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Attorney General Bill Lockyer Files "Friend of Court" Brief Over Unocal Gasoline Patent

Thursday, September 14, 2000
Contact: (415) 703-5837

(SACRAMENTO) – Attorney General Bill Lockyer today filed with the US Supreme Court a "friend of the court" brief on behalf of California and 33 other states, arguing that an oil company should not be able to "hijack and distort" the state regulatory process by claiming a patent on gasoline formulas developed in cooperation with the government to meet clean air standards.

Lockyer urged the high court to consider the appeal of a lower court ruling that required the six major oil companies in California to pay royalties to Unocal for clean-burning gasoline that Unocal claimed infringed on its patent.

The Attorney General argued that the Unocal patent's value stems from its similarity to California's cleaner-burning gasoline regulations developed to improve air quality. He noted that Unocal developed the patent in secret, while involved in California's industry-government partnership to develop these regulations. Unocal's inventors' admitted that they modified the patent to resemble California's regulations.

The amicus curiae brief was filed in the case of Atlantic Richfield Co. et al v. Union Oil Company of California. In 1997, a U.S. District Court jury in Los Angeles found that six major oil companies had infringed on a Unocal patent on clean-burning gasoline used in California. The companies were ordered to pay Unocal a fee of 5.75 cents per gallon on 29 percent of the gasoline produced, or over $69 million, plus interest, for the five months at issue. A federal appeals court upheld the patent earlier this year. ARCO, Chevron, Exxon Mobil, Shell, and Texaco have appealed the ruling to the US Supreme Court.

In the brief, Lockyer argued that the lower court decision "potentially allows Unocal to monopolize the retail gasoline market, and significantly increase the price consumers pay for gasoline" since the state requires the use of the clean-burning fuel. He cautioned that other companies may seek patents for other products that the state may mandate for public health and safety. He asked the high court to protect the states from having companies use the patent system to "distort and plunder the States' regulatory process."

Unocal has four other similar patents, which attempt to resemble federal reformulated gasoline requirements. These patents have created considerable uncertainty in the gasoline industry, and there is some consensus that they have consequently increased prices, even beyond the 5 3/4 cent per gallon royalties that Unocal obtained in this litigation.

California was joined by Alabama, Arizona, Arkansas, Colorado, Delaware, Georgia, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Virginia, Washington, West Virginia and Wisconsin, as well as the District of Columbia.

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