The US Solicitor General has filed a brief recommending the Supreme Court deny a request by several oil companies to open a hearing on Unocal Corp.'s cleaner burning gasoline patent. "Further review is not warranted," the solicitor general said in a friend of the court brief.
Now that the requested brief has been filed, the Supreme Court will decide whether to review a lower court's decision.
The patent's claims are similar to California's cleaner-burning gasoline regulations. The case is being closely watched, not least because of allegations that Unocal, which participated in the discussions with the California Clean Air Resources Board (CARB) to formulate gasoline regulations, altered its formulation to suit the rules (OGJ Online, Sept. 18, 2000).
The questions the solicitor general was actually called upon to answer were 1) whether there was sufficient evidence to conclude the patent application satisfies a "written description" requirement that demonstrates the inventor had possession, as of the filing date of the application, of the specific subject matter claimed in the patent and 2) whether existing specifications for aviation and racing fuel anticipated the patent, making Unocal's patents invalid.
The brief said the issues are essentially fact-specific questions concerning the application of settled legal standards in patent law.
The patent was filed in 1990. After it was filed, but before the patent was issued, the CARB set standards for gasoline sold in California. The standards were formulated following detailed discussion with industry, including Unocal. After CARB published its standards, Unocal amended its application to "include 41 claims, some of which are similar to the CARB regulatory conditions," said the solicitor's brief.
For its part, Unocal says the patent's claims were sometimes narrowed and sometimes broadened, but never copied from the CARB regulations.
The solicitor's brief said, "We share petitioners' and amici's concern about possible use of the regulatory process by a patent applicant." But it also said the narrow legal questions presented in the petition for a hearing were not an appropriate vehicle to address these concerns.
"That is not to say that there are no mechanisms available to address 'gaming' of a regulatory system," the brief warned. "It has long been accepted that misuse of a patent or inequitable conduct before the Patent Office can render a patent unenforceable."
But, the statement went on, petitioners do not present a claim of patent misuse, nor do they argue that fraud was committed on the Patent Office. Also, it said, "We do not believe � that the court of appeals decided any legal issue or altered settled legal principles in a way that would likely encourage misuse or inequitable conduct by patent holders in the future."
In 1995, years after the regulations were published, several refiners sought a legal finding the patent was invalid because of the two points the solicitor has rejected, i.e. the claim Unocal's patent as originally filed did not fit a "written description" of the eventual patent, and that the patent was anticipated by aviation and racing fuel specifications. Unocal counterclaimed, alleging the plaintiffs were infringing on the patent.
A federal court upheld a lower court decision that makers of California reformulated gasoline that conforms to Unocal's patented specifications should pay Unocal a royalty of 5.75�/gal on gasoline that fits the Unocal description. ARCO, Chevron Corp., ExxonMobil Corp., Shell Oil Co., and Texaco Inc. appealed the ruling to the US Supreme Court (OGJ Online, Sept. 18, 2000).
The amount in question in that lawsuit is more than $69 million. But it is future results that could hurt the industry most�under some interpretations, commentators have said, a substantial portion of reformulated gasoline produced in the US could be subject to royalties if the federal appeals court is upheld.
The patent is highly controversial, not only because it would, if enforced, increase refiners' and consumers' costs. The intersection of the patent and regulatory processes has led to concern in many industries.
Calif. Atty. Gen. Bill Lockyer last year filed an amicus curiae brief with the Supreme Court expressing fear other companies may seek patents for products the state may mandate for public health and safety (OGJ Online, Sept. 18, 2000).