development worth understanding before the next dispute arrives.
A Quick Primer on the Texas Business Court
The Texas Business Court was created during the 88th Texas Legislature in 2023 with the passage of House Bill 19. The new business courts began accepting cases on September 1, 2024, and handle complex business disputes – generally those exceeding $5 million or $10 million in controversy, depending on the type of claim.
The business courts follow the same procedures as Texas district courts, with jury trial rights preserved, but are led by judges with extensive commercial law experience. They cover matters like derivative proceedings, securities actions, governance disputes, and violations of Texas Finance Code, but exclude personal injury, family law, foreclosure, government entity claims, and claims related to consumer transactions.
The court's structure also provides consistency in business law interpretation across Texas, as all appeals go exclusively to the Fifteenth Court of Appeals, creating uniform precedent for commercial disputes.
The broader goal is to make Texas more attractive for business by resolving commercial disputes faster and more predictably – potentially drawing more incorporations and filings to the state, much as Delaware’s Court of Chancery, established in 1792, has done.
What HB 40 Changes – and Why It Matters
Under the original framework, the court’s jurisdiction was largely limited to cases involving at least $10 million in controversy and specific categories such as corporate governance, derivative proceedings, and qualified commercial transactions.
HB 40 builds on that foundation in several important ways:
Lower Dollar Threshold: From $10 Million to $5 Million
HB 40 reduces the amount-in-controversy requirement from $10 million to $5 million for several categories of claims, including:
- Actions arising from qualified transactions (generally, any transaction, or series of related transactions, with aggregate value of at least $5 million)
- Business or commercial contracts where parties have agreed to Texas Business Court jurisdiction
- Violations of the Texas Finance Code or Texas Business and Commerce Code by organizations
- Intellectual property disputes (discussed in more detail below)
- Actions under the Texas Uniform Trade Secrets Act (TUTSA)
What this means for you: If you were pursuing a commercial dispute that fell below $10 million (in damages or lost profits, for example), it may now qualify for Texas Business Court. Ask your attorney whether the Texas Business Court’s efficiency and commercial expertise may work in your favor.
New Intellectual Property and Technology Jurisdiction
This is one of the most significant additions in HB 40. The Texas Business Court now has concurrent jurisdiction over actions arising out of or relating to the ownership, use, or licensing of intellectual property (IP), specifically including:
- Computer software and software applications
- Information technology systems
- Data and data security
- Pharmaceuticals and biotechnology products
- Bioscience technologies
- Trade secrets, as defined by TUTSA
What this means for you: Before HB 40, IP cases landed on district court dockets alongside everything else. Now, qualifying cases can be heard by judges who understand what a SaaS agreement is, or what constitutes commercially reasonable data security – a critical advantage for businesses that rely on proprietary software, licensed technology, or confidential data.
Jurisdiction over Arbitration-Related Disputes
The Texas Business Court now has concurrent jurisdiction over actions to enforce arbitration agreements, appoint arbitrators, or review arbitral awards – as long as the underlying controversy involves claims that otherwise fall within the court’s jurisdiction.
Arbitration is a common provision in Texas business contracts, requiring contract disputes to be handled out of court. But when parties disagree about whether an arbitration clause is enforceable, whether an arbitrator should be appointed, or whether an award should be confirmed or vacated, those proceedings must be litigated in court.
What this means for you: Now, disputes related to arbitration can be litigated in a dedicated court system led by judges familiar with complex commercial transactions.
Older Cases Can Now Be Transferred
Previously, only cases filed on or after September 1, 2024 were eligible for removal to the Texas Business Court. HB 40 removes that restriction. If all parties agree, cases filed before that date can now be transferred. This gives litigants flexibility to move long-running disputes into a more efficient forum, even if they were originally filed in a district court years ago.
Texas Business Court vs. District Court: Understanding the Tradeoffs
The Pros of the Texas Business Court:
Texas Business Court offers the benefit of judges who are specifically trained and experienced in handling sophisticated business disputes. Another major advantage is procedural flexibility and specialized discovery procedures that are tailored to complex business litigation, potentially reducing costs and time compared to traditional district (state) court proceedings.
The Cons:
The Texas Business Court has disadvantages as well:
- Filing fees are higher than state district courts
- Judges serve two-year appointment terms, which can create continuity challenges on long matters
- The court is only fully operational in five major metropolitan areas (Austin, Dallas, Fort Worth, Houston, San Antonio), making it an inconvenient venue for businesses in other regions
Additionally, certain business-related claims – including medical malpractice, personal injury claims, legal malpractice, insurance coverage disputes, and consumer transaction claims arising from violations of federal or state law – fall outside the Texas Business Court’s jurisdiction, regardless of the dollar amount at stake. When a case involves multiple claim types, parties may find themselves litigating in more than one court simultaneously.
Is the Texas Business Court Right for your Dispute?
HB 40 made the Texas Business Court accessible to a far broader range of Texas businesses than when the court launched in 2024. That said, just because you can access this court system does not mean you should.
Weighing the tradeoffs requires a clear-eyed look at your specific situation, your goals, and the courts available to you. The attorneys at Hendershot Cowart P.C. have experience with forum selection and jurisdictional strategy across Texas courts. Contact us to discuss whether the Business Court gives you a genuine advantage – or whether another forum may better serve your case.