Federal Circuit Summary

Before Reyna, Taranto, and Hughes. Appeal from the United States District Court for the Central District of California

Summary: An individual claiming sole inventorship of a patent has standing under 35 U.S.C. § 256 to establish ownership of the patent, unless he has entered into a contract in which he assigns, or promises to assign, the rights to the patent, or he was “hired-to-invent” such that his employer is entitled to claim his inventive work.

JFAX Communications contracted GSP Software to “develop software solutions for the exclusive use of JFAX.” The contract provided that “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.” James, a GSP partner, developed and deployed the software. JFAX later obtained a patent directed at components of that software and named JFAX’s owners as inventors. James sued the current assignee, J2, for correction of inventorship under 35 U.S.C. § 256. J2 filed a motion to dismiss under F.R.C.P. 12(b)(1), alleging that James lacked Article III standing to bring the action. The district court granted the motion, finding that James had assigned, or was obligated to assign, his patent rights under the contract and the “hired-to-invent” doctrine.

The Federal Circuit reversed. With regard to the contract, the court found the contract language amenable to the construction that it does not assign, or promise to assign, patent rights that would otherwise accrue to James. In particular, the exclusive use provision is not itself a conveyance of any rights and can be read to encompass only the specific code provided to JFAX, not the underlying patentable methods. Furthermore, the court found that the provision granting JFAX sole ownership of “all code and compiled software” and assigning the copyright interests, but no patent interests, in such code supported the interpretation that no patentable methods or systems were assigned.

Additionally, the Federal Circuit found that the “hired-to-invent” doctrine did not apply in this case—its applicability depends on whether, based on the employer-employee relationship, the court can determine that the parties entered into an implied-in-fact contract to assign patent rights. Here, the underlying agreement was between GSP, a partnership, and JFAX, not between James and JFAX. Thus, James was not himself an employee of JFAX and no employment relationship was created within the contract that would support a “hired-to-invent” inference in this case.

This case is: GREGORY C. JAMES V. J2 CLOUD SERVICES

Written by: Baraa Kahf and Bryan J. Johnson

Edited by: Paul Stewart