IP Law Daily, PATENT—D. Del.: Largely favorable results for PayPal in IOENGINE's long-running infringement lawsuit, (Aug 12, 2025)

By Saurabh Kashyap, B.A., M.A., LL.B., LL.M.

Court denies IOENGINE's bid to add revived patent claim, authorizes PayPal to pursue preclusion defenses, and preserves its ability to challenge IOENGINE's damages theory.

Ruling on multiple pretrial and case-management motions in a long-running infringement lawsuit filed by IOENGINE, LLC against PayPal Holdings, Inc., the federal district court in Wilmington, Delaware denied IOENGINE’s bid to add claim 4 of U.S. Patent No. 9,059,969 (the ’969 patent), despite its reinstatement by the Federal Circuit, permitted PayPal to move for summary judgment on collateral estoppel and other preclusion issues arising from a parallel litigation, authorized supplemental damages discovery and expert reports, and set an April 2026 trial date, finding that IOENGINE's prior commitments and case-management considerations outweighed its arguments for expanding the asserted claims (IOENGINE LLC v. PayPal Holdings, Inc., No. 1:18-cv-00452-WCB (D. Del. Aug. 11, 2025)).

Background. The plaintiff, IOENGINE, LLC, develops technologies for secure portable devices and software enabling encrypted communications. The defendant, PayPal Holdings, Inc., operates a global digital payments platform. The litigation involves IOENGINE’S U.S. Patent Nos. 9,059,969 (the ’969 patent) and 9,774,703 (the ’703 patent), covering device architectures for executing program code and facilitating encrypted communications for secure transactions.

IOENGINE filed this lawsuit in the District of Delaware, alleging that PayPal's payment processing systems incorporated technology covered by the asserted patents. The case proceeded alongside a related action against Ingenico Inc., in which overlapping infringement, validity, and damages issues were presented. In 2019, Ingenico petitioned for inter partes review (IPR) of numerous claims of the '969 and '703 patents before the Patent Trial and Appeal Board (PTAB).

The court stayed the district court proceedings during the pendency of the IPRs. In its final written decisions, the PTAB found most challenged claims unpatentable. IOENGINE appealed these decisions to the U.S. Court of Appeals for the Federal Circuit. While the appeals were pending, the Ingenico case proceeded to trial on eight surviving claims, resulting in a July 2022 jury verdict in Ingenico’s favor. The Federal Circuit affirmed that judgment in Ingenico Inc. v. IOENGINE, LLC, 136 F.4th 1354 (Fed. Cir. 2025).

In a separate appeal from the PTAB’s IPR decisions, the Federal Circuit in IOENGINE, LLC v. Ingenico, Inc., 100 F.4th 1395 (Fed. Cir. 2024) reversed the unpatentability findings as to claim 4 of the ’969 patent and claims 61, 62, 110, and 111 of the ’703 patent. Despite this reinstatement, IOENGINE had previously represented to the district court in 2020—while seeking to lift the IPR stay—that it would not pursue in this case any claim the PTAB had found unpatentable, even if revived on appeal.

Relying on that commitment, the court had allowed IOENGINE to proceed on eight specified claims. Following the Federal Circuit decisions, both parties filed competing pretrial motions in 2025: IOENGINE sought to add reinstated claim 4 of the ’969 patent and to secure rulings on estoppel, damages updates, and claim construction guidance, while PayPal moved to enforce the prior claim-limitation agreement, raise preclusion defenses, and set a structured path toward trial.

Collateral estoppel. The court authorized PayPal to file a summary judgment motion addressing the preclusive effects of the Ingenico judgment and subsequent Federal Circuit affirmance, including whether collateral estoppel applied on a "limitation-by-limitation" basis. The court observed that such arguments had not been available to PayPal before the Ingenico verdict and thus did not constitute an impermissible "second bite at the apple." Strict page limits and filing deadlines were set to expedite the resolution of the issue.

IPR estoppel. IOENGINE had argued that PayPal was a “real party in interest” or in privity with Ingenico for purposes of 35 U.S.C. § 315(e)(2) estoppel, and therefore bound by the same limitations on prior art that applied in the Ingenico case. The court referred to its prior June 2022 summary judgment opinion rejecting IOENGINE’s motion on that question and invited IOENGINE to renew the issue on the merits with any new legal arguments. The court indicated that an evidentiary hearing could be considered if either party demonstrated that live testimony would materially affect the outcome. Absent such a filing, § 315(e)(2) would be deemed inapplicable to PayPal.

Claim 4 of the ’969 patent. The court denied IOENGINE's motion to add reinstated claim 4 of the '969 patent, relying on IOENGINE's express 2020 representation—made in the context of lifting the IPR stay—that it would not pursue in this case any claim found unpatentable by the PTAB, even if later revived on appeal. The court noted that this assurance was repeated in hearings and relied upon in case management decisions. It concluded that adding claim 4 at this stage would necessitate "extensive pretrial proceedings" and cause significant delay. IOENGINE was barred from asserting the claim in this action but could pursue it separately.

Damages discovery and expert reports. The court addressed two damages matters: IOENGINE’s July 2022 “new” damages theory—submitted after exclusion of its original model—and the need for updated financial data through March 23, 2024, the date the patents expired. PayPal was ordered to produce updated financial information within 10 days. IOENGINE was required to submit a supplemental expert report, not exceeding 10 pages, within 21 days of receiving that information. PayPal was permitted to file rebuttal reports by October 1, 2025. The court allotted each side seven hours for expert depositions and allowed PayPal to file a Daubert motion within 30 days after completion of damages discovery.

Claim construction guidance. IOENGINE asserted that the Federal Circuit’s opinion in Ingenico clarified the distinctions between “program code,” “encrypted communications,” and “content” in ways that could impact the construction of the asserted synchronization claims. The court permitted briefing on the issue—due in December 2025 and January 2026—but barred new expert reports or evidentiary hearings absent a later determination that such measures were necessary.

Patent eligibility. The court declined to reopen summary judgment on PayPal's § 101 defense, noting that its June 2022 analysis remained valid and was not undermined by subsequent developments or evidence. Nonetheless, PayPal was permitted to submit a briefing in early 2026 should it wish to continue pressing the issue. The court reserved the possibility of a bench trial only if the briefing established that such a proceeding was necessary.

Inequitable conduct. The court deferred consideration of PayPal’s inequitable conduct defense—alleging misconduct before the USPTO—until after the jury trial. Any post-trial bench trial on the issue would require PayPal to proffer testimony and documentary evidence showing a reasonable likelihood of success.

Pretrial schedule and trial date. The court ordered the parties to exchange proposed pretrial orders in February 2026 and file a joint pretrial order by March 6, 2026. A pretrial conference was scheduled via Zoom for March 30, 2026. The court set a five-day jury trial for late April 2026, allocating each side 11 hours to present its case.

The Case is No. 1:18-cv-00452-WCB.

Judge: Bryson, W.

Attorneys: Neal C. Belgam (Smith, Katzenstein, & Jenkins LLP) for IOEngine LLC. Jack B. Blumenfeld (Morris, Nichols, Arsht & Tunnell LLP) for PayPal Holdings, Inc.

Companies: IOEngine LLC; PayPal Holdings, Inc.

Cases: Patent DelawareNews