MoneyGram International Inc. (MGI) said it won a reversal of a patent-infringement decision against it, which larger rival Western Union Co. (WU) had filed over a system of staging money transfers.

MoneyGram shares were up 2.7% at $2.68 after hours, while Western Union's were down four pennies at $18.30.

The company said that "based on the grounds of obviousness," the U.S. Court of Appeals for the federal circuit ruled certain patents invalid, related to letting customers send transactions without the use of written send forms.

A representative for Western Union said the company was disappointed in the court's decision and is reviewing its options.

Last year, a federal jury in Texas awarded Western Union $16.5 million in damages from MoneyGram International Inc. (MGI) in the case.

In its most recent quarterly results, both MoneyGram and Western Union reported higher transaction volume after weak levels in the year-earlier period, though Western Union's revenue rose where MoneyGram's fell.

--By Joan E. Solsman, Dow Jones Newswires; 212-416-2291; joan.solsman@dowjones.com