Under U.S. patent law, only the “patentee” can file an infringement suit. Normally, this means that only the patent owner can sue infringers. However, licensees under a license from the owner can sometimes sue infringers on their own, without dragging the owner into court, if the patent license has transferred enough control to make the licensee the practical patent owner. This may be the intended result or completely unintended, but the terms of the patent license entire control this issue, as demonstrated in the recent precedential decision from the Federal Circuit: TexasLDPC Inc. v. Broadcom Inc., No. 2025-1074 (Sept. 14, 2026).
In this case, Texas A&M owned patents on error-correction technology for data signals. A&M granted an exclusive license to the startup company TexasLDPC, which never acquired any customers. By 2019, TexasLDPC had run out of money and shifted entirely to suing infringers. In this case, it sued Broadcom without joining A&M as a co-plaintiff. The trial court dismissed the case by determining that the license had automatically terminated when TexasLDPC “ceased business operations” by becoming a litigation-only entity, and that even if the license survived, TexasLDPC didn’t own sufficient rights under the license to sue alone, without joining A&M. The Federal Circuit reversed on both issues and reinstated the suit.
When Can a Patent Licensee Sue for Infringement?
The Federal Circuit first determined that “business operations” include enforcement. The contract repeatedly treated litigation as legitimate — making licensee responsible for enforcement and giving A&M a share of any recovery. Thus, enforcement alone was a sufficient business operation to continue the license.
When a License Transfers “All Substantial Rights”
On the more interesting issue, the Federal Circuit decided that TexasLDPC held “all substantial rights” such that it could sue infringers by itself, without joining A&M in the lawsuit. In deciding this issue, courts examine the whole agreement, but they focus on two things: the exclusive right to make, use, and sell the invention, and how much of the right to sue the patent owner owner has kept. TexasLDPC had an unfettered, exclusive right to enforce the patents and keep all of the damages, with no owner veto. That means that defendants could not be sued twice on the same patent, which is the main concern behind joinder the rule. What little A&M retained in the license didn’t matter enough. A&M retained a right to practice the patents for research, a financial interest, approval over subsequent assignment, and a narrow right to sue one particular licensee from a previous relationship. Be wary, though. Prior cases show that even small changes in the license could have flipped the result — such as an owner’s veto over litigation or settlement, or a pre-approved list dictating whom the licensee may sue.
In this case, A&M also was not a “necessary party.” Broadcom argued A&M had to be joined so it could be forced to produce licensing documents relevant to damages. Here, the federal circuit refused to let the desire for more discovery trump precedent on this issue indicating that A&M was not necessary.
Key Takeaways for Drafting Patent License Agreements
The takeaway for tech business is to draft patent licenses very carefully, clearly indicate who has all of the potential rights, including the right to sue. Also be careful when licensing patents from third parties, especially if you expect to be able to control any enforcement, collect any damages, and if you need the authority to grant sublicenses.
For companies entering into patent license agreements, clearly defining enforcement rights, litigation control, sublicensing authority, and other key provisions can help avoid unintended consequences. Contact Conley Rose to discuss how your organization can structure patent license agreements to protect its rights and business objectives.