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James v. J2 Cloud Services, LLC

United States Court of Appeals, Federal Circuit

April 20, 2018

GREGORY C. JAMES, Plaintiff-Appellant
v.
J2 CLOUD SERVICES, LLC, ADVANCED MESSAGING TECHNOLOGIES, INC., Defendants-Appellees

          Appeal from the United States District Court for the Central District of California in No. 2:16-cv-05769-CAS-PJW, Judge Christina A. Snyder.

          Keith Vogt, Oak Park, IL, argued for plaintiff-appellant. Also represented by Daniel Charles Cotman, Obi Iloputaife, Cotman IP Law Group, PLC, Pasadena, CA.

          Guy Ruttenberg, Ruttenberg IP Law, PC, Los Angeles, CA, argued for defendants-appellees. Also represented by Bassil George Madanat.

          Before Reyna, Taranto, and Hughes, Circuit Judges.

          TARANTO, CIRCUIT JUDGE.

         In this action against j2 Cloud Services, LLC and Advanced Messaging Technologies, Inc. (AMT), Gregory James asserts a claim for correction of inventorship under 35 U.S.C. § 256, as well as various state-law claims. The district court dismissed the correction-of-inventorship claim for lack of jurisdiction and, consequently, dismissed the state-law claims. We reverse the jurisdictional dismissal and remand for further proceedings.

         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.

         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." Id. The SDA (which states that it is governed by Delaware law) does not mention patent rights, whereas it expressly requires the assignment to JFAX of "all copyright interests" in the developed "code and compiled software." J.A. 55.

         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 35 U.S.C. § 256, along with state-law claims for unjust enrichment, conversion, misappropriation, and unfair competition. In October 2016, j2 and AMT filed a motion requesting, among other things, that the case be dismissed on the ground that the court lacks jurisdiction because Mr. James has no Article III standing to bring the action.[2]

         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, 2016 WL 9450470, at *5 (C.D. Cal. Dec. 19, ...


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