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JustMed, Inc. v. Byce

United States Court of Appeals for the Ninth Circuit
600 F.3d 1118 (2010)


Facts

Joel Just and Michael Byce (defendant) came up with the idea to create a digital audio larynx that would enable recipients of laryngectomies to speak more clearly. Although some initial development occurred in the 1990s, it stalled for several years. In 2003, Just and his wife founded JustMed, Inc. (JustMed) (plaintiff). Byce did not initially work on the product, but held a position on the board of directors. Jerome Liebler was responsible for much of the software development from 2003 to the summer of 2004. Liebler was paid a salary that was half money and half shares of the company. Soon after a working prototype was finished, however, Byce took over Liebler’s role. Byce did not have standard employment forms and did not receive benefits. Byce’s job responsibilities included software development, attending industry conferences, and maintaining the company website. Byce worked remotely and kept his own hours. Finally, for the three months leading up to August 2005, Byce was paid half of his salary in cash. At that time, Byce completed a form W-4 and had taxes withheld, though taxes were never withheld before. After August 2005, Byce deleted the code from JustMed’s system. JustMed filed suit, and Byce removed the case to federal court to have ownership of the software decided under the Copyright Act. The district court ruled in favor of JustMed, finding that Byce was an employee of JustMed when he developed the code and that JustMed was the copyright holder. Byce appealed the decision.

Rule of Law

Issue

Holding and Reasoning (Fletcher, J.)

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