Case Overview
On September 14, 2026, in TexasLDPC Inc. v. Broadcom Inc., No. 2025-1074, slip op. at 2–3 (Fed. Cir. Sept. 14, 2026), the Federal Circuit reversed a decision from the District of Delaware dismissing a patent and copyright infringement lawsuit brought by TexasLDPC Inc. (“TexasLDPC”) against Broadcom Inc., LSI Corporation, and Avago Technologies U.S. Inc. (collectively, “Broadcom”). The Federal Circuit held that TexasLDPC’s exclusive license agreement with Texas A&M University (“Texas A&M”) remained effective despite TexasLDPC’s decision to discontinue commercialization activities and focus exclusively on patent enforcement. Slip Op. at 2–3. The Court further determined that the agreement transferred “all substantial rights” in the asserted patents, permitting TexasLDPC to sue independently under 35 U.S.C. § 281 without joining Texas A&M. Id. at 3.
The dispute arose from a license covering five patents and three copyrights relating to low-density parity-check technology developed at Texas A&M. Id. at 3. The agreement granted TexasLDPC exclusive commercialization, sublicensing, and enforcement rights in exchange for equity, sublicensing royalties, and a share of infringement recoveries. Id. at 4. These rights were subject to a preexisting non-exclusive license with Marvell International, Ltd. Id. at 4. Texas A&M retained limited rights, including research and educational use. Id.
TexasLDPC sued Broadcom in December 2018. Id. at 6. By summer 2019, however, TexasLDPC had exhausted its capital without securing customers or sublicensees and shifted exclusively to litigation. Id. at 5. Broadcom moved to dismiss, arguing that the shift automatically terminated the agreement and that Texas A&M was a necessary party because TexasLDPC lacked all substantial patent rights. Id. at 6–7. The district court agreed, additionally finding that Texas A&M’s assertion of sovereign immunity impeded discovery necessary to determine damages. Id. at 7–8. Because Texas A&M could not be compelled to join the litigation, the district court dismissed the infringement claims. Id. at 8.
Court’s Analysis
Patent Enforcement Constitutes Continued Business Operations
The Federal Circuit first rejected the district court’s conclusion that TexasLDPC’s transition to enforcement-only activities triggered the agreement’s automatic termination provision, which applied if TexasLDPC “cease[d] its business operations.” Id. at 10. The agreement expressly included enforcement within its definition of “commercially reasonable efforts,” permitted enforcement activities without generating sales or sublicensing revenue, and contemplated sharing infringement recoveries with Texas A&M. Id. at 11. These provisions demonstrated that enforcement was an authorized business operation. Id. at 11. The district court had interpreted business operations as requiring continued commercialization or development, treating litigation as merely ancillary. Id. at 12.
The Court also rejected the district court’s reliance on contractual recitals emphasizing commercialization. Id. at 12. Citing Furmanite Worldwide, Inc. v. NextCorp, Ltd., 339 S.W.3d 326, 336 (Tex. App. 2011), the Court explained that recitals cannot override unambiguous operative provisions. Id. Accordingly, the agreement did not terminate when TexasLDPC shifted exclusively to enforcement. Id. at 14.
The Agreement Transferred All Substantial Patent Rights
The Federal Circuit next considered whether TexasLDPC could independently sue under 35 U.S.C. § 281, which authorizes a “patentee” to bring an infringement action. Id. at 14. An exclusive licensee may sue independently when its agreement transfers “all substantial rights,” rendering the transaction tantamount to an assignment. Id. (citing Alfred E. Mann Found. for Sci. Rsch. v. Cochlear Corp., 604 F.3d 1354, 1358–59 (Fed. Cir. 2010)).
The inquiry considers the totality of the agreement, with particular emphasis on the exclusive rights to make, use, and sell the patented invention and the patent owner’s retained enforcement authority. Id. (citing Univ. of S. Fla. Rsch. Found., Inc. v. Fujifilm Med. Sys. U.S.A., Inc., 19 F.4th 1315, 1320 (Fed. Cir. 2021)).
TexasLDPC possessed exclusive rights to commercialize, sublicense, enforce, and recover damages for infringement without Texas A&M’s approval. Id. at 15. Although Texas A&M retained research rights, assignment approval authority, certain termination rights, and enforcement authority concerning Marvell, the Federal Circuit concluded that these reservations did not materially diminish TexasLDPC’s substantial rights. Id. at 15–17.
The Court compared the agreement to those in Luminara Worldwide, LLC v. Liown Electronics Co., 814 F.3d 1343 (Fed. Cir. 2016), and Propat International Corp. v. RPost, Inc., 473 F.3d 1187 (Fed. Cir. 2007). Id. at 16–18. In Luminara, retained practice rights and financial interests did not prevent the licensee from possessing all substantial rights. Id. at 16–17. Conversely, in Propat, the patent owner retained veto authority over licensing and litigation decisions, substantially restricting the licensee’s control. Id. at 17–18.
Although characterizing the inquiry as a “close call,” the Federal Circuit found the agreement more analogous to Luminara. Id. at 17. TexasLDPC possessed an “essentially unfettered” enforcement right, while Texas A&M’s retained authority was limited to Marvell. Id. at 17. The Court further determined that independent enforcement would neither expose Broadcom to multiple infringement lawsuits nor jeopardize substantial rights retained by Texas A&M. Id. at 18.
Texas A&M was not a necessary party under Rule 19
Finally, the Federal Circuit rejected the district court’s determination that Texas A&M was a necessary party under Federal Rule of Civil Procedure 19. Id. at 20–24. Because TexasLDPC possessed all substantial rights, Texas A&M’s absence neither impaired its remaining interests nor exposed Broadcom to multiple or inconsistent obligations under Rule 19(a)(1)(B). Id. at 21.
The Court separately rejected the conclusion that Texas A&M was necessary under Rule 19(a)(1)(A) because its sovereign immunity prevented Broadcom from obtaining additional licensing information relevant to reasonable royalty damages under Georgia-Pacific Corp. v. U.S. Plywood Corp. Id. at 21–22.
The Federal Circuit emphasized that “Rule 19 is not a discovery tool.” Id. at 22. The need to obtain evidence from an absent entity does not make that entity necessary where meaningful relief remains available. Id. at 22–24. Moreover, Texas A&M had produced the two licenses directly involving the asserted patents, and Broadcom’s damages expert had completed a Georgia-Pacific analysis without the additional information. Id. at 23–24. The Court concluded that Texas A&M’s absence did not prevent complete relief. Id. at 24.
Ruling
The Federal Circuit reversed the dismissal, holding that TexasLDPC’s enforcement activities did not terminate its license, that the agreement transferred all substantial patent rights necessary to sue independently, and that Texas A&M was not otherwise a necessary party under Rule 19. Id. at 24–25.
Conclusion and Commentary
The practical significance of TexasLDPC extends beyond determining whether an exclusive licensee may independently enforce patents. The decision recognizes that patent enforcement can constitute a legitimate business operation, even when traditional commercialization efforts have ended. For patent owners seeking to monetize intellectual property through enforcement, the ruling confirms that licensing arrangements may contemplate litigation as an alternative means of realizing economic value.
Importantly, however, the Court’s conclusion depended on contractual provisions expressly recognizing enforcement as a commercially reasonable activity. The decision does not establish that enforcement necessarily qualifies as continued business operations under every license. Patent owners and licensees should therefore ensure that termination provisions expressly accommodate enforcement activities, particularly where commercialization milestones or minimum royalty requirements might otherwise threaten the agreement’s continued effectiveness.
The decision also clarifies the significance of retained patent rights. Patent owners may preserve financial interests, research privileges, and limited contractual protections without necessarily preventing a licensee from possessing all substantial rights. But retaining veto authority over infringement actions, licensing decisions, or settlements may undermine the licensee’s ability to sue independently. The critical consideration is not the agreement’s designation as an exclusive license, but the actual allocation of control over patent exploitation and enforcement.
Finally, the Court’s Rule 19 analysis limits attempts to compel joinder merely to obtain discovery from an absent patent owner, particularly universities and other entities asserting sovereign immunity. Although discovery difficulties may remain, they do not independently justify dismissal where meaningful relief can be afforded.
Ultimately, TexasLDPC provides important guidance for structuring patent monetization arrangements. Patent owners seeking to preserve economic benefits while transferring enforcement responsibility should clearly define the licensee’s authority, limit retained controls that could undermine independent enforcement, and anticipate transitions from commercialization to litigation. The Court’s acknowledgment that the substantial-rights inquiry was a “close call” nevertheless demonstrates that ambiguity in these arrangements can expose enforcement actions to costly challenges, even years after litigation begins.