Software Development Agreement Not a Clear Conveyance of Patent Rights

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.

Take Away

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.

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The Author

Joseph Robinson

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

Joseph Robinson

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

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