Subject: US seeks zero royalty compulsory license for Unocal clean fuel patent

From: James Love <[email-masked]>
Date: Fri, 07 Mar 2003 04:28:23 -0500

This is basically a standards case.  Jamie

-------- Original Message --------
Subject: US seeks zero royalty compulsory license for Unocal clean fuel 
patent
Date: Fri, 07 Mar 2003 04:27:11 -0500
From: James Love <[email-masked]>
To: IP-Health <[email-masked]>

*  Unocal acquired through the patent process "monopoly power for the
technology to produce and supply California" with the cleaner-burning
gasoline, which companies are required to sell for eight months of the
year. Many other refiners must pay Unocal to use the formulas it
patented to produce the fuel for California.

* The complaint moves to prevent Unocal from making money on the patents
in the future

http://www.nytimes.com/2003/03/05/business/05FUEL.html?ex=1047531600

Unocal Is Sued by F.T.C. Over California Gas Patent
By NEELA BANERJEE

he Federal Trade Commission filed a complaint yesterday accusing the
Unocal Corporation of fraudulent and anticompetitive practices in
obtaining patents for the production of cleaner-burning gasoline.

In a suit filed with an administrative law judge at the agency, the
F.T.C. contends that Unocal, which is based in El Segundo, Calif.,
misled California and other oil companies a decade ago when they were
developing guidelines for cleaner gasoline for the state.

According to the complaint, Unocal, one of the largest independent oil
and gas businesses in the United States, said certain research about the
gasoline was not proprietary but then obtained patents on the process
and began to charge others to use it.

As a result, the complaint said, Unocal acquired through the patent
process "monopoly power for the technology to produce and supply
California" with the cleaner-burning gasoline, which companies are
required to sell for eight months of the year. Many other refiners must
pay Unocal to use the formulas it patented to produce the fuel for
California.

The F.T.C. is asking the judge to prevent Unocal from using its patents,
seeking what amounts to a cease-and-desist order. The complaint moves to
prevent Unocal from making money on the patents in the future, but it
does not demand restitution or penalties for profits reaped by Unocal in
the past, the F.T.C. said. A spokesman for the F.T.C. did not elaborate
on why the agency had chosen such an approach, despite the fact that the
commission criticized Unocal for behaving "to the detriment of the
state's consumers."

"While companies are and must be free to petition the government, the
right to petition does not include the right to commit fraud during the
CARB regulatory process to obtain monopoly power," said Joe Simons,
director of the F.T.C.'s bureau of competition, using the acronym for
the California Air Resources Board, the state's pollution control
agency. "As a result of Unocal's behavior, companies producing Phase 2
`summertime' CARB gasoline are liable to pay Unocal very substantial
royalties."

In a statement, Unocal said that "hard evidence and case law will
vindicate" the company.

The F.T.C. complaint is the culmination of an investigation begun 18
months ago, which was touched off by a request from Exxon Mobil in March
2001. Exxon Mobil, BP, Royal Dutch/Shell and other oil companies arrayed
against Unocal had lost every legal appeal to invalidate the
gasoline-production patents.

The companies have so far refused to pay the royalties. Unocal is
seeking $282 million it says it is owed through the end of 2000, Exxon
Mobil said.

"We applaud the F.T.C.'s decision to file a complaint against Unocal for
unfair trade practices," Exxon Mobil said. "Unocal engaged in unfair
competition and attempted to gain a monopoly over a legally mandated
product. Their actions will result in higher costs for refiners and
higher prices for consumers."

The dispute can be traced back to a collaboration begun in the late
1980's between the State of California and a consortium of oil
companies, including Unocal, to develop guidelines for a cleaner-burning
gasoline. During the process, the companies and the state determined
what the pollution emissions of the fuel should be and how it should be
blended.

The F.T.C. contends that Unocal told the California Air Resources Board
that certain research about cleaner-burning gasoline was not
proprietary. Yet at the same time, Unocal moved to get a patent on the
research to make it proprietary, and to charge others for the use of it.

Unocal's first patent was issued in February 1994, the F.T.C. complaint
said, though it was not announced until January 1995. By this time, the
refining industry had spent billions of dollars to reconfigure
refineries to produce the new, cleaner-burning gasoline, the F.T.C.
complaint said.

The biggest refiners, like Exxon Mobil, now make reformulated gasoline
by "blending around" the patents, which slows the refining process,
crimps supplies of reformulated gasoline and drives up prices, they
contend. In 2000, in an investigation into high fuel prices in the
Midwest, the F.T.C. concluded that the efforts of refiners to avoid
infringing on Unocal's patents contributed to constrained supplies of
reformulated gasoline in the region.

The California Air Resources Board has long supported action against
Unocal, having filed an amicus brief in the mid-1990's in support of the
other oil refiners in the state.

"Unocal didn't even advise us that it had in fact filed for a patent for
over a year," said Jerry Martin, an agency spokesman. "The other oil
companies would not have gone along with the effort to work
cooperatively to develop a gasoline specification if they had known. We
wouldn't have gone along with it, either, if we had known that any
member of the group was filing a patent and developing a monopolistic
situation."

F.T.C. Begins Inquiry Into Unocal's Patents  (August 15, 2001)  $

F.T.C. Files Suit Against Exxon Over Ads  (September 18, 1996)  $

Find more results for Federal Trade Commission and Unocal Corporation .
-- 
James Love, Director, Consumer Project on Technology
http://www.cptech.org, mailto:[email-masked]
tel. +1.202.387.8030, mobile +1.202.361.3040

-- 
James Love, Director, Consumer Project on Technology
http://www.cptech.org, mailto:[email-masked]
tel. +1.202.387.8030, mobile +1.202.361.3040

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