On April 30, 2025, the Federal Circuit issued a decision in Fintiv, Inc. v. PayPal Holdings, Inc. (No. 23-2312), issued on April 30, 2025, upholding the invalidation of Finitiv Inc.’s (“Finitiv”) mobile wallet patents related to cloud-based transaction systems based on the Court’s finding that the patents were indefinite because they described the result of the invention instead of the process to achieve the result.

Fintiv sued PayPal for infringing U.S. Patent Nos. 9,892,386; 11,120,413; 9,208,488; and 10,438,196. The parties’ dispute centered on how the term “payment handler” was used in the patents’ claims. The Western District of Texas found the term "payment handler" to be a means-plus-function term under 35 U.S.C. § 112 (f), and held that Finitiv’s patents failed to disclose sufficient structure to perform the claimed functions, rendering the claims indefinite and thus invalid.

35 U.S.C. § 112 (f) provides: “An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”

The Federal Circuit agreed with the District Court that "payment handler" is a means-plus-function term. Although the term doesn't use the word "means," the Federal Circuit found that it describes a function without reciting sufficient structure for performing that function, thereby invoking § 112 (f).

The relevant claim language of the patents recites “a payment handler [service] [operable/configured] to use APIs of different payment processors including one or more APIs of banks, credit and debit cards processors, bill payment processors” and “a payment handler that exposes a common API for interacting with different payment processors.”

Finitiv argued that both the “handler” terms by themselves and the payment-handler terms as a whole identify structure and that the claims’ connecting terms—“that,” “operable to,” and “configured to”—which appear in the asserted claims are more often used with structural terms rather than non-structural ones.

The Federal Circuit disagreed and instead found that the District Court correctly credited technical dictionaries that demonstrated that the term “handler” does not impart any structure, the prefix “payment” merely describes the function of the handler – i.e. to perform payment functions, and there was no blanket rule that patent claims that recite such phrases such as operable or configured to connote structure, rather the applicability of § 112 (f) depends on the specific context of the patent at issue.

The Federal Circuit also rejected Finitiv’s argument that the claim language surrounding “payment handler” defines the inputs, outputs, and operation in manner that confers sufficient structure on the term itself because the other claim limitations did not outline the “rules” to be followed by the “payment handler” and the term “payment handler” has no known meaning.

The Federal Circuit concluded that the patents' specifications merely restated the functional language of the claims without providing an algorithm or detailed structure for implementing the "payment handler." This lack of disclosure fails to meet the requirements for definiteness under § 112 and led to the invalidation of Finitiv’s patents.

KEY TAKEAWAYS:

• This decision underscores the importance of providing clear structural descriptions in patent specifications when using functional claim language.
• Patent drafters working on software should keep in mind that claims using functional language without the word “means” still risk means-plus-function treatment unless they recite sufficiently definite structure in the specification.
• Terms like “configured to” and “operable to” do not always confer structure on an otherwise functional claim term and these terms should not be relied on to meet the requirements for definiteness under § 112.