Fintiv, Inc. v. Paypal holdings, Inc., Appeal No. 2023-2312 (Fed. Cir. Apr. 30, 2025)

In its only precedential patent opinion last week, the Federal Circuit affirmed a district court’s determination that the terms “payment handler” and “payment handler service” were means-plus-function terms subject to pre-AIA 35 U.S.C. § 112, par. 6, and that claims reciting the terms were invalid as indefinite.

The case concerned four patents directed to a “cloud-based transaction system” or “mobile wallet system” that patent owner Fintiv asserted were infringed by PayPal.  Several patent claims recited “a payment handler [service]” that interacts with application programming interfaces (“APIs”) of different payment processors.  Following claim construction, the district court found that the “payment handler” terms did not connote definite structure to a person of ordinary skill in the art, and that because the specification did not recite specific structure or an algorithm for performing the recited functions, the claims were invalid as indefinite.

The Federal Circuit agreed.  At the first step of the § 112 ¶ 6 inquiry, the Court determined that the asserted claims recited functions of the “payment handler [service],” such as that it is “operable” or “configured” “to use APIs of different payment processors,” or that the “payment handler” “exposes a common API for interacting with different payment processors.”  The Federal Circuit also agreed with the district court that the means recited for performing these functions—the “payment handler [service]” itself—did not communicate definite structure to a POSITA, and “can refer to many different entities in a payment system with different structures.”

At the second step, the Court looked to the patents’ specification to ascertain whether it recited specific structure to perform the claimed functions.  Where a recited function is performed by a general-purpose computer or processor, the “structure” for purposes of § 112 ¶ 6 must be a specific algorithm that the computer performs to accomplish the function.  Here, no specific algorithm was disclosed.  The Court rejected Fintiv’s argument that the patents disclosed a two-step algorithm of “wrap[ping] APIs of different payment processors” and “expos[ing] a common API,” explaining that “describing the results of the operation of an unspecified algorithm is not sufficient to transform the disclosure of a general-purpose computer into the disclosure of sufficient structure to satisfy § 112 ¶ 6” (cleaned up).

Accordingly, the Federal Circuit affirmed the district court’s determination that the asserted claims were indefinite.

The opinion can be found here.

By Jason A. Wrubleski

This article summarizes aspects of the law and does not constitute legal advice. For legal advice with regard to your situation, you should contact an attorney.