A Federal Circuit Panel of Judges Lourie, Plager, and Stoll, has again affirmed a District Court decision to dispose of a patent dispute on the pleadings using Alice. In FairWarning IP, LLC, vs. Iatric Systems, INC., No. 15-1985, 2016 (Fed. Cir. Oct. 11, 2016), the Federal Circuit agreed that FairWarning’s claims on fraud and misuse detection of patient medical records are “‘directed to or drawn to the concept of analyzing records of human activity to detect suspicious behavior.’ FairWarning, 2015 WL 3883958, at *2.”^[1]

The court here contrasted FairWarning’s claims with both the recent McRO, Inc. v. Bandai Namco Games America Inc., No. 15-1080, 2016 WL 4896481 (Fed. Cir. Sep. 13, 2016) and Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed. Cir. 2016) decisions. The more interesting distinctions made by the court involved the following characterizations of the claims in McRO versus FairWarning’s claims:

The claimed rules in McRO transformed a traditionally subjective process performed by human artists into a mathematically automated process executed on computers….As such, we explained that “it [was] the incorporation of the claimed rules, not the use of the computer, that ‘improved [the] existing technological process’”

…FairWarning’s claims merely implement an old practice in a new environment. See Alice, 134 S. Ct. at 2356. The claimed rules ask whether accesses of PHI, as reflected in audit log data, are 1) “by a specific user,” 2) “during a pre-determined time interval,” or 3) “in excess of a specific volume.” ’500 patent col. 16 ll. 34–36. These are the same questions (though perhaps phrased with different words) that humans in analogous situations detecting fraud have asked for decades, if not centuries. Although FairWarning’s claims require the use of a computer, it is this incorporation of a computer, not the claimed rule, that purportedly “improve[s] [the] existing technological process” by allowing the automation of further tasks.^[2]

The emphasized portions illustrate that the court appears to base the patentability decision on whether the claimed rules have already been used by people. The “subjective nature” of animators suggests that, even if the rules are the same, perhaps having no previously identified mechanism to perform a task (e.g., written rules) means that any rule claimed would be a patent eligible improvement. In contrast, the court found that the rules claimed by FairWarning were the same rules used by people for “decades, if not centuries.” This is, however, an interesting position to take given that a well-known formula connected to a well-known machine was found patentable in Diamond v. Diehr, 450 U.S. 175 (1981), and a new formula, or rules, was at the heart of Parker v. Flook, 437 U.S. 584, 585–86 (1978).

Aside from adding another specific example of ineligible subject matter, FairWarning suggests that new rules and generic computers are patent eligible as long as the rules are not later found to be followed by people.

Thanks to Bill Kaweit of Schwegman, Lundberg & Woessner, P.A., for this post.

_{[1] FairWarning, at 5.}

_{[2] FairWarning, at 7–8 (emphasis added).}