EXHIBIT A 

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Minute Order Form (06/97) 

United States District Court Northern District of Illinois 0' ' ' ,,,) . 

Name of Assigned Judge Richard A. Posner Sitting Judge If Other 

or Magistrate Judge than Assigned Judge 

CASE NUMBER 03 c 4954 DATE 12/6/2004 

CASE Pinpoint, Inc. vs. Amazon.com, Inc. et al 

TITLE 

MOTION: 

(In the rollowmg box (a) md1cate the party filing the mot1on, e.g., plamuff, defendant, 3rd party plainliff, and (b) state bnefly the nature 

or the motion being presented.] 

DOCKET ENTRY: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

0 

0 

0 

0 

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Filed motion of [use listing in "Motion" box above.] 

Brief in support of motion due __ . 

Answer brief to motion due __ . Reply to answer brief due __ . 

Ruling/Hearing on __ set for ___ at __ . 

Status hearing[held/continued to] [set for/re-set for] on __ set for ___ at ___ . 

Pretrial conference[held/continued to] [set for/re-set for] on __ set for ___ at ___ . 

Trial[ set for/re-set for] on __ at __ . 

[Bench/Jury trial] [Hearing] held/continued to __ at ___ . 

This case is dismissed [with/without] prejudice and without costs[by/agreementipursuant to] 

0 FRCP4(m) 0 Local Rule 41.1 0 FRCP4l(a)(l) 0 FRCP4l(a)(2). 

(10) • [Other docket entry] For the reasons stated, Pinpoint did not have standing to file this suit. I have 

therefore no choice by to direct the entry of judgment dismissing it (without prejudice), and voiding all 

previous judicial orders entered in the case, since they were entered in a case over which this court never 

obtained subject-matter jurisdiction. Trial set for December 6, 2004 is stricken. All pending motion are 

moot. Each side is assessed $750.00 injury costs, for a total amount of$1,500.00. Parties are given 21 

days from the date of this judgment to tender their checks to the Clerk, U.S. District Court. All matters 

in controversy having been resolved, final judgment is hereby entered in favor of all defendants and 

against plaintiff. 

(11) • [For further detail see order attached to the original minute order.] 

No notices required, advised in open court. 

No notices required. 

Notices mailed by judge's staff. 

Notified counsel by telephone. 

Docketing to mail notices. 

Mail AO 450 form. 

Copy 

SCT 

; . ~ ,_ j . 

, .. '] 'C:'J ' '7 ~· :.:" 

DCC 7- 2004 

~33 

nlailing dcpl.l\Y initiols 

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UNITED STATES DISTRICT COURT FOR THE 

NORTHERN DISTRICT OF ILLINOIS, 

EASTERN DIVISION 

PINPOINT, INC. 

Plaintiff, 

v. 

AMAZON.COM, INC., et al., 

Defendants. 

OPINION 

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) No. 03 C 4954 

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Richard A. Posner, 

Circuit Judge, 

sitting by designation 

POSNER, Circuit Judge. Pinpoint filed this suit last year 

against Amazon.com and affiliates (for simplicity I'll pretend 

that "Amazon.com" is the only defendant) for infringement of 

two business-method patents, U.S. Patent Nos. 5,758,257 and 

6,088, 722. The patents describe methodologies based on statistical theory, mathematics, and formal logic by which a retailer 

such as Amazon.com can identify customer preferences and use 

those preferences to make recommendations to the customers 

for additional purchases. Amazon.com denies infringement but 

also argues that the patents are invalid because of obviousness 

or anticipation. 

When the case was reassigned to me last month for trial, 

Amazon.com's challenge to Pinpoint's standing to bring this 

suit had not yet been resolved, and I set it for an evidentiary 

hearing on December 3, 2004. The hearing having now been 

/ ,. 20at 

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No. 03 C 4954 2 

held, I set forth here my findings of fact (simplified wherever 

possible to do without material inaccuracy) and conclusions of 

law. Fed. R. Civ. P. 52(a). 

The parties agree that the plaintiff in a patent infringement suit has the burden of proving that it owned the patent or 

(as here) patents on which its suit is based when it filed the 

complaint. United States v. Hays, 515 U.S. 737, 7'43 (1995); 

Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992); Fieldturf, Inc. v. Southwest Recreational Industries, Inc., 357 F.3d 

1266, 1268 (Fed. Cir. 2004); Wisconsin Right to Life, Inc. v. 

Schober, 366 F.3d 485, 489 (7th Cir. 2004). They further agree 

that unless this condition is satisfied, the district court lacks 

subject-matter jurisdiction. See Paradise Creations, Inc. v. UV 

Sales, Inc., 315 F.3d 1304, 1309 (Fed. Cir. 2003); Enzo APA & 

Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1093-94 (Fed. Cir. 

1998); Gaia Technologies, Inc. v. Reconversion Technologies, 

Inc., 93 F.3d 774, 779-80, amended, 104 F.3d 1296 (Fed. Cir. 

1996). 

The essential distinction on which the analysis in this opinion turns is between "inventor" and "owner." Patent law requires that the (or an) inventor of a patented invention be listed 

in the patent regardless of whether he is the (or an) owner of 

the patent. 35 U.S.C. §§ 102(f), 116; Pannu v. Iolab Corp., 155 

F.3d 1344, 1348-49 (Fed. Cir. 1998). "The statute imposes no 

requirement of potential ownership in the patent on those seeking to invoke it." Chou v. University of Chicago, 254 F.3d 1347, 

1358 (Fed. Cir. 2001). Nothing is more common than for an inventor to agree that the owner of a patented product or process 

that he invents will be someone besides himself, such as his 

employer. Amazon.com contends that the owner of Pinpoint's 

two patents at the time the complaint was filed was the University of Pennsylvania. The university has since assigned its 

patent rights to Pinpoint but the assignment comes too late to 

confer standing. Pinpoint recognizes this but argues that the 

university never owned the patents and that in any event one 

of the inventors listed in the patents, Wachob, not having been 

affiliated with the university, is a co-owner who assigned his 

patent rights to Pinpoint before the lawsuit began; if so, PinCase: 1:12-cv-01195 Document #: 25-1 Filed: 06/14/12 Page 4 of 12 PageID #:60
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•• ! 

No. 03 C 4954 3 

point, as a co-owner with the University of Pennsylvania, had 

standing to sue. See 35 U.S.C. § 262; Ethicon, Inc. u. United 

States Surgical Corp., 135 F.3d 1456, 1465-66 (Fed. Cir. 1998); 

Harrington Mfg. Co. u. Powell Mfg. Co., 815 F.2d 1478, 1481 

(Fed. Cir. 1986). 

The patents list four inventors besides Wachob: Herz, Ungar, Zhang, and Salganicoff. Herz is the principal of Pinpoint; 

Ungar and Zhang are professors at the University of Pennsylvania. No evidence was presented at the hearing about Salganicoff, and he is barely mentioned in the briefs on standing. I 

discuss his bearing on the case in the course of my discussion of 

Wachob. 

The inventive activity that culminated in the patented inventions followed the signing in 1994 by Herz, Ungar, and the 

University of Pennsylvania of a "Sponsored Research Agreement" whereby Herz agreed to finance research by Ungar. The 

agreement makes clear that all intellectual property resulting 

from the research belongs to the University of Pennsylvania, 

except research "made solely by SPONSOR [i.e., Herz] or employees of SPONSOR using facilities other than PENN'S." Attachment A to the agreement describes the sponsored research, 

which is to say the research the fruits of which belong to the 

university, as including "obtaining, organizing, entering and 

editing data on viewer preference characteristics," "searching 

for the best statistical methods to be employed in obtaining 

data on user preferences," "exploring theories and algorithms to 

be used in viewer clustering ... efforts will concentrate on the 

application of fuzzy set theory," and ''building optimization 

models, through mathematical programming, for scheduling 

video programs on TV channels." (The patented inventions are 

intended for use by cable television broadcasters as well as by 

online and other retailers.) 

The description of the sponsored research overlaps the inventions described in the patents closely enough to give rise to 

an inference that the inventions grew out of that research and 

therefore belonged to the University of Pennsylvania untilafter the suit was filed-it quitclaimed its interest in them to 

Pinpoint in exchange for a modest share of any net revenues 

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No. 03 C 4954 4 

earned by Pinpoint on the patents. The fact that the share was 

modest-6 to 7 percent-could be evidence that the university 

did not have much confidence that it really owned the patents. 

But Pinpoint makes nothing of the point, and anyway we don't 

know what representations Herz, Ungar, and Zhang made to 

the university regarding the applicability of the Sponsored Research Agreement to that research. 

Ungar, testifying by way of a videotaped deposition (which 

enabled me to evaluate his credibility), claimed not to remember having done any research under the Sponsored Research 

Agreement related to the patented inventions. He testified that 

his work on those inventions was done solely pursuant to a consulting agreement between him and Herz and involved no use 

of university facilities, which if true would support Pinpoint's 

reliance on the "made solely by SPONSOR'' clause of the Sponsored Research Agreement. 

However, I found Ungar's testimony singularly lacking in 

credibility, especially but not only in light of Zhang's deposition 

testimony. Zhang's curriculum vitae describes the work he did 

for Herz and Ungar as "university-sponsored," and when asked 

why he described it so he answered: "I just can remember I 

heard the term from either Fred Herz or Dr. Lyle Ungar, so I 

just used it." Although he denied having stored any of the data 

for this research on University of Pennsylvania computers, his 

emails reveal that he did save some of the data on those computers and also that he used the computers for computations 

that were part of this research and that he couldn't do on his 

home computer. 

I attach no weight to the fact that Zhang was paid for his 

work on the patented inventions by Herz rather than by the 

university. It was in the interest of Herz, Ungar, and Zhang to 

create the appearance that the research was not sponsored research, since, if it was, the inventors would be entitled under 

the university's patent policy (of which more shortly) to only a 

30 percent share of the profits from the inventions, versus the 

100 percent share that they would receive if it was not sponsored research. 

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Ungar's refusal to acknowledge that an email purporting to 

come from his email address was actually composed by him or 

with his knowledge was merely the low point of this witness's 

unsatisfactory testimony. Herz, who also testified by videotape, 

like Ungar and Zhang denied that the research leading up to 

the patents had been sponsored research. His demeanor was 

evasive, his testimony unresponsive, and the selectivity of his 

recollections implausible. 

Pinpoint points to a clause of the Sponsored Research 

Agreement that requires the university to disclose to the sponsor, that is, to Herz, any inventions "reasonably considered patentable" resulting from the sponsored research; and this was 

not done. But the responsibility for its not being done lay with 

Ungar, the principal investigator, who as I have emphasized 

had a financial interest in enabling Herz to obtain patents that 

would not be owned by the university. Ungar was a disloyal 

employee, whose disloyal act could not bind the university in its 

dealings with the sponsor whom Ungar was assisting in what 

amounted to a misappropriation of the university's intellectual 

property. 

I conclude that the research conducted by Ungar, Zhang, 

and their associates that resulted in the patents was conducted 

pursuant to the Sponsored Research Agreement and that the 

patented inventions were the intellectual property of the University of Pennsylvania when the complaint was filed, though 

by virtue of the subsequent assignment they are now the property of Pinpoint. 

The remaining issue is whether Wachob, a co-inventor with 

no university affiliation, was also a co-owner, which if so would 

as I said, by virtue of his assignment of his interest in the patent to Pinpoint (by way of Herz) before the complaint was filed, 

secure Pinpoint's standing independently of the university's interest at the time the suit was filed. I find that Wachob (who 

testified in person at the December 3 hearing) was not a coowner, on three independent grounds. The first is that although 

his consulting agreement with Herz did not contain an assignment of intellectual property, it was tacitly understood that he 

would have no rights in any patents that resulted from Herz's 

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project. It is clear to me that he never thought he had any 

rights in the patents. He admitted in his testimony that he had 

assigned any rights he might have had in the patents to Herz 

for nothing, "trusting" that if the patents proved to be commercially valuable Herz would give him something for his contribution. I find it implausible that someone who thought he was the 

co-owner of two potentially very valuable patents (Pinpoint's 

suit seeks damages in excess of $100 million) would assign his 

rights for nothing. 

Most of Wachob's testimony concerned a letter agreement 

with the university that he signed this past April, well after the 

lawsuit was filed. The agreement explains that Wachob's 

agreement to the terms set forth in the letter is essential to enable the university and Pinpoint to settle their dispute over the 

ownership of the patents; the reference is to the settlement 

whereby the university renounced any ownership interest. The 

letter was sent to each of the five inventors. All five signed. 

The letter states that a signatory, and thus Wachob, by 

signing agrees that at the time of the invention of the two patented inventions on which Pinpoint is suing he was subject to 

"Penn's Patent Policy," which grants even broader rights to the 

university than the Sponsored Research Agreement does. The 

policy states: "It is the policy of the University that all INVENTIONS, together with associated MATERIALS, which are conceived or reduced to practice by INVENTORS in the course of 

employment at the University, or result from work directly related to professional or employment responsibilities at the University, or from work carried out on University time, or at University expense, or with substantial use of University resources 

under grants or otherwise, shall be the property of the University as of the time such INVENTIONS are conceived or reduced 

to practice. INVENTORS shall assign to the University all 

right, title and interest in and to the INVENTIONS, MATERIALS and related patents and shall cooperate fully with the 

University in the preparation and prosecution of patents." The 

policy further provides that the inventors shall be entitled to 30 

percent of the royalties yielded by the patents. 

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The letter to Wachob stated: ''You further acknowledge that 

you have a duty under [Penn's Patent Policy] to assign to Penn 

any rights you may have in [the patents]." The letter further 

provides that Wachob will receive 3.75 percent of any royalties 

that the university receives from the patents. The actual figure 

is 12.5 percent, but it is 12.5 percent of "Inventors Personal 

Share," which, as I just noted, is specified in Penn's Patent Policy to be 30 percent of the royalties. 

Amazon.com placed the letter agreement in evidence in an 

attempt to show that Wachob acknowledged never having had 

an ownership interest in the patents, since if the patents were 

indeed covered by Penn's Patent Policy, the university owned 

them until the assignment to Pinpoint. Wachob, however, testified that since he had already assigned his interest in the patents to Herz, he thought that the letter might have been sent to 

him in mistake. He emailed Pinpoint to inquire about the matter, but when he received no answer to his inquiry he signed 

the letter and mailed it back to the university. He did so, he 

testified, because the letter said that his agreement to its terms 

was essential to the settlement. He further testified that he 

was unfamiliar with Penn's Patent Policy. 

By signing the agreement Wachob became bound not only 

to what was written in the agreement but also to any further 

commitment incorporated by reference, whether or not he read 

the incorporated documents or, for that matter, the agreement 

itself. Shehadi v. Northeastern National Bank, 378 A.2d 304, 

306 (Pa. 1977); Berardini v. Kay, 192 A. 882, 884 (Pa. 1937); 

Bernotas v. Super Fresh Food Markets, Inc., 816 A.2d 225, 230-

31 (Pa. Super. 2002); Silberman v. Crane, 44 A.2d 598, 599 (Pa. 

Super. 1945); 188 LLC v. Trinity Industries, Inc., 300 F.3d 730, 

736-37 (7th Cir. 2002); Aceros Prefabricados, S.A. v. 

TradeArbed, Inc., 282 F.3d 92, 97-98 (2d Cir. 2002); United 

States Fidelity & Guaranty Co. v. West Point Construction 

Co., 837 F.2d 1507 (11th Cir. 1988) (per curiam). Nevertheless, 

Pinpoint is correct that merely because Wachob was prepared 

to acknowledge, in effect, that he had never had an ownership 

interest in the patent (by virtue of the Penn Patent Policy) 

didn't mean that he hadn't. It just meant that for the sake of 

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No. 03 C 4954 8 

the settlement he was willing to admit never having had such 

an interest, just as the university was willing to do when it 

quitclaimed its interest in the patents in exchange for a share 

in the lawsuit (the practical significance of its retention of a · 

right to a share of royalties). 

However, Wachob's willingness to sign the letter agreement 

without even finding out whether or not it had been sent to him 

by mistake, without finding out what he was agreeing to (which 

depended on the contents of Penn's Patent Policy), and without 

wondering on what basis he was being assigned a 3.75 percent 

interest in such net royalties as the university might obtain, 

persuades me that he indeed had never acquired any ownership 

interest. He regarded any compensation that he might receive 

as being in the nature either of a gift or of an acknowledgment 

that he had made a valuable contribution to a potentially valuable product and should in fairness, rather than as a matter of 

a property or contract entitlement, receive something over and 

above the modest fee he had charged for his services under his 

consulting agreement with Herz (a $1,000 retainer, an hourly 

fee of $100, and the usual expenses). 

It is at this point that Salganicoffs status assumes a minor 

importance in the case. His consulting agreement expressly 

ceded all intellectual property rights to Herz. As there is no 

corresponding clause in Herz's consulting agreement with Wachob, Pinpoint asks us to infer that Wachob retained intellectual property rights. But I consider this evidence overborne by 

the evidence reviewed above, which convinces me that Wachob 

never obtained an ownership right in the inventions. 

But even if this were wrong, Pinpoint would still lose. If as 

I have found the patented inventions were the product of sponsored research and therefore were, under the Sponsored Research Agreement, the property of the university, Herz could 

not vest ownership rights in his consultants without the university's authorization. An attempt to do so would violate the 

duty of good-faith performance that Pennsylvania law (which 

controls the interpretation of the agreement by virtue of a 

choice of law provision in it) imposes on each party to a contract. Donahue v. Federal Express Corp., 753 A.2d 238, 242 (Pa. 

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No. 03 C 4954 9 

Super. 2000); Kaplan v. Cablevision of Pennsylvania, Inc., 671 

A.2d 716, 722, appeal denied, 624 A.2d 111 (Pa. Super. 1996); 

see also Northview Motors, Inc. v. Chrysler Motors Corp., 227 

F.3d 78, 91 (3d Cir. 2000) (Pennsylvania law); In re Doctors 

Hospital of Hyde Park, Inc., 337 F.3d 951, 955 (7th Cir. 2003) 

(lllinois law); Lockwood International, B. V. v. Volm Bag Co., 

273 F.3d 741, 745 (7th Cir. 2001) (Wisconsin law). For it would 

mean that Herz could have directed an employee of Pinpoint to 

assist in the sponsored research, listed the employee in the patent application as an inventor, have the employee assign his 

interest in the invention to Pinpoint, and claim therefore to be 

a co-owner of the patent, along with the University of Pennsylvania, even though the Sponsored Research Agreement required that patents growing out of the sponsored research be 

the sole property of the university. The fact that Wachob was 

not a signatory of the Sponsored Research Agreement is irrelevant. His property right if any in the patents was subject to the 

property rights earlier vested in the university by virtue of that 

agreement. He could not obtain a superior right by virtue of his 

principal's (Herz's) breach of contract. See In re Phillips' Estate, 

55 A. 213 (Pa. 1903); Ford Motor Credit Co. v. Caiazzo, 564 

A.2d 931, 934 (Pa. Super. 1989); Daniels v. Anderson, 624 

N.E.2d 1151, 1158 (Ill. App. 1993). The same is true of Salganicoff, and a fortiori of the university inventors. 

Maybe as a matter of prudence the university should have 

required Herz to require anyone working with him on sponsored research to sign an acknowledgment of being bound by 

the Sponsored Research Agreement. But the university's contract rights are clear without such a clause, and anyway it 

would have made no difference here, because Herz's position is 

that no one who worked on the patented inventions was conducting sponsored research. 

I reach this conclusion by still a third route. If, as I have 

concluded, Herz was required by the Sponsored Research 

Agreement that he and Ungar had signed to transfer to the 

University of Pennsylvania the intellectual property resulting 

from the research by Ungar and the others, and instead of doing so he allowed Wachob to gain ownership rights, then, 

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No. 03 C 4954 10 

whether or not Wachob acquired such rights, once he transferred them back to Herz by assignment Herz's obligation to 

transfer ownership to the university would spring back into 

force. In effect, a constructive trust would be impressed on 

Herz's rights in favor of the university as their equitable owner 

by virtue of the Sponsored Research Agreement. 

For the reasons stated, Pinpoint did not have standing to 

file this suit. I have therefore no choice but to direct the entry 

of judgment dismissing it (without prejudice, Fieldturf, Inc. v. 

Southwest Recreational Industries, Inc., supra, 357 F.3d at 

1269-70; H.R. Technologies, Inc. v. Astechnologies, Inc., 275 

F.3d 1378, 1384-85 (Fed. Cir. 2002)) and voiding all previous 

judicial orders entered in the case, since they were entered in a 

case over which this court never obtained subject-matter jurisdiction. Chicot County Drainage District v. Baxter State Bank, 

308 U.S. 371, 376 (1940); Bally Export Corp. v. Balicar, 

Ltd., 804 F.2d 398, 400 (7th Cir. 1986); General Star National 

Ins. Co. v. Administratia Asigurarilor de Stat, 289 F.3d 434, 

437 (6th Cir. 2002); Kocher v. Dow Chemical Co., 132 F.3d 

1225, 1229 (8th Cir. 1997); Gould v. Mutual Life Ins. Co., 790 

F.2d 769, 774 (9th Cir. 1986). 

Richard A. Posner 

Circuit Judge 

December 6, 2004 

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