U.S. District Judge Karen Gren Scholer has sent the trademark infringement dispute between the Toronto Stock Exchange and the Texas Stock Exchange to mediation after hearing arguments during a roughly two-hour hearing on a motion to dismiss Tuesday afternoon.
The Toronto Stock Exchange, or TSX, argued in its motion to dismiss that the court does not have jurisdiction to hear the case because Ontario, Canada, is both its place of incorporation and its principal place of business.
While preparing for its launch, the Texas Stock Exchange filed for a trademark covering its design and its acronym, TXSE. That filing triggered the Toronto Stock Exchange to send a cease and desist letter claiming that the design was too similar to its own and would cause confusion for its customers.
Texas Stock Exchange’s lawsuit was filed by Haynes Boone in October 2024, ahead of its launch in 2026. It claimed that the Toronto Stock Exchange is “threatened” by TXSE and had its New York lawyers send a letter demanding it change its branding under the threat of legal action.
The Texas Stock Exchange is seeking a declaration of noninfringement, a cancellation of TSX registration and a jury trial.
Before starting, Judge Scholer informed the parties that her middle son, Nathan Johnson, had, within the last few weeks, started as an associate at Greenberg Traurig, which is representing the Texas Stock Exchange in the case.
Judge Scholer told counsel she does not intend to voluntarily recuse, citing a judicial ethics opinion that held recusal is not mandatory if the family member is an associate.
“Just because you hired my son doesn’t help you,” Judge Scholer said.
Dallas-based Greenberg Traurig shareholder Bina Palnitkar assured Judge Scholer that her son has not been involved with the case.
Judge Scholer gave counsel for the Toronto Stock Exchange an opportunity to contact their client to inform them of the connection and to discuss if they wanted to seek her removal from the case.
Counsel returned from a brief break and informed the court that they would not be seeking her recusal.
Orrick, Herrington & Sutcliffe partner Sheryl Garko, who is representing the Toronto Stock Exchange, went first to argue for dismissal. She argued that sending the cease and desist letter was not enough to give Texas courts jurisdiction.
“Personal jurisdiction simply doesn’t exist,” Garko told the court.
She said that the Toronto Stock Exchange believes an appropriate venue for the case is either Delaware or New York.
Judge Scholer asked if they wanted to transfer the case. Garko said no, that her client is seeking a dismissal, but that they would not object if the court chose to transfer the case.
Palnitkar said that the Texas Stock Exchange sees the cease and desist letter as an attempt to slow them down from launching.
“[Texas Stock Exchange] means big things for the economy and residents in North Texas,” Palnitkar said.
She noted how other countries and cities use a similar acronym, like the New York Stock Exchange, being NYSE.
Judge Scholer had printed out the logos of each stock exchange and held them up for the parties to see. She asked each if there was any confusion between the two. Palnitkar said no. Garko said they believed there was confusion. Judge Scholer made a disbelieving face.
Palnitkar told Judge Scholer that the design she was holding, which is in their complaint, is just one version of the logo, while another has the “X” formatted in a way to resemble the horns of a longhorn.
“I’d like to see Toronto say that [version causes confusion],” Judge Scholer said.
Palnitkar went on to address Garko’s claim that Delaware or New York would be the proper venues for the case. She said that the outcome of the case will be felt in Texas and not Delaware or New York.
“This is a Texas-centered matter,” Palnitkar said.
On rebuttal, Garko told the court that Texas Stock Exchange could use “TEXSE” instead of “TXSE.”
“I think the merits of you arguing that is weak,” Judge Scholer told Garko.
Judge Scholer said this fight is over the difference between three letters or four letters and asked Garko if her client would be willing to withdraw the cease and desist letter. Garko said she would have to talk with her client.
Garko said there was no back and forth after the cease and desist letter was sent and that the Texas Stock Exchange filed suit after. She also said that there was no threat of legal action in the cease and desist letter.
She added that it was “simply not true” that they were trying to shut the Texas Stock Exchange down by sending the cease and desist letter.
Judge Scholer said she would take the matter under advisement but then ordered the parties to consider two options of mediators for mediation on Dec. 2.
TXSE Group is represented by Valerie Ho, David Marenberg and Scott Bornstein of Greenberg Traurig.
TSX Inc. is represented by C. Alan Carrillo and Cort Thomas of Brown Fox and Laura Najemy and Ryan Lind of Orrick, Herrington & Sutcliffe.
The case is TXSE Group Inc. v. TSX Inc., 3:24-cv-02609.