James v. J2 Cloud Services, LLC
Opinion
In this action against j2 Cloud Services, LLC and Advanced Messaging Technologies, Inc. (AMT), Gregory James asserts a claim for correction of inventorship under
I
Mr. James alleges in his complaint that he is the sole inventor of the subject matter claimed in U.S. Patent 6,208,638, which names Jack Rieley and Jaye Muller as the inventors. The '638 patent, which Messrs. Rieley and Muller applied for on April 1, 1997, describes and claims systems and methods "for accepting an incoming message over a circuit switched network and transmitting it over a packet switched network." '638 patent, Abstract. More particularly, the patent describes the conversion of an incoming facsimile or voicemail message into a digital representation, which is then forwarded to an email address associated with the account holder's phone number. Id ., col. 3, lines 47-61, col. 5, line 66 through col. 6, line 54. The application that issued as the '638 patent was originally assigned to JFAX Communications, Inc., the company owned by Messrs. Rieley and Muller at the time of the invention. At present, the '638 patent is assigned to AMT, and j2 has an exclusive license to it. The patent expired on April 1, 2017.
Mr. James alleges that in November 1995 he was introduced to JFAX's Mr. Rieley, who asked Mr. James to develop software that would provide JFAX with three functionalities-"Fax-to-Email, Email-to-Fax, and Voicemail-to-Email." J.A. 37. At that time, Mr. James alleges, he agreed to "create and develop original software solutions and systems" and began working, and "[n]obody at JFAX provided input about how" the work was to be done. Id . According to the complaint, Mr. James successfully tested a Fax-to-Email system on December 25, 1995, and the next month he traveled to New York to install it. J.A. 38.
*1371
On February 11, 1996, Mr. James and Mr. Rieley, as representatives, signed a contract between their principals detailing the work to be done. J.A. 53-57. The agreement was between JFAX, for which Mr. Rieley signed, and GSP Software, "a partnership of professional software developers and independent contractors," for which Mr. James signed. J.A. 53, 57. The parties and the district court refer to this contract as the "Software Development Agreement" (SDA)-whose preamble states that it reflects the parties' "Agreement on the terms by which" GSP "will develop software solutions for the exclusive use of JFAX."
According to the complaint, from February to August 1996, Mr. James, while in New York, developed and deployed all three JFAX systems, which included software and hardware components covered by the '638 patent. 1 J.A. 38-42. "The technical aspects of the code, functionality and operation of the system[s] were all conceived and implemented by [Mr.] James," he contends, and the only input provided by JFAX "was that JFAX needed a system." J.A. 37, 40-41.
Mr. James alleges that on August 30, 1996, he assigned all copyrights in code and compiled software to JFAX, but he "did not assign any patent ownership or inventorship rights." J.A. 42. He adds that he was not aware of the '638 patent until "November 2013 when he was contacted by attorneys representing one of the defendants" in a suit brought by JFAX (or perhaps a successor) alleging infringement of the '638 patent. J.A. 43.
On August 3, 2016, Mr. James brought the present action. The operative (first amended) complaint asserts a claim for correction of inventorship under
On December 19, 2016, the district court agreed with the Article III standing argument and granted the motion under Rule 12(b)(1) of the Federal Rules of Civil Procedure. It concluded that Mr. James lacks a stake in the controversy because he "fail[ed] to allege facts sufficient to show that he has an ownership or financial interest in the '638 patent."
James v. j2 Cloud Servs. Inc
., No. 2:16-cv-05769,
Mr. James timely appealed. We have jurisdiction under
II
We review without deference the ruling before us: the district court's
*1372
Rule 12(b)(1) dismissal for lack of standing.
See
Chou v. Univ. of Chicago
,
The district court stated the standard it was applying: "When deciding a Rule 12(b)(1) motion, the court construes all factual disputes in favor of the non-moving party."
James
,
A
To have Article III standing, the "plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision."
Spokeo
,
In this case, Mr. James alleges that he is the sole inventor of the inventions claimed in the '638 patent, that sole inventorship entails sole ownership, and that
The district court did not conclude otherwise. Nor did it depart from the longstanding "basic principle, codified in the Patent Act, that an inventor owns the
*1373
rights to his invention."
Bd. of Trustees of Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc.
,
According to the district court, the facts indisputably show Mr. James to have done just that- i.e. , to have assigned away, or entered into an enforceable agreement to assign away, any ownership rights he may have had in the patent. The correctness of that ruling is the sole issue before us. If the district court was right, then Mr. James lacks standing for want of any concrete interest in securing recognition as the sole inventor of the patent. 3
The district court held specifically that, even if Mr. James was an inventor (even the sole inventor), he had assigned, or obligated himself to assign, his patent rights to JFAX.
James
,
B
The district court concluded that "the SDA necessarily precludes plaintiff from retaining ownership of the patent rights."
James
,
The Patent Act provides that patents and patent applications are "assignable in law by an instrument in writing."
The SDA is amenable to the construction that it does not assign, or promise to assign, patent rights that would otherwise accrue to Mr. James as an inventor. The district court relied in its ultimate analysis on the SDA's preamble, which states that the contract set the terms on which GSP "will develop software solutions for the exclusive use of JFAX Communications." J.A. 53;
see
James
,
The key SDA Section 3 is open to the same interpretation. It provides: "JFAX shall become the sole owner of all code and compiled software solutions as described in this Agreement as soon as it is developed, and GSP shall assign to JFAX all copyright interests in such code and compiled software." J.A. 55. It refers to "code,"
i.e.
, sets of instructions, and "compiled software solutions,"
i.e.
, the machine-readable ("compiled") translation of the source code that was written in a computer language.
See
,
e.g.
,
Blueport Co., LLC v. United States
,
The same conclusion applies to SDA Section 2, which provides: "You agree to develop original software solutions, write original software routines, carry out testing and otherwise provide technological solutions for the JFAX system, and be responsible for the creation, execution and delivery to JFAX of a series of aspects of those solutions." J.A. 54. That language can be understood as referring only to the actual software and hardware delivered to JFAX, not to ownership rights in any patentable methods or systems invented in creating such products.
Further support for Mr. James's view of the SDA is found in the SDA's express reference to copyrights and complete silence about patents. As already noted, SDA Section 3, after stating that JFAX will become the owner of "all code and compiled software solutions," adds that "GSP shall assign to JFAX all copyright interests in such code and compiled software." Copyright extends only to the expression in source code or its compiled version,
i.e.
, object code, not to the underlying (potentially patentable) methods.
See
,
e.g.
,
Oracle America, Inc. v. Google Inc.
,
We have discussed SDA provisions that either the district court addressed or about which the parties have made substantial arguments concerning the SDA's express contract terms. On that basis, we conclude that the SDA can, and therefore at the present stage of this case must, be construed in Mr. James's favor. So construed, the SDA does not deprive Mr. James of constitutional standing.
C
The district court's second basis for its decision, which is related to the first, likewise does not support the Rule 12(b)(1) dismissal for lack of standing. The court invoked the "hired to invent" doctrine of
United States v. Dubilier Condenser Corp.
,
Because this "hired-to-invent" rule is "firmly grounded in the principles of contract law,"
Banks v. Unisys Corp.
,
Whether the doctrine is viewed as a matter of federal law or a matter of the state law of implied-in-fact contracts, its applicability in a given case depends on the terms of the contractual relationship of the parties.
See
Dubilier
,
This case involves a distinctive fact not present in the authorities j2 and AMT cite in support of their hired-to-invent argument. Specifically, we have been directed to no decision applying the hired-to-invent principle where the underlying agreement for engagement of services was between two artificial legal entities and to which the *1376 inventor was not personally a party. Here, it was the partnership GSP, not alleged inventor Mr. James, that was engaged by JFAX through the SDA. As the case is presented to us, although the operative complaint does not carefully attend to the distinction between Mr. James and GSP, it appears from the SDA, on which j2 and AMT rely, that Mr. James was not himself an "employee" of JFAX or personally hired by JFAX.
Regardless, the SDA does not support a hired-to-invent inference so as to deny standing here. j2 and AMT rely on the terms of the SDA to argue that GSP was engaged, and thus Mr. James was hired, to invent, creating an implied contract to assign resulting inventions. The problem with this argument is essentially the same as the problem we have already identified as defeating the SDA-contract argument for Rule 12(b)(1) dismissal. Based on the provisions and arguments presented to us, the SDA is readily capable of being read
not
to assign or to promise to assign the patent rights at issue. Because the SDA largely or even wholly defines the terms of JFAX's alleged "hiring" of Mr. James (actually of GSP), there is at least a factual dispute about any implied assignment or promise to assign. And that conclusion, though sufficient on its own case-specific terms, may be further supported by cases recognizing a general legal principle that tightly limits the finding of an implied-in-fact contract where an express contract governs the parties' relationship.
See
Atlas Corp. v. United States
,
III
For the foregoing reasons, we reverse the district court's order dismissing Mr. James's claims for lack of jurisdiction. We remand the case for further proceedings.
Costs awarded to appellant.
REVERSED AND REMANDED
Mr. James alleges that the initial development of the Fax-to-Email system occurred in November and December 1995 while he was in Australia. The system was completed soon afterward in New York.
By the time the motion was filed, the only defendants left in the case were j2 and AMT. An additional j2 entity, also named as a defendant, was dismissed before the motion was filed. In addition to the standing-based jurisdictional argument, the motion advanced at least seven additional arguments for either dismissal or summary judgment.
We have recognized that, in some circumstances, interests other than ownership may support Article III standing.
See
Shukh v. Seagate Tech., LLC
,
Reference
- Full Case Name
- Gregory C. JAMES, Plaintiff-Appellant, v. J2 CLOUD SERVICES, LLC, Advanced Messaging Technologies, Inc., Defendants-Appellees.
- Cited By
- 19 cases
- Status
- Published