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

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

Sources say the judge could return to a disputes or mediation-focussed role, though others have questioned whether the Texas court will remain a litigation hotspot in his absence
Sheppard, which has hired 14 IP partners in the last 12 months, has cited client demand for expert counsel in SEP, ITC, and district court disputes
Tingxi Huo joins our ‘Five minutes with’ series to discuss boosting the value of clients’ IP and the importance of reflection
Hefty legal teams assembled for a three-day hearing in what was the court’s first foray into SEPs since Unwired Planet v Huawei
IP firm's new base will be located inside the tallest office space in the UK's ‘second city’
Practitioners at four firms across Asia and Europe share the do’s and don’ts of mindful networking ahead of the INTA Annual Meeting
Brand Action explains why the IP community can be a force for good in the world as thousands of professionals prepare to head to London for INTA’s Annual Meeting
The firm, which has also hired a senior trademark leader to lead operations in the region, believes greater China to be one of the most important IP jurisdictions
Attorneys at Gibson Dunn share why plaintiffs’ growing reliance on DMCA anti-circumvention claims in AI scraping cases exposes a critical vulnerability
Tom Carver, who spent the last 18 months sailing the Mediterranean, tells Managing IP why he’s ready to return to land
Gift this article