PayPal Successfully Invalidates Asserted Claims of Secure Payment Transaction Patent Under 35 U.S.C. § 101

Winston & Strawn secured a decisive victory for PayPal in an intellectual property dispute brought by Irish non-practicing entity Internet Payment Patents LTD (IPPL). Magistrate Judge Susan van Keulen of the Northern District of California entered final judgment in PayPal’s favor, finding all asserted patent claims ineligible under 35 U.S.C. § 101 and granting PayPal’s motion to dismiss without leave to amend.

The litigation began in the Western District of Texas as a trade secret misappropriation case, but IPPL amended its complaint to add a patent infringement claim shortly after filing. Because every key witness to the alleged decades-old trade secret claim resides in California, PayPal moved to transfer the case to the Northern District of California. Judge Albright granted the motion, holding that the witness convenience and local interest factors supported transfer.

After transfer, PayPal moved to dismiss both the trade secret and patent claims. IPPL voluntarily dismissed its trade secret allegations with prejudice the day before the hearing. Judge van Keulen then ruled that the asserted patent was directed to “an abstract method of exchanging and matching identifying information other than a credit card number in order to facilitate online transactions,” rejecting IPPL’s characterization of the claims as an “algorithm.” At Alice Step Two, the Court held that reciting generic components such as computers, servers, or telecommunications networks did not supply an inventive concept, particularly because the specification acknowledged they could take many forms, if they are utilized at all.

This judgment marks Winston’s fourth consecutive successful resolution of NPE-initiated actions against PayPal, achieved through a combination of early motion practice, claim construction strategy, inter partes review, and transfer efforts—including wins in Grecia v. PayPal (No. 6:21-cv-309), Fintiv v. PayPal (No. 6:22-cv-288), and eCardless v. PayPal (No. 5:24-cv-1054).

San Francisco IP Litigation partner Rob Kang leads Winston’s PayPal team, which for this matter also included partner David Enzminger, Of Counsel Ryuk Park, associates Devin Garrity and Carson Swope, and former Winston partner Peggy Dayton.