Federal Circuit Finds Mobile Wallet Claims Indefinite

The Federal Circuit has affirmed a district court’s decision that patent claims to mobile wallet payment systems owned by Fintiv were invalid as indefinite under 35 U.S.C. 112(6).

The case is Fintiv, Inc. v. PayPal Holdings, Inc.

Fintiv sued PayPal for allegedly infringing three patents. The district court determined certain claim terms in the asserted patents were subject to 35 U.S.C. § 112 and held the asserted claims invalid as indefinite.

Fintiv appealed.

As the US Patent and Trademark Office (USPTO) explains,

A nonprovisional utility patent application must include a specification, including

– a description and a claim or claims;

– drawings, when necessary…

35 U.S. Code § 112 deals with patent specifications:

The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.

The relevant sections of the current version of the law are:

(b) Conclusion.—

The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention….

(f) Element in Claim for a Combination.—

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.

As the federal circuit explained in this case,

The asserted patents generally relate to a “cloud-based transaction system,” also referred to as a “‘monetary transaction system’, ‘mobile wallet platform’, ‘mobile wallet program’, ‘mobile wallet transaction system’, ‘mobile financial services (mFS) platform’ or ‘electronic payment system.’”

The specifications for all four asserted patents are substantially similar, and include the term “payment handler,” as in the following examples:

• a payment handler service operable to use [application programming interfaces (“APIs”)] of different payment processors, including one or more APIs of banks, credit and debit cards processors, and bill payment processors.
• a payment handler configured to use APIs of different payment processors, including one or more APIs of banks, credit and debit card processors, and bill payment processors.
• a payment handler that exposes a standard API for interacting with different payment processors.

(Emphasis added by court.)

The federal circuit agreed with the district court that “the payment-handler terms recite a function without reciting sufficient structure for performing that function.”

At trial, PayPal’s expert had testified that the payment-handler terms “provide[ ] no structure beyond a blank box, and critically, that a [person of ordinary skill in the art (“POSA”)] would not have understood how to implement the recited functions.”

As the federal circuit explained,

The district court correctly analogized “handler” with the nonce term “module,” which we have determined was “simply a generic description of software or hardware that performs a specified function.”

(“Nonce words” are generic verbal constructs such as module, component, apparatus, element, system, device, and member.)

The district court had found “that the term ‘handler’ does not impart any structure.”

For example, in a previous case

The court reasoned that “the prefix ‘user identification’” does not “impart structure because it merely describes the function of the module: to identify a user,” so “the claim language fails to provide any structure for performing the claimed functions.”

Fintiv also argued 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.”

However, said the federal circuit,

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.

These are not “magic words,” suggested the court:

Our case law does not provide for a blanket rule that these connecting words (i.e., “that,” “operable to,” and “configured to”) automatically suggest that terms are structural.

As in a previous case, said the court,

the purely functional claim language reciting that the payment-handler terms are configured or operated to complete an action provides no structure.

The court noted that

Structure disclosed in the specification qualifies as a corresponding structure if the intrinsic evidence clearly links or associates that structure to the function recited in the claim.

If a general-purpose computer performs a function, the specification must disclose the algorithm that the computer performs to accomplish that function.

Claims are indefinite, said the court, “if the specification fails to disclose adequate corresponding structure to perform the claimed function.”

The federal circuit agreed with the district court that the asserted claims

fail to disclose sufficient structure to perform the functions of ‘us[ing] APIs of different payment processors, including one or more APIs of banks, credit and debit cards processors, bill payment processors’ and ‘expos[ing] a common API for interacting with different payment processors.

In particular, noted the court,

the district court found that the specifications of the asserted patents do not disclose any algorithm to perform the recited function.

The specifications merely referred “to the generic process of translating APIs.”

The court concluded:

The specifications do not provide additional disclosures other than reciting the function of the payment-handler terms using generic terms without providing any details about an algorithm to carry out the functions of using APIs of different payment processors including one or more APIs of banks, credit and debit cards processors, bill payment processors, and exposing a common API for interacting with different payment processors. We have held 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…