Ingevity to challenge U.S. court ruling on emission control patent and expects limited impact on commercial operations or financial results through patent expiration in March 2022

November 18, 2020

Ingevity Corporation (NYSE:NGVT) today announced that it intends to challenge the decision of the U.S. District Court for the District of Delaware, as it relates to Ingevity’s patent covering canister systems used in the control of automotive gasoline vapor emissions (U.S. Patent No. RE38,844). The district court’s summary judgment decision came yesterday in advance of a scheduled January trial on a patent infringement complaint brought by Ingevity against BASF Corp., Florham Park, New Jersey. Ingevity’s suit against BASF, alleges that BASF infringed Ingevity’s patent through testing canister systems using a BASF-developed product that would presumably compete with Ingevity’s “honeycomb” technology.

As we said during our webinar on Ingevity’s Performance Materials business held on June 25, 2020, we continue to believe in the strength of our intellectual property and the merits of our case against BASF,” said Ed Woodcock, executive vice president and president, Performance Materials, for Ingevity. “As a result, we intend to pursue our remedies to overturn this decision, including an appeal to the Court of Appeals for the Federal Circuit, if necessary. Ingevity is the established technology leader in providing world-leading products for use in automotive evaporative emissions control systems. Our leadership and expertise in this application are unique and it is incumbent upon us to defend our innovations against infringement – including premature development activity – for the benefit of our customers and shareholders.”

Ingevity’s ‘844 patent covers certain canister systems designed to achieve gasoline vapor emission levels that comply with the most stringent U. S. Environmental Protection Agency (EPA) Tier 3 and California LEV III regulations. Ingevity’s patent rights preclude third parties – including competitors, suppliers, testing facilities and automotive original equipment manufacturers (OEMs) – from engaging in development activities, such as prototype creation, testing, marketing and qualifying, that fall within any of the patent’s claims during the life of the ‘844 patent which is set to expire in March 2022.

The district court’s decision relies on and reaches the same conclusion as a previous decision by an administrative law judge with the U. S. International Trade Commission in an action brought against MAHLE Filter Systems, Inc. and others that Ingevity has already appealed to the Court of Appeals for the Federal Circuit. The company believes that both of these decisions are based on an inaccurate interpretation of intellectual property law. “The patent has twice been upheld by the U.S. Patent and Trademark Office, and, put simply,” said Woodcock, “we want our day in court.”

Woodcock also stated that Ingevity expects limited impact on its commercial operations or financial results through patent expiration in March 2022 specifically as a result of yesterday’s decision. “We’ve always said that we expect competition for our ‘honeycomb’ scrubbers once the ‘844 patent expires,” he said. “Given that it typically takes automotive OEMs several years to redesign and introduce automotive platforms, any new entrant into the ‘scrubber’ market would most likely occur after the ‘844 patent’s expected natural expiry anyway.”

Ingevity also stated that the U.S. District Court decision has no bearing on the company’s ‘649 patent family in the area of canisters designed to reduce emissions in new, emerging “low purge” engines. “We believe that our ‘649 patent currently applies to systems that are on 15% to 20% of U.S. and Canadian vehicles and could apply to anywhere from 30% to 70% of future near-zero fuel system designs,” said Woodcock. This intellectual property is currently protected by patents not only in the United States, but in China and Europe as well.

Our activated carbon products are optimally manufactured to both capture gasoline emissions and return them to the engine for their intended use and do so in a way that provides the OEM with the greatest flexibility, minimal canister design, quality and reliability. This is where Ingevity is differentiated among other players, and this is the fundamental basis of our competitive advantage,” said Woodcock.

The automotive gasoline vapor emission control products are part of Ingevity’s Performance Materials segment which has manufacturing facilities in Covington, Virginia; Wickliffe, Kentucky; Waynesboro, Georgia; Changshu, China; and Zhuhai, China. Ingevity estimates that globally approximately 8 million gallons of gasoline are captured and recovered by the company’s activated carbon products every day.