In February, the Court of Appeals for the Federal Circuit affirmed an $84.8 million damages award, treble the jury’s $28.3 million verdict, arising from antitrust counterclaims in Ingevity Corp. v. BASF Corp. The decision highlights the limits of patent enforcement where antitrust principles apply, reinforcing that patentees may not use licensing practices to extend patent-based control into adjacent markets for non-infringing or unpatented products.
BASF’s counterclaims for unlawful tying, exclusive dealing, and tortious interference, arising from Ingevity’s licensing and commercial conduct involving U.S. Patent RE38,844, went to trial. The patent covers honeycombs in fuel vapor canisters, which are used to capture fuel vapors and reduce vehicle emissions, but does not extend to air intake systems. The jury found that Ingevity unlawfully conditioned access to a license for the ’844 patent on the purchase of all honeycomb products from Ingevity, including unpatented, staple good activated carbon honeycombs for air intake systems. This conduct extended market power from the tying product market into a separate tied market, in violation of Sections 1 and 2 of the Sherman Act. Staple goods are products with substantial, commercially significant non-infringing uses apart from any patented invention, while non-staple goods are made or adapted specifically for use in a patented invention.
This verdict serves as a cautionary reminder of the need to rigorously evaluate the assertion of patent rights where such enforcement may suppress competition in markets for unpatented goods. This is particularly important where patentees fail to properly assess whether the products at issue are staple or non-staple goods—because licensing arrangements that condition access across distinct markets can expose patentees to significant antitrust liability.
Ingevity contested the jury’s findings in a post-trial motion for judgment as a matter of law (JMOL), asserting that:
- Ingevity acted in “good faith” because it believed its honeycombs were non staple goods, meaning that patent laws would have permitted it to control their sale.
- Any conduct the jury labeled as “tying” was simply communications with customers about patent infringement, which should be immune under the Noerr-Pennington doctrine.
- In addition, Ingevity asserted that the jury’s damages failed to disaggregate damages imputed to unlawful tying from damages that could have stemmed from lawful patent enforcement and that the damages were speculative.
The District Court rejected each argument, holding that the jury was properly instructed on the staple goods issue and there was substantial evidence to support the jury’s staple goods finding. It further found that the evidence demonstrated conduct exceeding mere communications; testimony from Ingevity’s automotive division president showed that customers were required to purchase Ingevity’s honeycombs in order to obtain a patent license. Although Ingevity maintained that its honeycombs were intended only for fuel vapor canister applications, the district court determined that the jury could rely on evidence of sales for non‑infringing uses. Finally, the Court accepted BASF’s expert testimony that disaggregation was impracticable and found the damages model sufficiently grounded in the record rather than speculative.
On appeal, the Federal Circuit affirmed the District Court’s decision, including the $84.8 million damages award. The decision demonstrates that, in certain markets, patent enforcement strategy cannot be cabined to questions of validity and infringement alone. Where patent‑derived market power is leveraged from a tying market into a distinct tied market, traditional antitrust constraints may apply, and failure to rigorously assess market definition and staple good status can potentially result in substantial liability.
Notes and Definitions
Staple vs. Non-Staple Goods
Staple goods are products that have substantial, commercially significant non‑infringing uses apart from any patented invention. Because they are capable of lawful use with independent demand outside the patent, antitrust law treats them as ordinary articles of commerce.
In this case, the jury determined that the activated carbon honeycombs used in air intake systems were staple goods because they had substantial non‑infringing uses outside the patented fuel vapor application.
Non‑staple goods, by contrast, are items that have no substantial non‑infringing uses and are made or adapted specifically for use in a patented invention. They are designed exclusively—or nearly so—for practicing the patent and lack independent commercial utility outside infringement.
Noerr-Pennington Immunity
The Noerr‑Pennington doctrine protects the First Amendment right to petition the government and provides immunity from antitrust liability for genuine efforts to influence governmental action, including litigation.
Protected petitioning activity includes:
- Filing lawsuits, including patent infringement actions
- Threatening litigation in good faith
- Communicating with customers, competitors, or regulators about ongoing or prospective litigation (the basis on which Ingevity attempted to assert immunity in this case)
- Seeking legislative, executive, or judicial relief
Ingevity argued that it was entitled to Noerr‑Pennington immunity based on its communications with customers regarding patent infringement. The jury rejected that argument, finding that Ingevity’s conduct extended beyond protected communications and amounted to coercive commercial behavior outside the doctrine’s scope.
Unlawful Tying (Antitrust)
In antitrust, unlawful tying occurs when a seller with market power in one product (the tying product) conditions its sale or license on purchasing a second, distinct product (the tied product). When the tied product is a staple good, tying is a violation of Sections 1 and 2 of the Sherman Act.
Why This Case Went to the Federal Circuit (Not the Third Circuit)
Although Delaware is within the Third Circuit, all patent related appeals, including cases involving mixed patent and antitrust claims, must be heard by the U.S. Court of Appeals for the Federal Circuit, giving that court exclusive appellate jurisdiction.
Author Background: Samir Khatri is a Research Analyst at Coherent Economics. He holds a Bachelor of Arts in Economics and Mathematics, with a minor in Political Science, from Northwestern University, where he graduated with honors in Economics. His senior thesis in behavioral finance investigated the relationship between fractional ownership and the endowment effect. Prior to joining Coherent Economics, Samir contributed as an undergraduate research assistant on projects spanning development economics and antitrust.
The views and opinions expressed in this content are solely those of the author and do not necessarily reflect the position or views of the firm, its partners, employees, or affiliates. The information provided is for general informational purposes only and should not be construed as professional advice.