IP Law Daily, PATENT—Fed. Cir.: Asphalt technology developers’ infringement lawsuit against competitor revived on appeal, (May 21, 2026)

By Ravindra Kumar Singh, B.L.

The district court erroneously found that the patent owners lacked Article III standing despite retaining enforcement rights, royalty interests, and control over sublicensing.

Companies engaged in developing asphalt paving technologies retained Article III standing to pursue infringement claims despite granting an exclusive license of the asserted patents to a third party, the U.S. Court of Appeals for the Federal Circuit has determined. The appellate court reversed a federal district court’s dismissal of the underlying infringement lawsuit for lack of constitutional standing, holding that the plaintiffs maintained a non-illusory exclusionary interest through their ability to enforce the patents, control sublicensing, and collect royalties. Therefore, the Federal Circuit reversed the district court’s decision and remanded for further proceedings consistent with its opinion (A.L.M. Holding Co. v. Zydex Industries Private Ltd., No. 25-1317 (Fed. Cir. May 19, 2026)).

Background. A.L.M. Holding Company and Ergon Asphalt & Emulsions, Inc., joint owners of six patents relating to warm-mix asphalt technology, sued Zydex Industries Private Ltd. and Zydex Inc., manufacturers of asphalt additives, alleging infringement of their patented methods and compositions. Before filing suit, A.L.M. and Ergon had granted an exclusive, worldwide license to a third-party manufacturer.

The asserted patents were U.S. Patent Nos. 7,815,725 (the ’725 patent), 7,981,466 (the ’466 patent); 9,394,652 (the ’652 patent); 10,214,646 (the ’646 patent); 8,734,581 (the ’581 patent); and 9,175,446 (the ’446 patent). These patents relate to methods and compositions for producing warm-mix asphalt, enabling paving at lower temperatures with improved efficiency and reduced emissions.

In March 2024, A.L.M. and Ergon filed suit in the District of Delaware alleging infringement. Zydex moved to dismiss, arguing that the plaintiffs lacked Article III standing because they had transferred all meaningful rights to their exclusive licensee. The district court agreed and dismissed the case without prejudice. It held that A.L.M. and Ergon’s retained rights—including their right to sue, royalty interests, and ability to approve sublicenses—did not constitute exclusionary rights sufficient to establish a concrete injury in fact. Relying on Morrow v. Microsoft Corp., 499 F.3d 1332 (Fed. Cir. 2007), the court concluded that the retained right to sue was insufficient. A.L.M. and Ergon appealed.

Standing framework. Reviewing the issue de novo, the Federal Circuit explained that Article III standing requires an injury in fact that is concrete, particularized, and actual or imminent. In patent cases, this turns on whether the plaintiff possesses an exclusionary right—a legally protected interest in excluding others from practicing the patented invention. The court emphasized that constitutional standing is distinct from statutory standing under 35 U.S.C. § 281. While statutory standing asks whether a party holds “all substantial rights,” Article III requires only that the plaintiff retain at least one non-illusory exclusionary right.

Retained enforcement rights. Applying that framework, the Federal Circuit held that A.L.M. and Ergon retained sufficient exclusionary rights. The court identified their retained right to sue as a strong indicator of an exclusionary interest. Under the license agreement, A.L.M. and Ergon could independently initiate infringement actions if the licensee declined, control the litigation, and retain any recovery. This authority reflected a continuing ability to exclude unauthorized users.

Royalty interests. The court also relied on A.L.M. and Ergon’s entitlement to royalties from both the licensee and any sublicensees. While royalty interests alone do not establish standing, they, when combined with enforcement authority, reinforce the existence of an exclusionary right. Infringement would directly deprive A.L.M. and Ergon of royalty income, constituting a concrete injury tied to unauthorized use of the patented technology.

Control over sublicensing. The Federal Circuit further emphasized that A.L.M. and Ergon retained control over sublicensing. The agreement required the licensee to obtain prior approval before granting sublicenses, and any sublicensed sales generated royalties payable to the plaintiffs. This veto power ensured that the licensee could not unilaterally authorize third parties to practice the patents without A.L.M. and Ergon’s consent, preserving their exclusionary interest.

Non-illusory right to sue. A central issue was whether A.L.M. and Ergon’s right to sue was illusory. The court explained that a right becomes illusory if another party can unilaterally nullify it, such as by granting royalty-free sublicenses to accused infringers. Here, however, the licensee’s rights were constrained. It could not sublicense without consent, and all sublicenses remained subject to royalty obligations. A.L.M. and Ergon also retained the ability to terminate the agreement for breach. These limitations ensured that their right to sue remained meaningful.

Distinguishing precedent. The Federal Circuit was unpersuaded by the district court’s reliance on Morrow, where the plaintiff held only a bare contractual right to sue without ownership or other patent rights. By contrast, A.L.M. and Ergon remained patent owners and retained multiple interconnected rights. The court instead found Alfred E. Mann Foundation for Scientific Research v. Cochlear Corp., 604 F.3d 1354 (Fed. Cir. 2010), instructive, where similar retained rights supported standing.

Clarifying standing doctrine. The court also addressed confusion over the distinction between constitutional and statutory standing. It clarified that while the “all substantial rights” test governs statutory standing, a patent owner does not need to retain all such rights to satisfy Article III. Citing Intell. Tech LLC v. Zebra Techs. Corp., 101 F.4th 807 (Fed. Cir. 2024), the court reiterated that retaining at least one meaningful exclusionary right is sufficient.

Disposition. Finally, the Federal Circuit found that A.L.M. Holding Company and Ergon Asphalt retained a sufficient exclusionary interest to establish Article III standing. It reversed the district court’s dismissal and remanded for further proceedings, awarding costs to the appellants.

The Case is No. 25-1317.

Judge: Chen, R.

Cases: Patent FedCirNews