Fairwarning Ip, LLC v. Iatric Systems, Inc.
839 F.3d 1089
| Fed. Cir. | 2016Background
- FairWarning sued Iatric for allegedly infringing U.S. Patent No. 8,578,500, titled “System and Method of Fraud and Misuse Detection,” which detects improper access to patient PHI by analyzing audit log data against rules and notifying when matches occur.
- Claim 1 describes generating a rule (e.g., volume, time interval, specific user), applying it to audit logs, storing hits, and providing notifications; other claims add a user interface, microprocessor, and generic computer components.
- Iatric moved to dismiss under Rule 12(b)(6), arguing the claims recite patent-ineligible subject matter under 35 U.S.C. § 101; the district court granted dismissal with prejudice, finding the claims directed to an abstract idea and lacking an inventive concept.
- The Federal Circuit applied the two-step Alice/Mayo framework: (1) determine if claims are directed to an abstract idea, and (2) if so, whether claim elements add an ‘‘inventive concept’’ beyond well-understood, routine, conventional activity.
- The court held the claims are directed to the abstract idea of collecting and analyzing information to detect misuse and presenting results, and that the additional computer and interface elements are generic and do not supply the required inventive concept.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the ’500 patent claims directed to patent-eligible subject matter under § 101? | FairWarning: claims solve computer-specific problems (combining disparate audit logs in real time) and are rooted in computer technology, so eligible. | Iatric: claims are directed to the abstract idea of analyzing records of human activity to detect suspicious behavior. | Held: Claims are directed to an abstract idea (collecting/analyzing audit data and notifying). |
| Do the claims contain an inventive concept that transforms the abstract idea into patent-eligible subject matter? | FairWarning: system elements (UI, microprocessor, combining disparate sources) provide a technological solution. | Iatric: elements are generic computer components and conventional automation; no ‘‘something more.’’ | Held: No inventive concept; limitations merely recite routine computer implementation. |
| Can § 101 eligibility be decided on Rule 12(b)(6) motion here? | FairWarning: factual disputes and claim construction issues preclude dismissal. | Iatric: record and pleadings permit dismissal as a matter of law. | Held: Dismissal under Rule 12(b)(6) was proper; claimed facts do not overcome § 101 deficiency. |
| Does the patent preempt the field (e.g., HIPAA compliance) or is lack of complete preemption fatal/beneficial? | FairWarning: patent does not preempt entire HIPAA compliance field; so eligibility should not be denied on preemption grounds. | Iatric: preemption argument not necessary; claims are abstract regardless of scope. | Held: Absence of complete preemption does not demonstrate eligibility; claims remain abstract. |
Key Cases Cited
- Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (Sup. Ct.) (two-step framework for § 101 and abstract-idea analysis)
- Mayo Collaborative Servs. v. Prometheus Labs., 132 S. Ct. 1289 (Sup. Ct.) (inventive-concept requirement; routine activity insufficient)
- Ass’n for Molecular Pathology v. Myriad Genetics, 133 S. Ct. 2107 (Sup. Ct.) (laws of nature/natural phenomena/abstract ideas excluded)
- McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir.) (claims directed to specific computerized improvement can be eligible)
- Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir.) (claims improving computer functionality may be eligible)
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir.) (claims solving a problem unique to the Internet may be eligible)
- Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir.) (collecting and presenting information is an abstract idea)