Opinions — Tuesday, May 19, 2026

The Federal Circuit reversed the District of Delaware's dismissal for lack of constitutional standing in A.L.M. Holding Company v. Zydex Industries Private Ltd., holding that patent owners A.L.M. Holding Company and Ergon Asphalt & Emulsions retained sufficient exclusionary rights to satisfy Article III's injury-in-fact requirement despite granting an exclusive license. The appeal concerned six patents relating to warm-mix asphalt paving methods and compositions. Although A.L.M. and Ergon had licensed to Ingevity Corporation exclusive, worldwide rights to manufacture, use, and sell licensed products, they retained the right to sue third-party infringers, veto rights over sublicenses (not to be unreasonably withheld), and royalty interests. The Federal Circuit held that these retained rights, taken together, constituted a non-illusory exclusionary interest sufficient for constitutional standing, distinguishing Morrow v. Microsoft Corp. and drawing on the reasoning of Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp., a statutory standing case analyzing whether a licensee's powers rendered a patent owner's enforcement right illusory.

The decision clarifies the intersection between constitutional standing and the statutory "all substantial rights" test under 35 U.S.C. § 281, acknowledging that prior Federal Circuit precedent had improperly conflated the two inquiries but confirming that factual analyses overlap. While Mann addressed statutory standing, the Federal Circuit relied on its reasoning to determine that a patent owner's retained enforcement right is not illusory when paired with meaningful controls over sublicensing and royalty entitlements, even under an exclusive license. The holding signals that patent owners who retain litigation rights alongside sublicensing veto authority and royalty interests maintain sufficient exclusionary power for Article III purposes, expanding the circumstances under which licensors may independently sue for infringement. This provides patent owners greater latitude to structure exclusive licensing arrangements without forfeiting the constitutional capacity to enforce their patents, clarifying that a right to sue combined with controls preventing the licensee from unilaterally authorizing third-party practice constitutes a concrete, judicially cognizable injury.

The Federal Circuit reversed the Northern District of California's dismissal of Medtronic Ireland's patent infringement counterclaims against Recor Medical for lack of Article III standing. Medtronic Ireland owns patents covering renal neuromodulation systems and had licensed certain rights to an affiliate, Medtronic Galway, while retaining a secondary right to sue, royalty interests, veto authority over sublicenses, and control over which products fell within the license's scope. The district court found these retained rights insufficient for constitutional standing, relying on Morrow v. Microsoft Corp., where a bare right to sue divorced from other exclusionary rights was deemed inadequate.

The Federal Circuit applied its same-day precedential decision in A.L.M. Holding Co. v. Zydex Industries Private Ltd., holding that a patent owner retains an exclusionary right for constitutional standing when its right to sue is not rendered illusory by rights granted to the licensee. The court emphasized that Medtronic Ireland's combination of a secondary enforcement right, royalty interests that attach to any sublicenses, and veto power over sublicensing collectively ensured the licensee could not unilaterally authorize accused infringers to practice the patents through royalty-free sublicenses. The court distinguished Morrow by focusing on whether the licensee could nullify the patent owner's enforcement rights, finding that meaningful because the licensee's sublicensing power remained subject to the patent owner's consent and royalty interests.