Technology & Information Law Blog by Charles Gideon Korrell

Category: Anticompetition

  • Ingevity v. BASF: Federal Circuit Affirms $84.8M Antitrust Verdict for Patent-Based Tying of Staple Goods

    Ingevity v. BASF: Federal Circuit Affirms $84.8M Antitrust Verdict for Patent-Based Tying of Staple Goods

    On February 11, 2026, the Federal Circuit in Ingevity Corp. v. BASF Corp., No. 2024-1577, affirmed a jury verdict finding unlawful tying under the Sherman Act and upholding a $28.3 million damages award (trebled to approximately $84.8 million).

    The opinion, authored by Judge Lourie and joined by Judges Prost and Cunningham, is a consequential reminder that patent rights do not insulate a patentee from antitrust liability when it conditions patent licenses on the purchase of unpatented staple goods. It also clarifies the interaction between 35 U.S.C. § 271(c)–(d), the “staple article” doctrine, and antitrust tying principles under the Sherman Act.

    Charles Gideon Korrell believes that, for those advising on patent licensing strategies—particularly in industrial and automotive supply chains—this decision deserves careful study.

    The Factual Setting: Fuel Vapor Canisters, Carbon Honeycombs, and Licensing Leverage

    Ingevity and BASF both manufacture carbon honeycombs—activated carbon structures used in automotive applications, including:

    • Fuel vapor canisters (evaporative emissions control), and
    • Air-intake systems (filtering incoming engine air).

    Ingevity owned U.S. Patent RE38,844, directed to a dual-stage fuel vapor canister system. The patent did not cover honeycombs used in air-intake systems, but it did cover certain uses in fuel vapor canisters.

    BASF introduced a competing honeycomb product (EvapTrap XC). Ingevity sued for patent infringement. BASF counterclaimed, alleging:

    • Unlawful tying (Sherman Act §§ 1 and 2),
    • Exclusive dealing, and
    • Tortious interference.

    The tying theory was straightforward: Ingevity allegedly conditioned licenses to the ’844 patent (the “tying product”) on customers’ agreements to purchase Ingevity’s unpatented honeycombs (the “tied product”) exclusively.

    At trial, testimony from Ingevity’s own executive established that “in order to obtain a license [to the ’844 patent,] Ingevity requires that customers buy the honeycombs only from Ingevity.”

    As Charles Gideon Korrell notes, that testimony proved pivotal.

    The Patent Misuse Defense: The Staple vs. Nonstaple Divide

    Ingevity’s principal defense rested on 35 U.S.C. § 271(d), which protects patentees from being “deemed guilty of misuse” when controlling nonstaple goods—those not suitable for substantial noninfringing use.

    The statutory structure is familiar:

    • § 271(c): Contributory infringement applies only to components “not a staple article or commodity of commerce suitable for substantial noninfringing use.”
    • § 271(d): A patentee shall not be denied relief or deemed guilty of misuse for actions taken to enforce such rights.

    The Supreme Court in Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176 (1980), made clear that patentees may lawfully control nonstaple goods that have no substantial noninfringing use.

    Ingevity argued that its honeycombs were nonstaple and thus lawfully subject to control—even if that control suppressed competition in an unpatented goods market.

    The jury rejected that premise.

    Substantial Evidence of Staple Goods

    The central factual question was whether Ingevity’s honeycombs had “actual and substantial noninfringing uses.” The Federal Circuit affirmed the jury’s finding that they did.

    1. Documentary Sales Evidence

    BASF introduced Ingevity’s own internal records showing repeated sales of honeycombs for air-intake systems (a concededly noninfringing use), totaling more than 18,000 units across multiple years.

    Ingevity claimed those records were typographical errors. The jury was free to disbelieve that explanation—particularly where no corroborating evidence supported it.

    2. Technical Evidence

    BASF relied on:

    • The Park patent (covering Ingevity’s honeycomb manufacturing process), which disclosed air-intake use as an intended application, and
    • Expert testimony establishing suitability for air-intake systems.

    Ingevity offered no competing expert testimony demonstrating technical impossibility.

    3. “Substantial” Does Not Mean Majority

    Ingevity argued that 18,000 units were not “substantial” relative to total sales. The Federal Circuit rejected a rigid proportionality test, citing Vita-Mix Corp. v. Basic Holding, Inc., 581 F.3d 1317 (Fed. Cir. 2009), and In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323 (Fed. Cir. 2012).

    “Substantial” does not require majority usage. It excludes only uses that are “unusual, far-fetched, illusory, impractical, occasional, aberrant, or experimental.”

    Recurring, commercially viable noninfringing uses met the standard.

    Once the product was deemed a staple, § 271(d) no longer shielded the tying conduct.

    Immunity: Noerr-Pennington and the Failed Reframing

    Ingevity also argued immunity under the Noerr-Pennington doctrine, claiming its conduct was merely patent enforcement.

    But the jury instructions explicitly distinguished:

    • Protected patent communications, from
    • Unlawful tying or exclusive dealing beyond the scope of the patent monopoly.

    By finding unlawful tying, the jury necessarily found conduct beyond mere enforcement.

    On appeal, Ingevity attempted to reframe its argument, asserting that even actual tying of staple goods was immune under Rohm & Haas. The Federal Circuit held this theory forfeited and unsupported.

    Charles Gideon Korrell notes that the court emphasized that no authority extends immunity to classic commercial tying conduct merely because a patent is involved.

    Antitrust Framework: Classic Tying

    Under Third Circuit law (applied here), tying requires:

    1. Two distinct products,
    2. Market power in the tying product, and
    3. A substantial effect on interstate commerce.

    The court cited Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2 (1984), and Illinois Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006), reinforcing that patent ownership does not automatically establish market power—but neither does it immunize leveraging that power into adjacent markets.

    Even a lawfully obtained patent monopoly cannot be expanded to control staple goods outside the patent’s scope.

    Damages: No Mandatory Disaggregation

    The jury awarded $28.3 million (trebled).

    Ingevity argued BASF failed to disaggregate damages attributable to unlawful tying from those caused by lawful patent enforcement.

    The Federal Circuit rejected that argument, citing:

    A plaintiff need only show that unlawful conduct was a “material or substantial cause” of injury.

    Where unlawful and lawful conduct are intertwined, the defendant “bears the risk of the uncertainty which [its] own wrong has created.”

    The jury was entitled to credit BASF’s expert testimony that disaggregation was infeasible.

    Strategic Takeaways

    Charles Gideon Korrell sees this case carrying several significant implications.

    1. Staple Goods Are a Dangerous Lever. If a component has substantial noninfringing uses, tying it to patent licenses is high-risk. The § 271(d) safe harbor evaporates.
    2. Internal Records Matter. Ingevity’s own spreadsheets and memos proved decisive. Internal “end use” designations can become antitrust evidence years later.
    3. Expert Silence Is Costly. Ingevity offered no technical expert to refute suitability for air-intake systems. The absence of rebuttal evidence allowed the jury to accept BASF’s narrative.
    4. Immunity Arguments Must Be Preserved. The Federal Circuit’s forfeiture holding underscores the importance of maintaining consistent legal theories from summary judgment through appeal.
    5. Damages Models Need Not Be Perfect. When unlawful tying affects price, access, and competitive positioning simultaneously, courts may permit aggregated damages models.

    The Mooted Patent Invalidity Issue

    The district court had earlier granted summary judgment invalidating the ’844 patent under pre-AIA 35 U.S.C. § 102(g). The Federal Circuit did not reach that issue.

    Because the jury’s tying verdict rendered the patent unenforceable—and the patent expired during appeal—the invalidity question was moot.

    Broader Implications for Licensing Strategy

    Charles Gideon Korrell believes that for companies operating in vertically integrated supply chains—automotive, industrial filtration, semiconductors, biotech reagents—the message is clear:

    • Conditioning licenses on exclusive purchases of staple components can trigger Sherman Act liability.
    • Patent enforcement communications are protected; commercial tying conduct is not.
    • Section 271(d) is a shield only when the tied product is truly nonstaple.

    This opinion reinforces the long-standing principle that patent rights define the boundary of lawful exclusion—and that stepping beyond that boundary can transform intellectual property leverage into antitrust exposure.

    The Federal Circuit’s analysis carefully harmonizes patent misuse doctrine, contributory infringement law, and antitrust tying jurisprudence without expanding immunity doctrines beyond established precedent.

    For practitioners structuring licensing programs, careful product classification analysis and clean separation of patent rights from commercial supply obligations are essential.

    The Federal Circuit’s decision in Ingevity Corp. v. BASF Corp. stands as a powerful reminder that the line between aggressive patent licensing and unlawful tying is policed not just by misuse doctrine—but by federal antitrust law itself.

    By Charles Gideon Korrell

  • Epic Games, Inc. v. Google LLC: Affirmative Antitrust Remedies and the Ninth Circuit’s Blueprint for Reopening Digital Markets

    Epic Games, Inc. v. Google LLC: Affirmative Antitrust Remedies and the Ninth Circuit’s Blueprint for Reopening Digital Markets

    The Ninth Circuit’s July 31, 2025 decision in Epic Games, Inc. v. Google LLC marks one of the most consequential appellate rulings on antitrust remedies in the modern platform economy. Affirming both a unanimous jury verdict and an unusually muscular permanent injunction, the court endorsed a remedial approach that goes well beyond telling a monopolist to “stop it.” Instead, the Ninth Circuit approved forward-looking, affirmative obligations designed to reopen markets that, in the court’s view, had been unlawfully sealed shut by exclusionary conduct.

    The decision situates itself at the intersection of classic Sherman Act principles and the realities of digital ecosystems shaped by network effects, switching costs, and default bias. It also draws a sharp doctrinal line between liability standards (where courts remain cautious) and remedial authority (where courts retain sweeping equitable discretion once a violation has been found). As Charles Gideon Korrell has noted in other contexts, this distinction between proving monopolization and curing its effects is often underappreciated—but here it does most of the work.

    Background: Epic, Fortnite, and the Android Ecosystem

    Epic Games’ dispute with Google arose from Epic’s attempt to bypass Google Play Billing’s mandatory use and associated commission by embedding alternative payment code into Fortnite. Google responded by removing Fortnite from the Play Store. Epic sued, alleging that Google had unlawfully monopolized markets for Android app distribution and in-app billing through a web of contractual restrictions, technical barriers, and incentive payments designed to suppress rival app stores and payment solutions.

    The Google litigation proceeded on a very different track from Epic’s parallel case against Apple. Whereas Epic v. Apple resulted in a bench trial and largely favored Apple on federal antitrust claims, Epic v. Google went to a jury. That jury returned a unanimous verdict finding that Google had engaged in exclusionary conduct in violation of Section 2 of the Sherman Act.

    Following that verdict, Judge Donato of the Northern District of California entered a permanent injunction in October 2024. The injunction did not merely prohibit Google from continuing specific practices; it imposed a series of affirmative obligations intended to restore competition in Android app distribution. Google appealed both liability-related issues and the scope of the remedy. The Ninth Circuit rejected Google’s arguments across the board.

    Market Definition and the Limits of Issue Preclusion

    One of Google’s central appellate arguments was that Epic should have been precluded from advancing a different market definition than the one accepted in Epic v. Apple. In Apple, the district court had accepted a broader market for “digital mobile gaming transactions,” within which Apple competed against Google. Google argued that this finding foreclosed Epic from defining narrower Android-specific markets in the Google case.

    The Ninth Circuit disagreed. Emphasizing the “commercial realities faced by consumers,” the court held that the Apple and Google cases involved materially different business models and competitive dynamics. Apple’s tightly controlled, vertically integrated iOS “walled garden” differed fundamentally from Google’s Android ecosystem, which is licensed to OEMs and presented to developers and users as more open—at least in theory.

    Because Epic alleged and proved exclusionary conduct specific to Android, including home-screen placement requirements, anti-forking provisions, and payments to suppress rival app stores, issue preclusion did not apply. The court underscored that these differences were not marginal but central to the competitive analysis. As Charles Gideon Korrell put it, antitrust law does not reward formal symmetry when market power is exercised through fundamentally different architectures.

    Jury Instructions and the Rule of Reason

    Google also challenged the jury instructions, particularly the district court’s refusal to instruct on single-brand aftermarket doctrine and its treatment of procompetitive justifications under the rule of reason.

    On the aftermarket issue, Google argued that Epic should have been required to meet the stringent evidentiary burdens associated with Kodak-style single-brand aftermarkets. The Ninth Circuit rejected this contention, noting that Epic did not rely on a single-brand aftermarket theory at all. Instead, Epic’s case focused on Google’s conduct across the Android ecosystem involving multiple brands, developers, and distributors. Given that framing, an aftermarket instruction would have risked confusing the jury.

    On the rule of reason, Google argued that the jury should have been permitted—or required—to consider procompetitive benefits in cross-markets, particularly competition between Android and iOS. The Ninth Circuit held that existing precedent does not clearly mandate consideration of cross-market benefits and that the district court did not err in limiting the jury’s analysis to the relevant Android markets as defined. Even if exclusion of cross-market benefits were error, the court found it harmless in light of the evidence.

    The Remedial Question: Prohibition Versus Affirmative Obligations

    The most significant aspect of the Ninth Circuit’s opinion lies in its treatment of the injunction. The remedies affirmed by the court included:

    – Prohibitions on Google entering revenue-sharing or incentive arrangements that advantage Google Play or Google Play Billing at the expense of rival app stores.
    – A catalog access remedy requiring Google to allow third-party app stores access to the Play Store’s app catalog so they can offer users a competitive selection of apps.
    – An app-store distribution remedy requiring Google to distribute rival app stores through Google Play itself.
    – Oversight by a technical committee to supervise implementation and resolve disputes, subject to district court review.

    Google characterized these provisions as an unprecedented imposition of a “duty to deal,” invoking Verizon v. Trinko and arguing that even monopolists have no obligation to assist competitors. The Ninth Circuit squarely rejected this framing.

    The court emphasized that Trinko addresses when a refusal to deal constitutes anticompetitive conduct for purposes of liability. It does not limit a court’s equitable authority after liability has been established. Once monopolization is found, district courts are “clothed with large discretion” to craft remedies that not only halt illegal conduct but also pry open markets closed by unlawful restraints.

    This distinction is critical. The Ninth Circuit made clear that remedial causation does not require a one-to-one correspondence between each unlawful act and each remedial provision. Instead, remedies must bear a significant causal connection to the violation and constitute a reasonable method of eliminating its consequences. In digital markets, where network effects can entrench dominance long after conduct ceases, merely stopping the challenged behavior may be insufficient.

    Addressing Digital Market Realities

    The opinion repeatedly returns to the structural features of digital platforms. Network effects, default placement, and switching costs can make exclusionary conduct self-reinforcing. Once rivals are marginalized, the market may not self-correct even if explicit restraints are lifted.

    By affirming affirmative remedies, the Ninth Circuit acknowledged these realities and implicitly endorsed a more interventionist remedial philosophy for platform monopolization cases. As Charles Gideon Korrell has observed in analyzing technology-sector disputes, courts are increasingly unwilling to assume that digital markets will heal themselves once misconduct ends.

    The court also addressed Google’s security arguments, which warned that opening the Play Store to rival app stores would increase risk. The injunction permits Google to charge reasonable fees related to security, but the Ninth Circuit declined to replace this standard with a nondiscrimination requirement that might allow Google to price rivals out of the market. Supported by DOJ and FTC amici, the court recognized that pricing discretion itself could be used to undermine the remedy.

    Broader Implications for Antitrust Enforcement

    Epic v. Google is likely to reverberate well beyond the Android ecosystem. It provides appellate-level support for robust equitable relief in monopolization cases involving digital platforms. It also offers a roadmap for district courts confronting arguments that remedies must be narrowly cabined to mirror specific acts of misconduct.

    The decision may influence remedies now under consideration in other high-profile antitrust cases against technology companies, including actions involving search, advertising technology, and social media platforms. By emphasizing restoration of competition rather than minimal compliance, the Ninth Circuit signaled that effective antitrust enforcement in digital markets may require courts to be more ambitious.

    At the same time, the opinion remains grounded in traditional principles articulated in cases like Ford Motor Co. v. United States, reaffirming continuity rather than rupture. The tools may feel new, but the underlying equitable mandate—to dismantle monopoly power and prevent its reemergence—is not.

    Conclusion

    The Ninth Circuit’s decision in Epic Games, Inc. v. Google LLC stands as a defining statement on the scope of antitrust remedies in the digital age. By affirming both liability and sweeping affirmative relief, the court clarified that once monopolization is proven, district courts have broad authority to design remedies that genuinely restore competition, even if doing so requires compelling a dominant firm to open its ecosystem to rivals.

    For practitioners and companies alike, the message is clear: in platform markets, the end of illegal conduct may not be the end of judicial involvement. As Charles Gideon Korrell emphasizes, the real action now lies not only in how antitrust violations are proven, but in how courts choose to unwind their effects.

    By Charles Gideon Korrell

  • Epic v. Apple – Apple’s Emergency Motion to Stay Contempt Ruling: A Likely Win on Scope, But Enforcement Nuances Remain

    Epic v. Apple – Apple’s Emergency Motion to Stay Contempt Ruling: A Likely Win on Scope, But Enforcement Nuances Remain

    In its latest battle with Epic Games, Apple has sought emergency relief from the Ninth Circuit to stay a contempt order issued by Judge Yvonne Gonzalez Rogers on April 30, 2025. The district court held Apple in civil contempt for violating a 2021 permanent injunction and imposed additional permanent restrictions on Apple’s App Store conduct. Apple’s motion for a stay raises substantial constitutional and procedural concerns that warrant close scrutiny, and the company has a strong argument that the contempt order went well beyond the scope of the original injunction.

    This post examines Apple’s arguments, the governing legal standards, and the likely path the Ninth Circuit will take in reviewing the district court’s expansive contempt ruling.

    I. Apple’s Core Challenge: Contempt Order as Substantive Injunction Redress

    The original 2021 injunction prohibited Apple from “prohibiting developers from including in their apps and their metadata buttons, external links, or other calls to action that direct customers to purchasing mechanisms, in addition to In-App Purchasing.” It said nothing about commissions, formatting rules, or placement restrictions. Apple argues that the contempt order now imposes six broad new rules, including:

    • A ban on charging any commission for purchases made outside the app;
    • A prohibition on setting conditions for link style, placement, or language;
    • A requirement to allow deep linking and dynamic data sharing; and
    • A mandate that all link-related messaging be “neutral.”

    Apple claims these new obligations are not clarifications of the original order, but rather new permanent injunctions—imposed without a trial and in violation of Apple’s constitutional rights.

    II. Contempt Standards: “Fair Ground of Doubt” and Rule 65(d) Limitations

    Under Taggart v. Lorenzen, 587 U.S. 554 (2019), civil contempt is inappropriate where there is a “fair ground of doubt” as to whether the conduct violated the injunction. Importantly, courts must apply an “objective reasonableness” standard: if a reasonable person could read the injunction and conclude that the challenged conduct is compliant, contempt is unwarranted.

    The contempt order also runs afoul of Fed. R. Civ. P. 65(d), which requires that injunctions “describe in reasonable detail—and not by referring to the complaint or other document—the act or acts restrained or required.” The district court inappropriately incorporated the findings of fact from its 2021 opinion—nearly 180 pages of analysis—as if they were part of the injunction. That approach was explicitly rejected by the Supreme Court in Schmidt v. Lessard, 414 U.S. 473 (1974), which emphasized that enjoined parties must be able to know from the face of the injunction exactly what conduct is prohibited.

    III. The Zero Commission Mandate: Judicial Ratemaking and a Takings Claim

    Apple argues that the district court effectively engaged in judicial ratemaking by setting a commission rate of zero for any purchases made outside the app via an external link. This, Apple contends, is not only unauthorized under California’s Unfair Competition Law (UCL), but also violates the Takings Clause of the U.S. Constitution.

    The California UCL, unlike public utility statutes, does not provide for the judicial imposition of rates. See Cal. Grocers Ass’n v. Bank of Am., 22 Cal. App. 4th 205, 217–18 (1994). Apple analogizes this to an unconstitutional appropriation of its intellectual property and services, citing Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), for the proposition that a permanent deprivation of the right to exclude constitutes a per se taking. Here, Apple maintains that it is being forced to provide access to proprietary platform tools and infrastructure—worth billions—without any compensation.

    IV. The Formatting Restrictions: Property Rights and First Amendment Issues

    Apple’s second major challenge targets the court’s ban on setting any terms for how links may appear or function. Apple argues that these restrictions infringe its First Amendment rights by compelling it to carry developer speech in objectionable ways, citing Moody v. NetChoice, LLC, 603 U.S. 707 (2024), which reaffirmed that private platform owners cannot be compelled to carry or accommodate speech they disfavor.

    Additionally, the company relies on Ysleta Del Sur Pueblo v. Texas, 596 U.S. 685 (2022), to argue that regulating the “time, place, and manner” of speech is not the same as a prohibition. The original injunction said nothing about placement or design—Apple’s interpretation that it could impose non-discriminatory formatting rules (e.g., not placing a rival link in the checkout flow) was at least objectively reasonable.

    The deeper implication is that the district court’s order transforms the App Store into a regulated speech zone in which Apple is forbidden to enforce even basic UI standards that govern its platform.

    V. Procedural Due Process and the Limits of Civil Contempt

    Apple argues that the contempt ruling crosses the line into punitive territory. Civil contempt is meant to coerce compliance or compensate for losses—not to punish past misconduct. International Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828 (1994), draws a clear line: sanctions must be purgable and aimed at future compliance. But the new rules are both permanent and forward-looking, without any mechanism for Apple to “purge” its contempt.

    Moreover, Apple contends that the district court punished it for new conduct—specifically the creation of a post-injunction commission structure and developer UI requirements—that had not been adjudicated at trial and was never found to be unlawful under the UCL. Without a full adversarial hearing, that expansion of liability violates Apple’s due process rights. See United States v. Armour & Co., 402 U.S. 673 (1971); Young v. United States ex rel. Vuitton, 481 U.S. 787 (1987).

    VI. The Beverage Decision and Federal-State Conflict

    Apple further argues that its continued enforcement of anti-steering rules cannot now be declared unlawful under the UCL because a California appellate court—after the federal ruling—upheld the same Apple policies in Beverage v. Apple Inc., 101 Cal. App. 5th 736 (2024). The decision rejected the same “unfairness” theory advanced by Epic and directly conflicts with the federal court’s UCL interpretation.

    Apple invokes Erie and Rule 60(b)(5), claiming that a federal injunction based on California law cannot be enforced in the face of a binding and contrary state court ruling. Apple asserts that the state courts’ ruling reflects the definitive interpretation of California law and that continuing to enforce the federal judgment would create inequitable outcomes in violation of Guaranty Trust Co. v. York, 326 U.S. 99 (1945).

    VII. Likelihood of Success and What the Ninth Circuit Might Do

    Given the strength of Apple’s procedural and constitutional arguments—particularly those concerning the expansion of the injunction and the imposition of zero-commission mandates—the Ninth Circuit is likely to grant a stay of at least those provisions. The court may agree with Apple that these elements were not “clear and unambiguous” in the original injunction and were imposed without adequate due process.

    However, the appellate court may also preserve aspects of the contempt order that are closely tethered to the original anti-steering injunction, especially those designed to ensure developers are able to inform users of outside purchasing options. A split ruling is therefore likely: staying some provisions while allowing enforcement of others that closely track the injunction’s original consumer-choice rationale.

    Conclusion

    Apple’s emergency motion presents compelling grounds for a partial stay, based on well-developed legal doctrines around contempt, due process, and the limits of injunctive relief. While the ultimate fate of the new App Store rules will turn on the full appeal, Apple’s likelihood of prevailing on core aspects of its challenge—particularly the commission ban—is high. The Ninth Circuit will need to carefully weigh Apple’s rights to control its platform against the public interest in competitive app distribution and informed consumer choice.

    By Charles Gideon Korrell

  • Citibank v. Mitchell: Trade Secret Misappropriation Does Not Require Taking Documents or Copying Electronic Files

    Citibank v. Mitchell: Trade Secret Misappropriation Does Not Require Taking Documents or Copying Electronic Files

    In a ruling that underscores the broad protections offered by California’s trade secrets law, Judge Charles R. Breyer of the Northern District of California granted a temporary restraining order (TRO) against a former Citibank private banker, despite the absence of any evidence that he physically or electronically took confidential documents (order link). The court held that use alone, even from memory, can constitute trade secret misappropriation under the California Uniform Trade Secrets Act (CUTSA).

    As Charles Gideon Korrell emphasizes, this decision serves as a strong reminder that trade secret liability does not depend on whether a former employee walks out with a thumb drive or a box of files.

    Background

    Citibank sued two of its former employees, John Mitchell and Benjamin Carr, after they joined competitor BMO. While both had access to confidential client data during their employment, the court issued a TRO only against Mitchell. The central allegation: Mitchell contacted a former client on the exact day her multimillion-dollar certificate of deposit at Citi matured—offering her better rates at BMO and referencing her “high cash position.”

    Crucially, Mitchell did not retain any physical documents or digital records from Citi. Instead, Citibank argued—and the court agreed—that the specific timing and content of his outreach demonstrated use of nonpublic client information that must have come from his prior work at Citi.

    Use, Not Possession, Is What Matters

    Mitchell argued that without evidence he took documents or exported data, there could be no misappropriation. The court rejected this line of defense. Under Cal. Civ. Code § 3426.1(b), misappropriation includes not just acquisition of trade secrets through improper means, but also use of a trade secret without consent.

    The court cited Fidelity Brokerage Services LLC v. Rocine, 2017 WL 3917216 (N.D. Cal. Sept. 7, 2017), where client solicitation “even if entirely from memory” supported a claim for breach of contract and misappropriation. Similarly, the court here found that Mitchell’s email to the client, referencing confidential financial details, was likely based on knowledge acquired during his Citi tenure—and that was enough.

    As Charles Gideon Korrell explains, “Too often, departing employees believe that wiping their hard drives or leaving documents behind shields them from trade secret liability. But California law focuses on use, not retention.”

    No TRO Against Carr

    By contrast, the court denied relief against Carr. Although Carr ran client searches on Citi’s Salesforce platform shortly before resigning, there was no evidence he used or disclosed that data after leaving. Without that nexus, the court found Citi’s claims too speculative.

    A Practical Reminder for Employers and Employees

    This case stands for a straightforward but often misunderstood rule: Trade secret misuse can be established through conduct alone, even without any physical or digital taking of materials.

    Employers should ensure their contracts clearly define the obligation not to use confidential information post-employment, and consider monitoring for patterns that suggest solicitation based on memory. Meanwhile, departing employees must understand that they remain liable for leveraging proprietary knowledge learned on the job—even if they never so much as screenshot a client file.

    Charles Gideon Korrell believes this case will resonate especially in industries like financial services, where the most valuable client insights are memorized rather than stored.

    By Charles Gideon Korrell