Fintiv, Inc. v. PayPal Holdings, Inc., No. 2023-2312 (Fed. Cir. (W.D. Tex.) Apr. 30, 2025). Opinion by Prost, joined by Taranto and Stark.
Fintiv sued PayPal for infringement of four patents directed to “cloud-based transaction systems.” After claim construction, the district court held the claim terms “payment handler” and “payment handler service” invalid for indefiniteness. The court ruled that these payment-handler terms are in means-plus-function format under 35 U.S.C. § 112 ¶ 6, but the patent specifications failed to disclose adequate structure corresponding to the claimed functions. The court thus entered final judgment of invalidity. Fintiv appealed.
The Federal Circuit affirmed. First, the court noted that because the payment-handler terms do not use the words “means,” there is a rebuttable presumption that § 112 ¶ 6 does not apply. But the Federal Circuit agreed with the district court that PayPal overcame the presumption because “the payment-handler terms recite function without reciting sufficient structure for performing that function.”
The Federal Circuit explained that the district court correctly analogized “handler” with the nonce term “module,” which is “simply a generic description of software or hardware that performs a specified function.” The court rejected Fintiv’s argument that the claims’ use of connecting terms like “that,” “operable to,” and “configured to”—which Fintiv argued are more often used with structural terms than non-structural ones—does not change the nature of the payment-handler terms. “As used in the claims, the payment-handler terms are no more than a black box recitation of structure that can operate as a substitute for means,” and skilled artisans “would not have understood how to implement the recited functions.”
After determining that the terms invoke § 112 ¶ 6, the court analyzed the specifications for corresponding structure but found none. Fintiv argued that the patents disclose a two-step algorithm as the structure, but the court rejected the theory because “Fintiv’s purported two-step algorithm merely recites the asserted claims’ language.” The Federal Circuit thus held the terms indefinite: “Without an algorithm to achieve these functionalities—and, more generally, given the specifications’ failure to disclose adequate corresponding structure—we hold the payment-handler terms indefinite.”
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