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 2026

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

Cookies Settings

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

An increase in instructions from domestic companies and litigation for international clients are driving success for the Chinese IP firm, according to two lead partners
Ankur Sangal said he wants his team, nearly 30-strong already, to respond to a growing demand for specialist, commercially focused IP advice in a ‘rapidly evolving’ Indian market
As AI adoption accelerates across corporate IP departments, Simon Webster, president of IP at Clarivate, argues that success will depend less on technology alone and more on data quality, workflow design, and organisational readiness
After months of speculation over his next move, former Texas patent judge Alan Albright has found a new home at the firm’s Austin office
Law firms can now participate in the research for the Managing IP Awards and IP STARS rankings
The firm has hired former Norton Rose Fulbright patent prosecution leader Ronak Kalhor-Witzel as it seeks to strengthen its position in high-value technology, UPC and international patent matters
Angela Dunning shares why it’s an exciting time to be practising at the intersection of AI and IP, where the law is actively being made
The Dutch division is cementing its position as the UPC's primary alternative to Germany, with a consistent share of filings and growing market influence
Junior lawyers aren’t unwilling to work hard, as some seniors believe; rather, they are rejecting traditional career advancement models that have limited payoff
Rebekah Gay discusses overcoming self-doubt, supporting the next generation of women lawyers, and how changing client demands are reshaping IP practice
Gift this article