CLS v Alice decision may be the “death” of US business method patents

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

CLS v Alice decision may be the “death” of US business method patents

The validity of hundreds of thousands of business method patents is uncertain after the Federal Circuit narrowly upheld the district court’s decision in CLS v Alice that four patents are invalid under Section 101

In a 135-page decision published on Friday by a strongly divided court, the 10 judges on the en banc panel issued seven conflicting opinions on whether Alice’s claims relating to a computerised trading system are patent-eligible.

Seven of the judges affirmed the district court’s ruling that the method and computer-readable media claims are not patent eligible. The judges were equally divided on whether the system claims were patent eligible, meaning that the district court’s decision was upheld.

In a dissenting-in-part opinion joined by three other judges, Judge Moore said the decision would lead to the "death" of hundreds of thousands of software and business method patents. She said the decision gave "staggering breadth to what is meant to be a narrow judicial exception".

She added: “There has never been a case which could do more damage to the patent system than this one.” In an opinion titled “Additional reflections”, Chief JudgeRader lamented that there was “little, if any, agreement amongst” the judges.

The disagreement between the judges may lead to the case being taken up by the Supreme Court.

The Court was rehearing the case after overturning its controversial 2-1 panel decision in July last year to affirm Alice’s patent claims for a computerised trading system that minimises risk.

In the previous split decision, the judges concluded that merely using a computer did not prevent Alice’s claims from being regarded as patent-ineligible abstract ideas. However, the 2-1 majority said that computer implementation was crucial to the system’s function as an intermediary between traders.

The case dates back to CLS's 2007 lawsuit which sought to invalidate Alice's patents. Alice counterclaimed that CLS was infringing claims 33 and 34 of its US patent number 5,970,479 and all claims of its US patents numbers 6,912,510; 7,149,720; and 7,725,375.

more from across site and SHARED ros bottom lb

More from across our site

Price hikes at ‘big law’ firms are pushing some clients toward boutiques that offer predictable fees, specialised expertise, and a model built around prioritising IP
The Australian side, in particular, can benefit by capitalising on its independent status to bring in more work from Western countries while still working with its former Chinese partner
Koen Bijvank of Brinkhof and Johannes Heselberger of Bardehle Pagenberg discuss the Amgen v Sanofi case and why it will be cited frequently
View the official winners of the 2025 Social Impact EMEA Awards
King & Wood Mallesons will break into two entities, 14 years after a merger between a Chinese and an Australian firm created the combined outfit
Teams from Shakespeare Martineau and DWF will take centre stage in a dispute concerning the registrability of dairy terminology in plant-based products
Senem Kayahan, attorney and founder at PatentSe, discusses how she divides prosecution tasks, and reveals the importance of empathetic client advice
The association’s Australian group has filed a formal complaint against the choice of venue, citing Dubai as an unsafe environment for the LGBTQIA+ community
Firm says appointment of Nick McDonald will boost its expertise in cross-border disputes, including at the Unified Patent Court
In the final episode of a podcast series celebrating the tenth anniversary of IP Inclusive, we discuss the IP Inclusive Charter and the senior leaders’ pledge
Gift this article