IP Law Daily, PATENT—D. Del.: Patent holder’s communications to customers amounted to unlawful tying, (Apr 12, 2023)

By Patricia K. Ruiz, J.D.

The court had previously agreed to decide the immunity issue after hearing evidence at trial.

A patent-holder accused of unlawful tying was not immune from liability under patent laws and the Noerr-Pennington doctrine, held the District of Delaware, relying on factual findings by the jury at trial. The jury was instructed that it could not find illegal tying if the company’s conduct was limited to “communications about its patent rights to customers,” and the jury’s determination on tying also required a factual determination on the company’s communications (Ingevity Corp. v. BASF Corp., April 11, 2023, Andrews, R.).

Background. Ingevity brought an action against BASF alleging infringement of U.S. Patent No. RE38,844 ("the ’844 patent"). The ’844 patent is a reissue of U.S. Patent No. 6,540,815. The ’844 patent relates to "a method for reducing emissions from evaporative control systems," specifically, by using "vapor-adsorbing materials in hydrocarbon fuel consuming engines." Evaporation of gasoline from motor vehicles is a major source of hydrocarbon air pollution. The claimed invention is aimed at targeting a subset of evaporative emissions known as "diurnal breathing loss" emissions. Ingevity claimed that BASF was manufacturing, testing, and marketing a new generation of BASF’s product EvapTrap XC, which was a "bleed trap that can be used as part of, or in conjunction with, a fuel vapor canister." Ingevity claimed that BASF had infringed on the ’844 patent by conducting the testing. (see Owner of patent for reducing gasoline emissions denied preliminary injunction against BASF, June 5, 2019). Previously, the court invalidated all asserted claims of the ’844 patent based on prior invention (see Patent for reducing gasoline emissions was invalid for anticipation, November 18, 2020).

Immunity from liability. BASF had filed counterclaims against Ingevity, including a claim that Ingevity unlawfully tied the ’844 patent by requiring customers wishing to license the patent to also purchase unpatented carbon honeycombs from Ingevity. Ingevity argued its alleged anticompetitive conduct was immune from liability under the patent laws and the Noerr-Pennington doctrine. Finding that the tying claim involved a question of fact as to whether Ingevity’s carbon honeycombs were staple articles of commerce, the court denied both parties’ motions for summary judgment and expressed the intention to decide the Noerr-Pennington issues after hearing the evidence at trial. The court included the staple article of commerce question in final jury instructions, which provided that BASF bears the burden of proving by a preponderance of evidence that the carbon honeycombs are staple goods and therefore beyond the scope of Ingevity’s right to exclude. Ultimately, the jury returned a verdict finding that BASF met this burden. The court then considered the parties proposed findings of fact and conclusions of law on the immunity issues, and the court determined that neither the Noerr-Pennington docrine nor the patent laws immunize Ingevity’s conduct.

Jury findings. Ingevity did not dispute that the jury implicitly found that its honeycombs were staple goods; it did argue that this finding is irrelevant, maintaining that its immunity defenses do not depend on any staple article finding by the jury, as the staple article question is separate from Ingevity’s First Amendment and patent law immunity defenses. Ingevity argued that BASF’s evidence regarding its conduct shows nothing more than that Ingevity communicated to customers what does and does not infringe the ’844 patent, which is a protected exercise of its rights under the First Amendment and the patent laws. The court found that the “trouble with Ingevity’s argument is that the jury found otherwise.” The jury was instructed that it could not find illegal tying if Ingevity’s conduct was limited to “communications about its patent rights to customers.” Because the jury found tying, it also found that the conduct upon which it based its tying finding was not limited to protected communications about Ingevity’s patent rights to customers. The court was further unconvinced by Ingevity’s argument that the jury’s findings are irrelevant because the parties agreed the court, and not the jury, would decide the instant immunity questions. The court stressed that no agreement existed that the court would decide every subsidiary factual issue bearing on immunity.

The Case is No. 18-1391-RGA.

Attorneys: Karen Elizabeth Keller (Shaw Keller LLP) for Ingevity Corp. and Ingevity South Carolina, LLC. Rodger Dallery Smith, II (Morris, Nichols, Arsht & Tunnell LLP) for BASF Corp.

Companies: Ingevity Corp.; Ingevity South Carolina, LLC; BASF Corp.

Cases: Patent DelawareNews