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A Recent Decision Puts Patent Holders on NoticeA few months back on February 11, 2026, the U.S. Court of Appeals for the Federal Circuit issued its decision in Ingevity Corp. v. BASF Corp. (No. 2024-1577), (<a href="https://www.cafc.uscourts.gov/opinions-orders/24-1577.OPINION.2-11-2026_2646300.pdf">24-1577.OPINION.2-11-2026_2646300.pdf</a>) affirming a multimillion-dollar antitrust verdict against a patent holder who conditioned patent licenses on customers' exclusive purchase of its products. The case is a stark reminder that while patent rights confer significant market power, using those rights to compel customers to buy unrelated products can expose a patent holder to treble-damage antitrust liability. For any business that bundles product supply obligations with IP license grants, a common structure in manufacturing, technology, and supply chain agreements, this decision demands careful attention.The Facts: Carbon Honeycombs and Exclusive SupplyIngevity Corporation and BASF Corporation both manufacture activated carbon honeycomb structures used in automobile emissions systems. Ingevity owned U.S. Patent RE38,844, which covers dual-stage fuel vapor canister systems. Critically, the patent only covered honeycombs used in fuel vapor canisters, not honeycombs used in air-intake systems, which represent a separate and substantial market application.When BASF began marketing a competing honeycomb 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 Ingevity's patent to purchase all of their carbon honeycomb needs exclusively from Ingevity, including honeycombs destined for non-infringing uses like air-intake systems. In other words, Ingevity was allegedly leveraging its patent on fuel vapor canisters to force customers to also buy its air-intake products, effectively locking competitors like BASF out of both markets.Ingevity's own president admitted at trial that customers had to buy honeycombs exclusively from Ingevity to obtain a license. A jury found in BASF's favor, awarding $28,285,714 in damages, which the district court subsequently trebled under the antitrust statutes.The Legal Framework: Patent Rights Have LimitsUnder antitrust law, an unlawful "tying" arrangement exists when a seller conditions the sale or license of one product (the "tying product") on the buyer's agreement to purchase a separate product (the "tied product"). Patent holders generally enjoy broad rights to control their inventions, including the right to license on conditions of their choosing. However, 35 U.S.C. § 271(d) draws an important boundary: a patent holder may condition licenses on the purchase of "nonstaple goods" (products that have no substantial use other than in an infringing application) but it may not use its patent to control "staple goods" that have actual and substantial non-infringing uses.The critical question before the Federal Circuit was whether Ingevity's carbon honeycombs qualified as "staple goods" with substantial non-infringing uses.The Evidence: Your Own Records Can Convict YouBASF's case was built largely on Ingevity's own business records. Internal sales spreadsheets documented repeated carbon honeycomb purchases across multiple customers, over multiple months and years, totaling more than 18,000 units designated for air-intake system applications, a clearly non-infringing use. Internal company memoranda and technical documents corroborated these records.Ingevity mounted four arguments in response, each of which the Federal Circuit rejected:"The records are typographical errors." Ingevity offered no documentary support for this claim and presented no expert testimony. The jury was entitled to credit the business records over the self-interested testimony of company executives."Non-infringing uses are physically impossible." Again, Ingevity offered no expert or technical evidence to support this assertion, while BASF presented evidence to the contrary."Even if accurate, the records don't prove 'actual' non-infringing uses." The Federal Circuit held that sales records showing customers purchasing products for a stated non-infringing purpose constitute substantial evidence of actual use."18,000+ units is not 'substantial.'" The court found this argument asked it to improperly reweigh the evidence. The jury's finding that 18,000+ units constituted a substantial non-infringing use was supported by the record.The Federal Circuit emphasized that it "may not second-guess the jury's credibility determinations, re-weigh the evidence, or question the drawing of legitimate inferences from the facts." The verdict stood.Why This Matters for Your BusinessThe Ingevity decision carries practical implications for any company that licenses patents while also selling products in the same commercial space. Here are the key takeaways:Review your license agreements for tying language. If your patent licenses contain exclusivity requirements—whether express or implied—that compel licensees to purchase products from you beyond the scope of the licensed patent, you may be creating an unlawful tying arrangement. This is particularly dangerous where the tied products have uses that do not implicate the licensed patent.Understand the "staple goods" distinction. A patent holder may require licensees to purchase components that have no substantial use other than in the patented invention. But if those components have other commercially significant applications, conditioning a license on their purchase is antitrust tying. The line between "nonstaple" and "staple" goods is factual and fact-intensive—and your own sales records, marketing materials, and internal communications will be the first place an adversary looks for evidence.Beware of exclusive supply arrangements bundled with IP licenses. Many manufacturing, OEM, and supply chain agreements combine patent licenses with requirements contracts or exclusive supply terms. These structures are not inherently unlawful, but they become dangerous when the supply obligation extends to products that fall outside the scope of the licensed patents. Companies should ensure that any exclusivity requirement is carefully tailored to products that are genuinely covered by, or have no use outside of, the licensed technology.Document your rationale. If you do impose purchase requirements in connection with a patent license, document the legitimate business justifications (quality control, technical integration, warranty support) and ensure the scope of the purchase requirement maps closely to the scope of the patent claims.Your internal records are discoverable. Perhaps the most sobering lesson from Ingevity is that the company's own sales records, showing 18,000+ units sold for non-infringing purposes, became the cornerstone of the antitrust verdict against it. Businesses should ensure that their internal records, CRM data, and sales categorizations accurately reflect the actual use of products, because those records will be Exhibit A in any tying dispute.The Bigger Picture: Patent Licensing in an Antitrust WorldThe Ingevity decision arrives at a time when the intersection of patent licensing and antitrust law is receiving heightened attention. The U.S. Department of Justice recently reiterated that patent holders who seek redress for infringement are "generally exempt from antitrust liability", but that exemption has clear boundaries. Using a patent as leverage to foreclose competition in adjacent product markets is one of those boundaries.For companies that hold patents and also sell products, which describes most manufacturers, technology companies, and life sciences firms, the message is clear: patent rights are powerful, but they are not a blank check to tie up entire product markets. License agreements should be structured to enforce the patent grant without overreaching into unrelated commercial territory.What You Should Do NowIf your company licenses patents to customers who also purchase products from you, consider conducting a focused review of those arrangements. Specifically:Identify any license terms that condition the grant on purchasing products beyond the scope of the patent claims.Assess whether the products subject to any exclusivity requirement have substantial non-infringing uses.Evaluate whether internal sales records or marketing materials could be used to establish non-infringing applications.Consider restructuring arrangements to separate the patent license from product supply obligations, or narrowing exclusivity to products that genuinely fall within the patent's scope.A proactive agreement review today is far less costly than a treble-damage antitrust verdict tomorrow.&nbsp;The IP Business Solutions team at Michael Best &amp; Friedrich LLP advises clients on IP licensing strategy, agreement drafting and review, and IP risk assessment across a range of industries. If you have questions about how this decision may affect your licensing arrangements, or if you would like us to conduct a focused review of your existing agreements, please contact us.<div class="passle-featured-image passle-featured-image-position-bottom"><img src="https://images.passle.net/fit-in/400x400/filters:crop(0,173,2160,1212)/Passle/5f6edd8e8cb62a0bec3e5fd2/SearchServiceImages/2026-05-16-11-34-55-487-6a08565f0f0329b95646b189.jpg" alt="Featured Image" /></div>

When Patent Licensing Crosses the Line: The Federal Circuit’s Warning on Tying Arrangements

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