James v. j2 Cloud Servs., LLC, No. 2017-1506, 2018 U.S. App. LEXIS 10025 (Fed. Cir. Apr. 20, 2018) (Before Reyna, Taranto, and Hughes, J.) (Opinion for the court, Taranto, J.).
Gregory James alleged that he is the sole inventor of the j2 ‘638 patent, and brought an action to correct inventorship under 35 U.S.C. §256. The district court dismissed the case for lack of standing, finding Mr. James assigned his rights to the patent and lost any concrete interest sufficient for him to sue. Construing all factual disputes in favor of Mr. James, as is proper at the pleadings stage, the Federal Circuit reversed. It rejected the district court’s conclusion that Mr. James assigned his rights under a Software Development Agreement (”SDA”) or the “hired-to-invent” doctrine.
The SDA was not a clear conveyance of rights and did not encompass the patentable methods embodied in the ‘638 patent. First, the “compiled software solutions” language suggests the actual code, not underlying patentable methods. Second, the SDA language can be understood as referring only to the actual software and hardware delivered rather than to ownership rights in patentable inventions used to create such products, Third, the SDA contains an express refence to copyrights but is silent about patents. Software does not extend to the potentially patentable methods underlying the code.
The SDA did not establish an employment relationship amounting to an inference that Mr. James was hired to invent. The evidence of record did not show that the parties entered into an implied-in-fact contract to assign patent rights. There is at least a factual dispute about any implied assignment or promise to assign. The underlying agreement is between two legal entities, JFAX and GSP Software, “a partnership of professional software developers and independent contractors.” Through the SDA, JFAX engaged the partnership GSP and not Mr. James. Mr. James was not himself an “employee” of JFAX or personally hired by JFAX. Mr. James signed the SDA for GSP, but he was not personally a party to the contract. He did not assign his patent rights and thus had standing to bring the correction of inventorship action.
Where a contractual assignment of patent rights is not unequivocal the contract cannot defeat standing at the pleadings stage in a correction of inventorship action. A contract between two legal entities cannot assign the patent rights of a non-party, when the non-party signed the agreement on behalf of one of the entities and not for himself. A contract to develop and deliver software, absent express language conveying an assignment, does not imply a transfer of patent rights and does not create an implication that the developer was hired to invent.