Alcohol Monitoring Systems, Inc. v. Actsoft, Inc. et al. centers on allegedly infringing sales of “TattleTale” bracelets, which monitor a person’s blood alcohol level in a non-invasive manner, as one component of a “house arrest system.”1 In a thorough opinion reminiscent of Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994), Judge Brimmer denied defendant U.S. Home’s Motion to Dismiss the Complaint for lack of personal jurisdiction [Doc. No. 163]. This denial was made despite the fact that U.S. Home has never: (i) had offices in Colorado; (ii) been licensed to do business in Colorado; (iii) sold product or transacted business in Colorado; or (iv) had any officers or employees based in Colorado. In its Response, plaintiff AMS demonstrated that the same individuals who created and control co-defendant Actsoft created and control U.S. Home, that U.S. Home sells the “TattleTale” exclusively to Actsoft for sale throughout the U.S., and that Actsoft specifically targeted Colorado companies as part of its marketing campaign. In addressing the merits, Judge Brimmer found that U.S. Home only challenged personal jurisdiction under due process (and therefore waived arguments under Colorado’s long-arm statute made in its Reply). Judge Brimmer then found Colorado to be the situs for at least a portion of AMS’s alleged injury, as U.S. Home contributed to and induced Actsoft’s direct infringement, stating “because the injury from the infringing offer is felt where the patent holder loses potential business, the situs of the injury is the location where the allegedly infringing device is offered for sale.” In support of his holding, Judge Brimmer applied a three part due process inquiry, finding that: Actsoft offered to sell the accused products in Colorado; U.S. Home was fully aware of Actsoft’s business activities in Colorado; and, by appointing Actsoft as its sole distribution channel, Colorado became a target of U.S. Homes activities (satisfying the “purposefully directed” prong). Given this awareness, U.S. Home should have reasonably anticipated being hailed into Colorado on at least AMS’s indirect infringement claim. Judge Brimmer also found that: any additional burden imposed on U.S. Home by litigating in Colorado is minimal; Colorado has an interest in redressing injuries inflicted by out of state actors and discouraging injury within its borders; and, policy interests would be undermined by the inefficiencies that could attend piecemeal litigation. This holding will likely come as a serious blow to U.S. Home, particularly because AMS has conceded that Judge Brimmer’s claim construction has eliminated the possibility of finding infringement by the other defendants. Please click on the case name to view a complete copy of the decision.
Special thanks to Ian Walsworth of Sheridan Ross PC for preparing this summary.
1For context, the reader is encouraged to rent “Disturbia” (DreamWorks 2007), starring Shia LaBeouf, Carrie-Anne Moss and David Morris, where a similar home detention bracelet becomes part of the plot.