The Software IP Report

Another Business Method Patent Falls at the Federal Circuit

By Charles Bieneman

Categories: Patent Eligibility, Software Patents, The Software IP Report

A district court properly found that patent claims reciting “detecting improper access of a patient’s protected health information (PHI) in a computer environment” were directed to patent-ineligible subject matter under 35 U.S.C. § 101. Fairwarning IP, LLC v. Iatric Systems, Inc., No 2015-1985 (Fed. Cir., Oct. 11, 2016 (opinion by Judge Stoll, joined by Judges Lourie and Plager).  Accordingly, the Federal Circuit affirmed a Rule 12(b)(6) dismissal of a suit alleging infringement of US Patent No. 8,578,500.

Applying the two-part patent-eligibility test of Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Federal Circuit agreed with the district court that the claims were directed “to the concept of analyzing records of human activity to detect suspicious behavior,” and as such were directed to an abstract idea.  Further, in considering the “abstract idea” prong of the Alice test, the court explained that recent decisions in McRO, Inc. v. Bandai Namco Games America Inc., and Enfish, LLC v. Microsoft Corp. were distinguishable.

Here, the claims recited rules for analyzing an audit log. Unlike McRO, which produced a result similar to old manual practices but did so implementing new mathematical rules, the ’500 patent claims simply implemented old practices in a new (computer) environment.  Nor were the claims like those of Enfish.  The fact that the claims “purport to accelerate the process of analyzing audit log data” was of no moment because increased efficiencies simply came “from the capabilities of a general-purpose computer, rather than the patented method itself.”

Turning to the second part of the Alice test, the claims recited nothing to transform the abstract idea into patent-eligible subject matter.  In particular, the court rejected the patent owner’s argument that the patent solved technical problems resulting from patient data in different file formats.  The court explained that “[t]he mere combination of data sources…does not make the claims patent eligible.”  The claims here simply used a general-purpose computer to monitor audit log data.

The court then addressed the patent owner’s argument “that the district court improperly granted [the defendant’s] motion under Rule 12(b)(6).”  The court noted its repeated statements that determining patent-eligibility under 35 U.S.C. § 101 at the pleading stage was “possible and proper” in many cases.  The court rejected the patent owner’s argument that the court could not have decided the question without going outside the pleadings for a factual inquiry.

The court’s dismissal of two other arguments by the patent owner are noteworthy.  First, the patent owner had argued that the district court improperly found patent-ineligibility where the claims did not preempt the entire field of HIPAA compliance.  The Federal Circuit responded that the claims’ failure to preempt the entire field did not “make them any less abstract.”

The court also rejected the argument that “identified claim construction issue” precluded “dismissal under Rule 12(b)(6).”  The patent owner’s argument was that correct claim construction would have made clear that the claims needed to be executed in a computer.  The Federal Circuit explained that this argument merely re-cloaked the argument that the claims were patentable because they were executed in a computer environment, and that claim construction would not have made the claims any less drawn to an abstract idea without significantly more.