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Refiners petition US Supreme Court for review of Unocal patent case

Attorneys for ExxonMobil Corp. and four other refiners petitioned the US Supreme Court Tuesday to review a lower court decision that would force them to pay royalties to Unocal Corp. for its gasoline reformulation process.

"We continue to believe that the Unocal patent is invalid, that Unocal improperly exploited the patent and regulatory process in obtaining the patent, and that Unocal should not be awarded any royalties," said Gene Renna, senior vice-president of ExxonMobil, in a written statement.

"We contend that the trial and appellate courts committed errors in their judgments in this case and that those errors have serious implications, not just for gasoline refiners and consumers, but for how we make environmental rules in the US," he said.

Joining ExxonMobil in that petition are ARCO, Chevron USA Inc., Shell Oil Products Co., and Texaco Refining & Marketing Inc. They are the same five companies that were subject to a $91 million judgment after a jury found they infringed on Unocal's patent during a 5-month period in 1996 (OGJ, Apr. 3, 2000, Newsletter).

A federal appellate court subsequently upheld that decision, granting Unocal a 5.75�/gal royalty on gasoline production that complies with California Phase 2 reformulated gasoline (RFG) specifications. Legal analysts say actual liabilities could run much higher.

Unocal officials have said the company's 1994 patent may apply to a second phase of gasoline reformulation throughout the US. That possibly could make other refiners targets of similar suits for back royalties and penalties, observers say.

Opponents claim Unocal misused the patent system. "Unocal participated in regulatory proceedings while secretly filing and then amending patent claims to closely resemble the regulatory outcome," said Renna. "Our brief points out the inequity of effectively levying a fine against producers who are required by law to make this clean-burning gasoline."

Unocal officials deny those charges and say the real impact on gasoline prices would be less than 2�/gal.

William Ichord, a Unocal vice president, earlier said, "We believe that our patented formulations may offer refiners a more cost-effective way to produce RFG that meets federal air quality standards. If that is the case, then refiners might reduce the relative cost of manufacturing RFG by licensing our patents and using our formulations (OGJ Online, June 29, 2000)."

The Supreme Court is expected to decide on the refiners' petition during the term that begins in October.

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