Unocal Action OK in Patent Case, Judge Says

In a legal decision that could lead to higher gasoline prices in California, a federal judge deflected the claims of six major oil companies and ruled Monday that Unocal Corp. acted properly in obtaining a patent on cleaner-burning gasoline.

The ruling by U.S. District Judge Kim McLane Wardlaw in Los Angeles could bring a windfall of at least $69 million to Unocal, which had secured its patent on a version of the gasoline that California refiners have been producing since 1996 under clean-air mandates.

Oil industry experts had speculated that gasoline prices might increase thanks to a U.S. District Court jury’s decision last November that Atlantic Richfield Co., Chevron USA Inc., Exxon Corp., Mobil Oil Corp., Shell Oil Products Co. and Texaco Refining & Marketing Inc. must pay Unocal 5.75 cents per gallon for violating the patent.

But Unocal Chairman and Chief Executive Roger C. Beach insisted Monday that consumers probably will not see much difference in gasoline prices, depending on the marketplace and future refining decisions by the opposing oil companies.

“Of course, the ultimate impact will be determined by the refiners,” Beach said.

A Chevron spokesman said the company had not seen the ruling and could not comment. “Appeal has always been an option, and it remains an option,” he said.

The six Unocal competitors sued in 1995 seeking to invalidate Unocal’s patent, contending that it was too broad and was based on information that was already well-known in the industry--information that the competitors said they had shared as part of a research coalition to find gasoline that would meet tough guidelines established by the California Air Resources Board.

Unocal has since sold its refineries and gasoline stations to Tosco Corp., which is not a party to the lawsuit.

For now, the case applies only to 1.2 billion gallons of gasoline produced during a five-month period in 1996, but Unocal spokesman Barry Lane said the company will ask the court for a further accounting of production since that time. The 1.2 billion gallons accounted for about 29% of the California reformulated gasoline produced by the six oil companies during the period.

“We are pleased with the judge’s ruling,” Beach said. “Our conduct has been proper throughout the entire research and patent application process, and this latest ruling confirmed that one more time.

“The jury recognized the major advancements in cleaner-burning gasolines made by Unocal scientists and put a value on those advancements. Now Judge Wardlaw has confirmed that we acted properly in obtaining our patent.”