CAFC Affirms $84.8 Million Antitrust Verdict Against Ingevity in Patent Tying Case

The U.S. Court of Appeals for the Federal Circuit (CAFC) today issued a precedential decision in Ingevity Corporation v. BASF Corporation, affirming a jury verdict that found Ingevity liable for unlawful tying under federal antitrust laws. On appeal, the CAFC upheld the U.S. District Court for the District of Delaware’s decision to deny Ingevity’s post-trial motions for judgment as a matter of law (JMOL). As a result, the ruling included an award of more than $84 million in trebled damages to BASF Corporation (BASF). Judge Lourie authored the unanimous opinion, joined by Judges Prost and Cunningham.

The dispute focused on carbon honeycombs, an activated carbon structure used to filter airborne pollutants in automobiles. Ingevity Corporation, Ingevity South Carolina, LLC, and BASF manufacture these honeycombs for use in two different applications of air-intake systems and fuel vapor canisters. Ingevity owns U.S. Patent RE38,844, which is directed to a dual-stage fuel-vapor canister system. While honeycombs used in fuel vapor canisters fall within the scope of the ‘844 patent, those used in air-intake systems do not, a central distinction in the case.

In 2016, BASF began marketing its EvapTrap XC, a carbon honeycomb with dimensions and cell density comparable to those of Ingevity’s products, but produced with different materials and manufacturing processes. In 2018, Ingevity filed a lawsuit against BASF for infringement of the ‘844 patent, meanwhile BASF asserted counterclaims for unlawful tying and exclusive dealing under the Sherman Act, and tortious interference under Delaware law. BASF alleged that Ingevity illegally conditioned licenses to the ‘844 patent, the tying product, on a customer’s agreement to exclusively purchase Ingevity’s unpatented honeycomb products, the tied product. Before the trial on the counterclaims, the district court granted summary judgment that the asserted claims of the ‘844 patent were invalid under pre-AIA 35 U.S.C. § 102(g). After a jury trial on BASF’s counterclaims, the jury found Ingevity had engaged in unlawful tying and awarded BASF $28,285,714 in antitrust damages, which the district court later trebled to $84,857,142.

Moreover, Ingevity argued that its conduct was protected under the patent laws because its honeycomb products were “nonstaple goods,” meaning they lacked substantial non-infringing uses. Under 35 U.S.C. § 271(d), a patent owner has a statutory right to control nonstaple goods, but the CAFC rejected this argument, finding that substantial evidence supported the jury’s determination that Ingevity’s honeycombs were in fact staple goods. The court pointed to Ingevity’s own sales records, which showed over 18,000 units sold for non-infringing air-intake applications across multiple years. Although Ingevity claimed these records contained “typographical errors,” it provided no corroborating documents or testimony from the listed salespeople or customers. BASF also introduced the Park patent, which disclosed that Ingevity’s honeycomb manufacturing process had an “intended application” in air-intake systems. The jury also heard testimony from Ed Woodcock, president of Ingevity’s automotive-products division, “who admitted at trial that in order to obtain a license [to the ‘844 patent,] Ingevity requires that customers buy the honeycombs only from Ingevity.”

Furthermore, Ingevity argued that its conduct was immune from antitrust liability under the Noerr-Pennington doctrine, which shields certain conduct from antitrust liability when it involves petitioning the government. The CAFC found that Ingevity had forfeited this argument because it was materially different from the one it had made before the district court. At the district court, Ingevity had argued that its conduct was merely patent enforcement communications, which are protected. On appeal, however, Ingevity argued that the tying conduct itself was immune, regardless of whether the honeycombs were staple goods. The CAFC noted that “Ingevity had agreed to a jury instruction stating that immunity does not apply to conduct, such as tying or exclusive dealing, that unlawfully restricts competition beyond the scope of the patent monopoly.” The court found no legal precedent to support extending immunity to the actual tying of staple goods, and Ingevity’s counsel admitted at oral argument that “there is no case either way” on the issue. Since the jury was properly instructed that patent enforcement communications alone could not support a tying violation, the CAFC reasoned that the jury necessarily found Ingevity’s conduct went beyond protected communications.

Ingevity challenged the jury’s damages award, arguing that BASF had failed to disaggregate damages caused by lawful patent enforcement from those caused by unlawful tying. The CAFC disagreed, explaining that BASF only needed to show that Ingevity’s unlawful conduct was a “material cause” of its injury. The court found that the jury had reasonably credited the testimony of BASF’s damages expert, Dr. Divya Mathur, who testified that disaggregation was impossible because the same exclusionary practices simultaneously affected price, access, and customer choice. BASF’s honeycomb evidence showed that it was cheaper and performed better than Ingevity’s, and that several automakers had expressed interest in BASF’s products and undertaken validation testing. The record also showed Ingevity internally viewed BASF as a competitive “threat” and responded by selectively raising prices to coerce customers into exclusivity.

The CAFC dismissed Ingevity’s appeal of the district court’s patent invalidity ruling and explained that, because it was affirming the unlawful tying verdict, the ‘844 patent was rendered unenforceable while it had already expired on March 18, 2022. Ultimately, the CAFC found all of Ingevity’s remaining arguments unpersuasive and affirmed the district court’s judgment in its entirety.