FairWarning IP, LLC v. Iatric Sys., Inc.

• Decision Date: 11 October 2016
• Docket Number: 2015-1985
• Citation: 120 U.S.P.Q.2d 1293,839 F.3d 1089
• Parties: FairWarning IP, LLC, Plaintiff–Appellant v. Iatric Systems, Inc., Defendant–Appellee
• Court: U.S. Court of Appeals — Federal Circuit

839 F.3d 1089

120 U.S.P.Q.2d 1293

FairWarning IP, LLC, Plaintiff–Appellant

v.Iatric Systems, Inc., Defendant–Appellee

2015-1985

United States Court of Appeals, Federal Circuit.

Decided: October 11, 2016

Sean A. Passino , Hauptman Ham, LLP, Alexandria, VA, argued for plaintiff-appellant. Also represented by Rachel Karen Pilloff ; Michael S. Hooker, Jason Paul Stearns , Phelps Dunbar LLP, Tampa, FL.

Lisa M. Tittemore , Sunstein Kann Murphy & Timbers LLP, Boston, MA, argued for defendant-appellee. Also represented by Brandon Taylor Scruggs .

Before Lourie, Plager, and Stoll, Circuit Judges.

Stoll

, Circuit Judge.

FairWarning IP, LLC, appeals a judgment of the United States District Court for the Middle District of Florida dismissing its suit with prejudice after holding that the asserted patent, U.S. Patent No. 8,578,500

, claims patent-ineligible subject matter under 35 U.S.C. § 101. Because we agree with the district court that FairWarning's '500 patent claims patent-ineligible subject matter, we affirm.

BACKGROUND

FairWarning sued Iatric Systems, Inc. for infringing claims of the '500 patent

. The '500 patent is titled “System and Method of Fraud and Misuse Detection” and discloses ways to detect fraud and misuse by identifying unusual patterns in users' access of sensitive data. The specification describes systems and methods to detect fraud by an otherwise-authorized user of a patient's protected health information (“PHI”). According to the specification, pre-existing systems were able to record audit log data concerning user access of digitally stored PHI. The claimed systems and methods record this data, analyze it against a rule, and provide a notification if the analysis detects misuse. Claim 1 recites:

1. A method of detecting improper access of a patient's protected health information (PHI) in a computer environment, the method comprising:

generating a rule for monitoring audit log data representing at least one of transactions or activities that are executed in the computer environment, which are associated with the patient's PHI, the rule comprising at least one criterion related to accesses in excess of a specific volume, accesses during a pre-determined time interval, accesses by a specific user, that is indicative of improper access of the patient's PHI by an authorized user wherein the improper access is an indication of potential snooping or identity theft of the patient's PHI, the authorized user having a pre-defined role comprising authorized computer access to the patient's PHI;

applying the rule to the audit log data to determine if an event has occurred, the event occurring if the at least one criterion has been met;

storing, in a memory, a hit if the event has occurred; and

providing notification if the event has occurred.

'500 patent

col. 16 ll. 27–46.

Before the district court, Iatric moved to dismiss the complaint, arguing the asserted patent claimed patent-ineligible subject matter under § 101

. FairWarning filed an amended complaint asserting all claims of the '500 patent, and Iatric again moved to dismiss. The district court granted Iatric's motion and dismissed the case under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

Following the two-step test for patent-eligibility identified in Alice Corp. v. CLS Bank International , ––– U.S. ––––, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014)

, the court first found the claims were directed to a patent-ineligible abstract idea: “the concept of analyzing records of human activity to detect suspicious behavior.” FairWarning IP, LLC v. Iatric Sys., Inc. , No. 8:14–CV–2685, 2015 WL 3883958, at *2 (M.D. Fla. June 24, 2015) (quotation marks omitted). This concept, the court explained, “is a basic and well-established abstract idea.” Id. Turning to step two, the court found that the claims contained nothing to “transform[ ] the abstract idea into a patentable concept.” Id. at *4. The court analyzed the elements of the claim individually and as an ordered combination, but found “nothing significantly more than an instruction to apply the abstract idea ... using some unspecified, generic computer.” Id. (quoting Alice , 134 S.Ct. at 2360 ) (alteration in original).

FairWarning appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1)

.

DISCUSSION

We review motions to dismiss under the law of the regional circuit. OIP Techs., Inc. v. Amazon.com, Inc. , 788 F.3d 1359, 1362 (Fed. Cir.)

, cert. denied , ––– U.S. ––––, 136 S.Ct. 701, 193 L.Ed.2d 522 (2015). The Eleventh Circuit reviews the dismissal of a complaint under Rule 12(b)(6) de novo, “[a]ccepting all of the well-pleaded allegations in the complaint as true and drawing all reasonable inferences in favor of the plaintiff.” Montgomery Cty. Comm'n v. Fed. Hous. Fin. Agency , 776 F.3d 1247, 1254 (11th Cir. 2015)

.

I. Section 101

defines patent-eligible subject matter as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. The Supreme Court has “long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.” Ass'n for

Molecular Pathology v. Myriad Genetics, Inc. , ––– U.S. ––––, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) (internal brackets omitted) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc. , ––– U.S. ––––, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012) ).

To determine patent eligibility, “the Supreme Court set forth a two-step analytical framework to identify patents that, in essence, claim nothing more than abstract ideas.” BASCOM Glob. Internet Servs., Inc. v. AT & T Mobility LLC , 827 F.3d 1341, 1347 (Fed. Cir. 2016)

(citing Mayo , 132 S.Ct. at 1296–97 ). The inquiry's first step requires a court to “determine whether the claims at issue are directed to a patent-ineligible concept.” Alice , 134 S.Ct. at 2355. If they are, the court must then, under the second step, “examine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Id. at 2357 (quoting Mayo , 132 S.Ct. at 1294, 1298 ). This inventive concept must do more than simply recite “well-understood, routine, conventional activity.” Mayo , 132 S.Ct. at 1298.

A.

We find that, under step one, the claims of the '500 patent

are directed to an abstract idea. As the '500 patent specification explains, the invention “relates to a system and method of detecting fraud and/or misuse in a computer environment based on analyzing data such as in log files, or other similar records, including user identifier data.” '500 patent col. 1 ll. 15–18. The district court found that “the '500 patent is directed to or drawn to the concept of analyzing records of human activity to detect suspicious behavior.” FairWarning , 2015 WL 3883958, at *2 (quotation marks omitted). We agree. The patented method, as illustrated by claim 1 quoted above, collects information regarding accesses of a patient's personal health information, analyzes the information according to one of several rules (i.e., related to accesses in excess of a specific volume, accesses during a pre-determined time interval, or accesses by a specific user) to determine if the activity indicates improper access, and provides notification if it determines that improper access has occurred.

We have explained that the “realm of abstract ideas” includes “collecting information, including when limited to particular content.” Elec. Power Grp., LLC v. Alstom S.A. , 830 F.3d 1350, 1353 (Fed. Cir.2016)

(collecting cases). We have also “treated analyzing information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category.” Id. And we have found that “merely presenting the results of abstract processes of collecting and analyzing information, without more (such as identifying a particular tool for presentation), is abstract as an ancillary part of such collection and analysis.” Id. Here, the claims are directed to a combination of these abstract-idea categories. Specifically, the claims here are directed to collecting and analyzing information to detect misuse and notifying a user when misuse is detected. See id .

While the claims here recite using one of a few possible rules to analyze the audit log data, this does not make them eligible under our decision in McRO , Inc. v. Bandai Namco Games America Inc. , No. 15–1080, 837 F.3d 1299, 2016 WL 4896481 (Fed. Cir. Sept. 13, 2016), which also involved claims reciting rules. In McRO

we held that, in analyzing step one, “the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.” Id. at 1312, 2016 WL 4896481 at *6 (quoting Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015) ). Of course, claims cannot be directed to “laws of nature, natural phenomena, and abstract ideas,” but must instead “claim patent-eligible applications of those concepts.” Alice , 134 S.Ct. at 2355 (citing Mayo , 132 S.Ct. at 1296–97 ). Indeed, even though a claim can be abstracted to the point that it reflects a patent-ineligible concept—for, “[a]t some level, ‘all inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,’ ” id. at 2354 (quoting Mayo , 132 S.Ct. at 1293 )—that claim may nevertheless be patent eligible if the claim language is directed to a patent-eligible application of that concept. See

Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1050 (Fed. Cir. 2016).

The claims in McRO

were not directed to an abstract idea, but instead were directed to “a specific asserted improvement in computer animation, i.e., the automatic use of rules of a particular type.” McRO , 837 F.3d at 1314, 2016 WL 4896481, at *8. We explained that “the claimed...