diff --git a/src/compiler/checker.ts b/src/compiler/checker.ts
index ca6ab49708c75..36dad0b34b05d 100644
--- a/src/compiler/checker.ts
+++ b/src/compiler/checker.ts
@@ -14046,7 +14046,7 @@ export function createTypeChecker(host: TypeCheckerHost): TypeChecker {
             else if (type !== firstType) {
                 checkFlags |= CheckFlags.HasNonUniformType;
             }
-            if (isLiteralType(type) || isPatternLiteralType(type) || type === uniqueLiteralType) {
+            if (isLiteralType(type) || isPatternLiteralType(type)) {
                 checkFlags |= CheckFlags.HasLiteralType;
             }
             if (type.flags & TypeFlags.Never && type !== uniqueLiteralType) {
diff --git a/tests/baselines/reference/inferenceAndHKTs.symbols b/tests/baselines/reference/inferenceAndHKTs.symbols
new file mode 100644
index 0000000000000..8542a0b36222e
--- /dev/null
+++ b/tests/baselines/reference/inferenceAndHKTs.symbols
@@ -0,0 +1,100 @@
+=== tests/cases/compiler/inferenceAndHKTs.ts ===
+// Repro from #53970
+
+export interface TypeLambda {
+>TypeLambda : Symbol(TypeLambda, Decl(inferenceAndHKTs.ts, 0, 0))
+
+    readonly A: unknown;
+>A : Symbol(TypeLambda.A, Decl(inferenceAndHKTs.ts, 2, 29))
+}
+
+export interface TypeClass<F extends TypeLambda> {
+>TypeClass : Symbol(TypeClass, Decl(inferenceAndHKTs.ts, 4, 1))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 6, 27))
+>TypeLambda : Symbol(TypeLambda, Decl(inferenceAndHKTs.ts, 0, 0))
+
+    readonly _F: F;
+>_F : Symbol(TypeClass._F, Decl(inferenceAndHKTs.ts, 6, 50))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 6, 27))
+}
+
+export type Apply<F extends TypeLambda, A> = F extends { readonly type: unknown }
+>Apply : Symbol(Apply, Decl(inferenceAndHKTs.ts, 8, 1))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 10, 18))
+>TypeLambda : Symbol(TypeLambda, Decl(inferenceAndHKTs.ts, 0, 0))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 10, 39))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 10, 18))
+>type : Symbol(type, Decl(inferenceAndHKTs.ts, 10, 56))
+
+    ? (F & { readonly A: A })['type']
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 10, 18))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 11, 12))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 10, 39))
+
+    : { readonly F: F, readonly A: A };
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 12, 7))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 10, 18))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 12, 22))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 10, 39))
+
+export interface T<A> {
+>T : Symbol(T, Decl(inferenceAndHKTs.ts, 12, 39))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 14, 19))
+
+    value: A;
+>value : Symbol(T.value, Decl(inferenceAndHKTs.ts, 14, 23))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 14, 19))
+}
+
+export interface TTypeLambda extends TypeLambda {
+>TTypeLambda : Symbol(TTypeLambda, Decl(inferenceAndHKTs.ts, 16, 1))
+>TypeLambda : Symbol(TypeLambda, Decl(inferenceAndHKTs.ts, 0, 0))
+
+    readonly type: T<this["A"]>;
+>type : Symbol(TTypeLambda.type, Decl(inferenceAndHKTs.ts, 18, 49))
+>T : Symbol(T, Decl(inferenceAndHKTs.ts, 12, 39))
+}
+
+export declare const map: <F extends TypeLambda>(F: TypeClass<F>) => <A, B>(a: Apply<F, A>, f: (a: A) => B) => Apply<F, B>;
+>map : Symbol(map, Decl(inferenceAndHKTs.ts, 22, 20))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 22, 27), Decl(inferenceAndHKTs.ts, 22, 49))
+>TypeLambda : Symbol(TypeLambda, Decl(inferenceAndHKTs.ts, 0, 0))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 22, 27), Decl(inferenceAndHKTs.ts, 22, 49))
+>TypeClass : Symbol(TypeClass, Decl(inferenceAndHKTs.ts, 4, 1))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 22, 27), Decl(inferenceAndHKTs.ts, 22, 49))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 22, 70))
+>B : Symbol(B, Decl(inferenceAndHKTs.ts, 22, 72))
+>a : Symbol(a, Decl(inferenceAndHKTs.ts, 22, 76))
+>Apply : Symbol(Apply, Decl(inferenceAndHKTs.ts, 8, 1))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 22, 27), Decl(inferenceAndHKTs.ts, 22, 49))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 22, 70))
+>f : Symbol(f, Decl(inferenceAndHKTs.ts, 22, 91))
+>a : Symbol(a, Decl(inferenceAndHKTs.ts, 22, 96))
+>A : Symbol(A, Decl(inferenceAndHKTs.ts, 22, 70))
+>B : Symbol(B, Decl(inferenceAndHKTs.ts, 22, 72))
+>Apply : Symbol(Apply, Decl(inferenceAndHKTs.ts, 8, 1))
+>F : Symbol(F, Decl(inferenceAndHKTs.ts, 22, 27), Decl(inferenceAndHKTs.ts, 22, 49))
+>B : Symbol(B, Decl(inferenceAndHKTs.ts, 22, 72))
+
+declare const typeClass: TypeClass<TTypeLambda>;
+>typeClass : Symbol(typeClass, Decl(inferenceAndHKTs.ts, 24, 13))
+>TypeClass : Symbol(TypeClass, Decl(inferenceAndHKTs.ts, 4, 1))
+>TTypeLambda : Symbol(TTypeLambda, Decl(inferenceAndHKTs.ts, 16, 1))
+
+declare const a: T<number>;
+>a : Symbol(a, Decl(inferenceAndHKTs.ts, 26, 13))
+>T : Symbol(T, Decl(inferenceAndHKTs.ts, 12, 39))
+
+const x1 = map(typeClass);
+>x1 : Symbol(x1, Decl(inferenceAndHKTs.ts, 28, 5))
+>map : Symbol(map, Decl(inferenceAndHKTs.ts, 22, 20))
+>typeClass : Symbol(typeClass, Decl(inferenceAndHKTs.ts, 24, 13))
+
+const x2 = map(typeClass)(a, (_) => _);  // T<number>
+>x2 : Symbol(x2, Decl(inferenceAndHKTs.ts, 29, 5))
+>map : Symbol(map, Decl(inferenceAndHKTs.ts, 22, 20))
+>typeClass : Symbol(typeClass, Decl(inferenceAndHKTs.ts, 24, 13))
+>a : Symbol(a, Decl(inferenceAndHKTs.ts, 26, 13))
+>_ : Symbol(_, Decl(inferenceAndHKTs.ts, 29, 30))
+>_ : Symbol(_, Decl(inferenceAndHKTs.ts, 29, 30))
+
diff --git a/tests/baselines/reference/inferenceAndHKTs.types b/tests/baselines/reference/inferenceAndHKTs.types
new file mode 100644
index 0000000000000..51fc87bf76b8d
--- /dev/null
+++ b/tests/baselines/reference/inferenceAndHKTs.types
@@ -0,0 +1,64 @@
+=== tests/cases/compiler/inferenceAndHKTs.ts ===
+// Repro from #53970
+
+export interface TypeLambda {
+    readonly A: unknown;
+>A : unknown
+}
+
+export interface TypeClass<F extends TypeLambda> {
+    readonly _F: F;
+>_F : F
+}
+
+export type Apply<F extends TypeLambda, A> = F extends { readonly type: unknown }
+>Apply : Apply<F, A>
+>type : unknown
+
+    ? (F & { readonly A: A })['type']
+>A : A
+
+    : { readonly F: F, readonly A: A };
+>F : F
+>A : A
+
+export interface T<A> {
+    value: A;
+>value : A
+}
+
+export interface TTypeLambda extends TypeLambda {
+    readonly type: T<this["A"]>;
+>type : T<this["A"]>
+}
+
+export declare const map: <F extends TypeLambda>(F: TypeClass<F>) => <A, B>(a: Apply<F, A>, f: (a: A) => B) => Apply<F, B>;
+>map : <F extends TypeLambda>(F: TypeClass<F>) => <A, B>(a: Apply<F, A>, f: (a: A) => B) => Apply<F, B>
+>F : TypeClass<F>
+>a : Apply<F, A>
+>f : (a: A) => B
+>a : A
+
+declare const typeClass: TypeClass<TTypeLambda>;
+>typeClass : TypeClass<TTypeLambda>
+
+declare const a: T<number>;
+>a : T<number>
+
+const x1 = map(typeClass);
+>x1 : <A, B>(a: T<A>, f: (a: A) => B) => T<B>
+>map(typeClass) : <A, B>(a: T<A>, f: (a: A) => B) => T<B>
+>map : <F extends TypeLambda>(F: TypeClass<F>) => <A, B>(a: Apply<F, A>, f: (a: A) => B) => Apply<F, B>
+>typeClass : TypeClass<TTypeLambda>
+
+const x2 = map(typeClass)(a, (_) => _);  // T<number>
+>x2 : T<number>
+>map(typeClass)(a, (_) => _) : T<number>
+>map(typeClass) : <A, B>(a: T<A>, f: (a: A) => B) => T<B>
+>map : <F extends TypeLambda>(F: TypeClass<F>) => <A, B>(a: Apply<F, A>, f: (a: A) => B) => Apply<F, B>
+>typeClass : TypeClass<TTypeLambda>
+>a : T<number>
+>(_) => _ : (_: number) => number
+>_ : number
+>_ : number
+
diff --git a/tests/cases/compiler/inferenceAndHKTs.ts b/tests/cases/compiler/inferenceAndHKTs.ts
new file mode 100644
index 0000000000000..00887c7fa9157
--- /dev/null
+++ b/tests/cases/compiler/inferenceAndHKTs.ts
@@ -0,0 +1,33 @@
+// @strict: true
+// @noEmit: true
+
+// Repro from #53970
+
+export interface TypeLambda {
+    readonly A: unknown;
+}
+
+export interface TypeClass<F extends TypeLambda> {
+    readonly _F: F;
+}
+
+export type Apply<F extends TypeLambda, A> = F extends { readonly type: unknown }
+    ? (F & { readonly A: A })['type']
+    : { readonly F: F, readonly A: A };
+
+export interface T<A> {
+    value: A;
+}
+
+export interface TTypeLambda extends TypeLambda {
+    readonly type: T<this["A"]>;
+}
+
+export declare const map: <F extends TypeLambda>(F: TypeClass<F>) => <A, B>(a: Apply<F, A>, f: (a: A) => B) => Apply<F, B>;
+
+declare const typeClass: TypeClass<TTypeLambda>;
+
+declare const a: T<number>;
+
+const x1 = map(typeClass);
+const x2 = map(typeClass)(a, (_) => _);  // T<number>