Gregory C. James v. J2 Cloud Services, LLC, Advanced Messaging Technologies, Inc.

United States Court of Appeals
for the Federal Circuit
______________________
GREGORY C. JAMES,
Plaintiff-Appellant
v.
J2 CLOUD SERVICES, LLC, ADVANCED
MESSAGING TECHNOLOGIES, INC.,
Defendants-Appellees
______________________
2017-1506
______________________
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.
______________________
Decided: April 20, 2018
______________________
K EITH VOGT , Oak Park, IL, argued for plaintiff-
appellant. Also represented by D ANIEL CHARLES COTMAN,
O BI I LOPUTAIFE, Cotman IP Law Group, PLC, Pasadena,
CA.
G UY RUTTENBERG, Ruttenberg IP Law, PC, Los Ange-
les, CA, argued for defendants-appellees. Also represent-
ed by BASSIL G EORGE MADANAT .
______________________
Before REYNA, T ARANTO, and HUGHES , Circuit Judges.

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JAMES v. J 2 CLOUD SERVICES, LLC 2
T ARANTO, Circuit Judge.
In this action against j2 Cloud Services, LLC and Ad-
vanced 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 dis-
missal 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 num-
ber. 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 in-
troduced 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

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JAMES v. J 2 CLOUD SERVICES, LLC 3
at JFAX provided input about how” the work was to be
done. Id. According to the complaint, Mr. James success-
fully 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 princi-
pals 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 De-
velopment Agreement” (SDA)—whose preamble states
that it reflects the parties’ “Agreement on the terms by
which” GSP “will develop software solutions for the exclu-
sive 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, functional-
ity 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 sys-
tem.” J.A. 37, 40–41.
1 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.

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JAMES v. J 2 CLOUD SERVICES, LLC 4
Mr. James alleges that on August 30, 1996, he as-
signed 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 de-
fendants” in a suit brought by JFAX (or perhaps a succes-
sor) 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, con-
version, 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 Proce-
dure. 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, 2016).
Accordingly, the court also dismissed the state-law claims.
Id. The dismissal was entered on December 22, 2016.
2 By the time the motion was filed, the only defend-
ants 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 sum-
mary judgment.

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JAMES v. J 2 CLOUD SERVICES, LLC 5
Mr. James timely appealed. We have jurisdiction un-
der 28 U.S.C. § 1295(a)(1).
II
We review without deference the ruling before us: the
district court’s Rule 12(b)(1) dismissal for lack of stand-
ing. See Chou v. Univ. of Chicago, 254 F.3d 1347, 1357
(Fed. Cir. 2001); Cedars-Sinai Medical Ctr. v. Watkins, 11
F.3d 1573, 1580 (Fed. Cir. 1993) (citing Love v. United
States, 915 F.2d 1242, 1245 (9th Cir. 1989)).
The district court stated the standard it was applying:
“When deciding a Rule 12(b)(1) motion, the court con-
strues all factual disputes in favor of the non-moving
party.” James, 2016 WL 9450470, at *3 (citing Dreier v.
United States, 106 F.3d 844, 847 (9th Cir. 1996)). We
apply the same standard. “[A]t the pleading stage, the
plaintiff must clearly . . . allege facts demonstrating each
element” required for standing, Spokeo, Inc. v. Robins,
136 S. Ct. 1540, 1547 (2016), as revised (May 24, 2016)
(internal quotation marks omitted), but “general factual
allegations of injury resulting from the defendant’s con-
duct may suffice, for on a motion to dismiss we presume
that general allegations embrace those specific facts that
are necessary to support the claim,” Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560 (1992) (internal quotation
marks and alterations omitted). “For purposes of ruling
on a motion to dismiss for want of standing, both the trial
and reviewing courts must accept as true all material
allegations of the complaint, and must construe the
complaint in favor of the complaining party.” Warth v.
Seldin, 422 U.S. 490, 501 (1975); see Ritchie v. Simpson,
170 F.3d 1092, 1097 (Fed. Cir. 1999).
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

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JAMES v. J 2 CLOUD SERVICES, LLC 6
likely to be redressed by a favorable judicial decision.”
Spokeo, 136 S. Ct. at 1547 (citing Defenders of Wildlife,
504 U.S. at 560–61); see Chou, 254 F.3d at 1357. “The
benefit of the suit to the plaintiff must relate to the al-
leged injury.” Huster v. j2 Cloud Servs., Inc., 682 F. App’x
910, 914 (Fed. Cir. 2017) (citing Vermont Agency of Natu-
ral Resources v. United States ex rel. Stevens, 529 U.S.
765, 772–73 (2000)). In conducting the standing analysis,
we “assume[] the merits of a litigant’s claim and deter-
mine[] whether even though the claim may be correct the
litigant advancing it is not properly situated to be entitled
to its judicial determination.” Rocky Mountain Helium,
LLC v. United States, 841 F.3d 1320, 1325 (Fed. Cir.
2016) (internal quotation marks omitted); see 13A Charles
Alan Wright & Arthur R. Miller, Federal Practice and
Procedure §§ 3531, 3531.4 (3d ed. 2008 & Supp. 2016).
In this case, Mr. James alleges that he is the sole in-
ventor of the inventions claimed in the ’638 patent, that
sole inventorship entails sole ownership, and that 35
U.S.C. § 256 gives him a cause of action to establish sole
inventorship and therefore sole ownership. Subject to an
important qualification, if Mr. James were to prevail on
those allegations in this case, he would stand to gain
concretely, whether through securing an entitlement to
seek damages for past acts of infringement or otherwise.
Such a gain would be directly related to the merits of the
claim and would redress the asserted injury of being
deprived of allegedly rightful ownership. In the absence
of other facts, that is enough to give Mr. James Article III
standing.
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 rights to his
invention.” Bd. of Trustees of Leland Stanford Junior
Univ. v. Roche Molecular Sys., Inc., 563 U.S. 776, 790
(2011); see Teets v. Chromalloy Gas Turbine Corp., 83
F.3d 403, 407 (Fed. Cir. 1996) (“Ownership springs from

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JAMES v. J 2 CLOUD SERVICES, LLC 7
invention.”). Rather, the court found the straightforward
standing logic recited above to be inapplicable in this
matter because of the important qualification that
“[w]hen the owner of a patent assigns away all rights to
the patent, neither he nor his later assignee has a ‘con-
crete financial interest in the patent’ that would support
standing in a correction of inventorship action.” Trireme
Medical, LLC v. AngioScore, Inc., 812 F.3d 1050, 1053
(Fed. Cir. 2016) (quoting Chou, 254 F.3d at 1359).
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 secur-
ing 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, 2016 WL 9450470, at *3–5. The court
relied on two related sources for that conclusion: (1) the
SDA; and (2) the “hired-to-invent doctrine.” Neither
source, we conclude, properly supports the conclusion of
3 We have recognized that, in some circumstances,
interests other than ownership may support Article III
standing. See Shukh v. Seagate Tech., LLC, 803 F.3d 659,
663 (Fed. Cir. 2015) (recognizing a “concrete and particu-
larized reputational injury” apart from ownership); Chou,
254 F.3d at 1359 (recognizing a “concrete financial inter-
est” apart from ownership). But Mr. James has not
alleged any benefit he would receive from being named as
an inventor, or even as the sole inventor, separate from
his claim to be the true owner of the ’638 patent. His
standing therefore depends on his retention of ownership.

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JAMES v. J 2 CLOUD SERVICES, LLC 8
assignment or obligation to assign at this stage of the
proceedings.
B
The district court concluded that “the SDA necessarily
precludes plaintiff from retaining ownership of the patent
rights.” James, 2016 WL 9450470, at *5. We disagree.
Under the standards appropriate at this stage of the
proceedings, which require that “the court construe[] all
factual disputes in favor of” Mr. James, id. at *3, we
cannot conclude that the SDA precludes Mr. James from
retaining ownership rights in patents on his inventions—
either as itself an assignment or as a contract to assign.
The Patent Act provides that patents and patent ap-
plications are “assignable in law by an instrument in
writing.” 35 U.S.C. § 261. “Although state law governs
the interpretation of contracts generally,” whether a
contract “creates an automatic assignment or merely an
obligation to assign” is a matter of federal law. DDB
Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d
1284, 1290 (Fed. Cir. 2008); see Abraxis Bioscience, Inc. v.
Navinta LLC, 625 F.3d 1359, 1364 (Fed. Cir. 2010);
Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1253 (Fed.
Cir. 2000). On the automatic-assignment side of the line
is a “contract [that] expressly conveys rights in future
inventions.” Abraxis, 625 F.3d at 1364. On the other side
of the line is a “mere promise to assign rights in the
future.” Id. at 1365. “In construing the substance of [an
alleged] assignment, a court must carefully consider the
intention of the parties and the language of the grant.”
Israel Bio-Eng’g Project v. Amgen, Inc., 475 F.3d 1256,
1265 (Fed. Cir. 2007) (citing Vaupel Textilmaschinen KG
v. Meccanica Euro Italia SPA, 944 F.2d 870, 874 (Fed.
Cir. 1991)).
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 dis-

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JAMES v. J 2 CLOUD SERVICES, LLC 9
trict 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 exclu-
sive use of JFAX Communications.” J.A. 53; see James,
2016 WL 9450470, at *5 (rejecting Mr. James’s position
because it “would, for example, enable plaintiff to license
the rights in contravention of JFAX’s exclusive use”). But
that language is not itself a conveyance of any rights and,
in any event, does not clearly go beyond GSP-developed
specific software products to encompass also any underly-
ing patentable methods embodied in the specific code. It
can be read as indicating that it is only the specific code
that will be for JFAX’s exclusive use.
The key SDA Section 3 is open to the same interpreta-
tion. 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, 533 F.3d 1374, 1377
n.1 (Fed. Cir. 2008) (explaining terminology of “source
code” being “compiled” into “object code”); Syntek Semi-
conductor Co., Ltd. v. Microchip Technology Inc., 307 F.3d
775, 779 (9th Cir. 2002) (same). Indeed, the “compiled
software solutions” language suggests that “software
solutions”—the term in the SDA preamble—itself refers
to the actual code, not underlying patentable methods. It
is standard usage to speak of compiling the former,
whereas we have been shown nothing to suggest a com-
mon, or even acceptable, usage of “compiling a method.”
The same conclusion applies to SDA Section 2, which
provides: “You agree to develop original software solu-
tions, write original software routines, carry out testing
and otherwise provide technological solutions for the

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JAMES v. J 2 CLOUD SERVICES, LLC 10
JFAX system, and be responsible for the creation, execu-
tion 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 deliv-
ered 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.,
750 F.3d 1339, 1354–55 (Fed. Cir. 2014); Sony Computer
Entertainment, Inc. v. Connectix Corp., 203 F.3d 596, 599,
602, 605 (9th Cir. 2000); Atari Games Corp. v. Nintendo of
Am. Inc., 975 F.2d 832, 839–40 (Fed. Cir. 1992). Moreo-
ver, the operative complaint alleges, with support from
documents attached to the complaint, that Mr. James
actually executed assignments of copyrights in the specific
software for the three systems furnished to JFAX. There
is nothing comparable for patents, which are not men-
tioned at all in the SDA.
We have discussed SDA provisions that either the dis-
trict court addressed or about which the parties have
made substantial arguments concerning the SDA’s ex-
press 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.

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JAMES v. J 2 CLOUD SERVICES, LLC 11
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., 289 U.S. 178, 187 (1933), and Standard
Parts Co. v. Peck, 264 U.S. 52, 59–60 (1924). In accord-
ance with those decisions, we have summarized the
doctrine as recognizing that an employer may “claim an
employee’s inventive work where the employer specifically
hires or directs the employee to exercise inventive facul-
ties.” Teets, 83 F.3d at 407 (citing Dubilier, 289 U.S. at
187, and Standard Parts, 264 U.S. at 59–60). In certain
circumstances involving employment, we have explained,
“the employee has received full compensation for his or
her inventive work.” Id.
Because this “hired-to-invent” rule is “firmly ground-
ed in the principles of contract law,” Banks v. Unisys
Corp., 228 F.3d 1357, 1359 (Fed. Cir. 2000), its applicabil-
ity depends on the particular relationship between the
“employee” and “employer” in a given case where the rule
is invoked. We have said that “[t]o apply this contract
principle, a court must examine the employment relation-
ship at the time of the inventive work to determine if the
parties entered an implied-in-fact contract to assign
patent rights.” Teets, 83 F.3d at 407; see also Gellman v.
Telular Corp., 449 F. App’x 941, 945 (Fed. Cir. 2011)
(explaining that the hired-to-invent “doctrine is expressly
equitable, and creates only an obligation for the employee
to assign to his employer”) (citing Melin v. United States,
478 F.2d 1210, 1213 (Ct. Cl. 1973)). And we have added
that, “[a]s a matter of common law, after the Supreme
Court’s decision in Erie Railroad v. Tompkins, 304 U.S. 64
(1938), state contract principles provide the rules for
identifying and enforcing implied-in-fact contracts.”
Teets, 83 F.3d at 407 (applying Florida law).

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JAMES v. J 2 CLOUD SERVICES, LLC 12
Whether the doctrine is viewed as a matter of federal
law or a matter of the state law of implied-in-fact con-
tracts, its applicability in a given case depends on the
terms of the contractual relationship of the parties. See
Dubilier, 289 U.S. at 187 (explaining that the implied
assignment of or promise to assign ownership rights
“spring[s] from the contract of employment”). Here, there
is no dispute that the asserted “employment” is based on
the SDA. That contract governed the terms of JFAX’s
acquisition of the software-development services at issue.
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
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, creat-
ing 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),

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JAMES v. J 2 CLOUD SERVICES, LLC 13
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,
895 F.2d 745, 754 (Fed. Cir. 1990); Chase Manhattan
Bank v. Iridium Afr. Corp., 239 F. Supp. 2d 402, 409 (D.
Del. 2002) (citing Atlas, 895 F.2d at 754). Accordingly, it
was improper to dismiss the case under Rule 12(b)(1) for
lack of standing based on the hired-to-invent principle.
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

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