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Federal Circuit hands victories to Apple, PayPal in parallel payment-system patent infringement disputes with Fintiv

Olivia Sophie Rafferty

Context: The NHK-Fintiv framework, first invoked in March 2020 and which the Acting Director of the United States Patent & Trademark Office (USPTO), Coke Morgan Stewart, recently reinstated (April 17, 2025 ip fray article), allows the Patent Trial and Appeal Board (PTAB) to deny inter partes reviews (IPRs) if parallel district court litigation is ongoing. The rule has resulted in a string of litigation, chiefly brought by large tech companies. In December 2018, Fintiv filed a complaint against Apple in the Western District of Texas over one of its mobile wallet-related patents. It then filed a case against PayPal over the infringement of four of its payment-system patents in the same court in April 2022. In both cases, the district court sided with the defendants, finding the “payment handler terms” in the claims in Fintiv’s patents were indefinite. In parallel PTAB proceedings, another one of Fintiv’s patents, challenged by Apple, was found invalid in November 2023. Fintiv filed appeals in both the district court and PTAB proceedings.

What’s new: The United States Court of Appeals for the Federal Circuit yesterday dismissed both of Fintiv’s appeals, affirming the district court’s decisions that its patents are invalid. While it found Fintiv’s arguments in PayPal’s case were “unpersuasive” (April 30, 2025 Federal Circuit PayPal opinion (PDF)), it threw out Fintiv’s appeal in the Apple case over the patent as moot after invalidating the claims in the PayPal dispute (April 30, 2025 Federal Circuit Apple opinion (PDF)).

Direct impact: The decision in the PayPal case can be appealed to the Supreme Court. However, the likelihood of a cert petition being accepted is low.

Wider ramifications: While there is no public patent infringement litigation involving Fintiv and Apple or Google, with its disputes limited to companies such as PayPal, the outcome of PTAB disputes such as the one with Apple could have significant impacts on the validity of the NHK-Fintiv rule. The framework was challenged again in August 2024 by a group of tech giants, including Apple and Google, which argued that it shields low-quality patents from scrutiny and increases litigation risks for tech firms (PDF). That case is now on appeal for the second time in the Federal Circuit.

The patent-in-suit in Apple’s case was:

The patents-in-suit in PayPal’s case included:

The first patent in PayPal’s case (U.S. Patent No. 9,892,386) was the same patent at the heart of Apple and Fintiv’s PTAB proceedings.

In Apple’s district court case, U.S. District Judge Alan D. Albright concluded in June 2023 that Fintiv failed to provide evidence that Apple’s products contained a “widget” as required by the patent claims in question, granting Apple’s motion for summary judgment (PDF).

Meanwhile, in the PayPal case, the Western District of Texas held in July 2023 that the “payment handler terms” in the claims in Fintiv’s patents were indefinite, and specifically that the asserted claims were “means-plus-function” terms that failed to disclose adequate corresponding structure.

Yesterday, the Federal Circuit upheld the district court’s findings, disagreeing with Fintiv’s following arguments:

  1. Both the “handler” terms by themselves and the payment-handler terms as a whole identify structure (and that extrinsic sources, such as the Internet Open Trading Protocol, support that argument): the district court correctly analogized “handler” with the nonce term “module,” which it determined was “simply a generic description of software or hardware that performs a specified function.” Further, the IOTP suggests that the payment-handler terms “can refer to many different entities in a payment system with different structures.”
  2. The claims’ connecting terms— “that”, “operable to” and “configured to” are “more often used with structural terms rather than non-structural ones”: Fintiv fails to meaningfully explain how the connecting words in these cases that deal with different patents are dispositive here other than to state that these connecting words are identical or nearly identical to the connecting words in the asserted claims. 
  3. The Federal Circuit Dyfan decision controls here (notably, the payment-handler terms are a class of software structures under Dyfan): unlike in Dyfan, where the expert’s testimony that the term “code”/“application” connoted software structure to a person of ordinary skill in the art was unrebutted, here, neither expert testified that the payment-handler terms connoted structure.
  4. The claim language defines the “inputs, outputs, and operation of the ‘payment handler”: the case Fintiv cited, Apple v. Motorola, does not apply to the PayPal case.
  5. The asserted patents identify a two-step algorithm for a payment handler: (1) wraps APIs of different payment processors, such as banks, and (2) exposes a common API to facilitate interactions with many different kinds of payment processors: the purported two-step algorithm merely recites the asserted claims’ language. Without an algorithm to achieve these functionalities and, more generally, given the specifications’ failure to disclose adequate corresponding structure, the payment-handler terms are indefinite.

Counsel

In both cases, Fintiv was represented by AddyHart P.C.’s Meredith Martin Addy, Chad Pannell, III, and Benjamin Cappel, as well as a team at Kasowitz Benson Torres LLP: Jeceaca An, Marcus A. Barber, John W. Downing, Darcy L. Jones, Heather S. Kim, ThucMinh Nguyen, Jonathan K. Waldrop, and Paul G. Williams.

PayPal was represented by Winston & Strawn LLP’s Robert N. Kang, Eimeric Reig-Plessis, Nimalka Wickramasekera, and Shelton Coburn LLP’s Barry Kenneth Shelton.

Apple was represented by a team at Ropes & Gray LLP: Frances Zhang, Douglas Hallward-Driemeier, James L. Davis, Jr., James R. Batchelder, Christopher M. Bonny, Brian Lebow, and Cassandra B. Roth.