We have heard from some users that five failed pattern lock attempts can sometimes fail to trigger an Incorrect Passcode event.
This may seem to be the case but five failed pattern unlock attempts will indeed trigger the Theft Alert feature.
When a PIN, passcode or letters consisting of fewer than four characters are entered ("entered" meaning followed by the "Enter" key), Android does not consider that an actual unlock attempt. You will see no message from the Android Lock Screen saying "Failed Attempt" or "Try Again," etc. So it makes sense that we wouldn't trigger an Incorrect Passcode event due to a non-attempt. If the input is four digits or greater, Android will display a message along the lines of "PIN incorrect, please try again" or "Wrong PIN." If five of these attempts are made consecutively, an Incorrect Passcode event will be triggered. The same logic follows for an alphanumeric password.
A pattern lock works the same way. When an attempt at a pattern unlock is made using fewer than four points in the grid (considered completed by taking your finger off the screen), the Android Lock Screen reports "Sorry, try again" and changes the line or points you've connected to red, but this is not considered by Android to be an actual unlock attempt. It is the equivalent of trying the PIN unlock with three or fewer digits. A pattern unlock attempt of four or more points is considered by Android to be a true unlock attempt, and if that is done five times Lookout will indeed run an Incorrect Passcode event in that situation.