INGEVITY CORPORATION v. BASF CORPORATION

Authored by: Jeremy J. Gustrowsky

The Federal Circuit recently upheld a multimillion-dollar antitrust verdict against a patent holder who conditioned patent licenses on customers’ exclusive purchase of its products. The case centered on carbon honeycombs—activated carbon structures used to filter pollutants in automobiles—and whether requiring customers to buy only from the patent holder crossed the line from legitimate patent enforcement into illegal anticompetitive behavior.

Ingevity Corporation and BASF Corporation both manufacture carbon honeycombs marketed for automobile air-intake systems and fuel vapor canisters. Ingevity owned U.S. Patent RE38,844, which covers dual-stage fuel vapor canister systems. Importantly, the patent only covers honeycombs used in fuel vapor canisters, not those used in air-intake systems. When BASF began marketing a competing product in 2016, Ingevity sued for patent infringement. BASF counterclaimed, alleging that Ingevity had created an unlawful “tying” arrangement by requiring customers who wanted a license to the patent to purchase all their honeycomb needs exclusively from Ingevity.

Under antitrust law, tying occurs when a seller conditions the sale of one product on the buyer also purchasing another product. While patent holders generally have the right to control “nonstaple goods”—products that can only be used in an infringing manner—they cannot use their patents to control “staple goods” that have substantial non-infringing uses. The critical question became whether Ingevity’s honeycombs had actual and substantial uses outside the scope of the patent.

The jury found they did. BASF presented Ingevity’s own business records showing repeated sales of honeycombs for air-intake applications—a non-infringing use—totaling over 18,000 units to multiple customers over several years. Internal company memos and technical evidence supported these records. Ingevity’s president even admitted at trial that customers had to buy honeycombs only from Ingevity to obtain a license. While Ingevity argued the sales records contained typographical errors and that its honeycombs could not physically be used in air-intake systems, the court noted that Ingevity offered no expert testimony or documents to support these claims. The jury was entitled to credit the documentary evidence over the interested testimony of company executives.

Ingevity also argued its conduct was immune from antitrust liability because it was merely enforcing its patent rights. The Federal Circuit rejected this argument, noting that Ingevity had agreed during trial that tying and exclusive dealing are not immune activities. The court found that Ingevity’s conduct went beyond protected patent communications—it created a “classic tying arrangement” by conditioning licenses on product purchases. Having lost on that theory below, Ingevity could not reframe its argument on appeal. The court affirmed the jury’s $28,285,714 damages award (later trebled by the district court), finding substantial evidence supported both liability and the amount of harm BASF suffered from being excluded from the market.