FairWarning IP, LLC v. Iatric Systems, Inc., No. 2015-1985, 2016 U.S. App. LEXIS 18313 (Fed. Cir. Oct. 11, 2016) (Before Lourie, Plager, and Stoll, J.) (Opinion for the court, Stoll, J.)
In an October 11, 2016, decision, the Federal Circuit affirmed the district court’s finding that FairWarning’s patent claims were invalid because the claims encompassed an abstract idea under 35 U.S.C. § 101.
Iatric Systems was sued for infringing FairWarning’s ’500 patent, directed to detecting fraud and misuse of personal information by identifying unusual patterns in users’ access to sensitive data. The district court granted Iatric’s motion to dismiss the case under Rule 12(b)(6). The district court found that the claims were directed to a patent-ineligible abstract idea, with no inventive concept, under the controlling principles of Mayo/Alice.
The Federal Circuit agreed that the ’500 patent is directed to the concept of analyzing records of human activity to detect suspicious behavior. The patented method collects information regarding accesses to a patient’s personal health information, analyzes the information according to one of several rules to determine if the activity indicates improper access, and provides notification if such improper access has occurred. The Court stated that the use of an enumerated rule to analyze log data does not make the claims eligible for patenting, citing McRO, Inc. v. Bandai Namco Games America Inc. The claimed rules in McRO transformed a traditionally subjective process performed by humans into a mathematically automated process executed on computers. The human process and computer process in McRO produced a similar result but did so in fundamentally different ways. It was the incorporation of the claimed rules, not the use of the computer, that improved the existing technological process by allowing the automation of further tasks. In contrast, the Court found that FairWarning’s claims did not provide improved rules and “merely implement an old practice in a new environment.” Further, FairWarning’s claims were not like the patentable claims in Enfish, which provided a specific improvement to the way computers operate, not an abstract idea implemented on a computer. Although FairWarning purported to accelerate the process of analyzing audit log data, the Court found that this came from the capabilities of a general-purpose computer, not from the patented method itself.
The Court also agreed with the district court that the claims contained no inventive concept that would save them, under Mayo/Alice step two. First, claims 12 and 13 are system claims that include a “user interface” for selection of a rule, as well as a microprocessor that analyzes audit log data under various rules. The use of generic computer elements, like a microprocessor or user interface, do not transform an otherwise abstract idea into patent-eligible subject matter. The Court held that other disputed claims “add nothing more than similar nominal recitations of basic computer hardware, such as ‘a non-transitory computer-readable medium with computer-executable instructions’ and a microprocessor.” These limitations only add generic computer components to otherwise-ineligible method claims.
The Court rejected FairWarning’s argument that the claims solve technical problems unique to the computer environment and are eligible under DDR Holdings v. Hotels.com. Merely combining data sources did not make the claims patent eligible, nor did limiting the claims to the computer field. Because the patent is simply directed to the broad concept of monitoring audit log data, the Federal Circuit held that it did not contain “something more” to transform the underlying abstract idea into a patent-eligible application.
Finally, the Court rejected FairWarning’s argument that the district court improperly granted Iatric’s motion under Rule 12(b)(6). It reiterated that “in many cases it is possible and proper to determine patent eligibility under 35 U.S.C. § 101 on a Rule 12(b)(6) motion.”
Using new or improved rules applied by a computer may be patent-eligible, and improving the operation of the computer itself may be patent-eligible, but using a computer to implement old practices is not patentable under § 101. Further, claiming a combination of data sources, or limiting claims to the computer field, does not transform an otherwise abstract idea into “something more” that is patent-eligible.
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