Exxon Says Unocal Reaped Unlawful Gasoline Profit
Oil giant Exxon Mobil Corp. has told antitrust regulators that Unocal Corp. applied for its anti-smog gasoline patents in secret while helping to shape rules requiring them at a third of the nation’s pumps, according to documents obtained by Reuters on Tuesday.
The charge has triggered a formal investigation of the California energy company’s patents by the Federal Trade Commission, threatening it with a loss of the $75 million to $150 million it hoped to reap annually from royalties and the roughly $100 million it has already made.
“Unocal subverted the standard-setting process to obtain unlawful monopoly profits,” Exxon’s filing said.
“Undoing the effects of Unocal’s improper conduct would include requiring it to disgorge any royalties that it has received as a result of the patents.”
The move by Exxon is the latest in a heated gasoline battle that has pitted some of the nation’s most powerful energy companies against the smaller Unocal. Analysts say a victory for Exxon could mean lower pump prices for consumers.
Unocal’s five anti-smog fuel patents have been widely criticized as a reason for high retail gasoline prices in the United States during the last two years, particularly by oil firms that felt forced to reduce production or dodge royalty lawsuits.
Unocal, however, has been energetic in its own defense. “These are old allegations that have been reviewed and rejected by the courts,” said Unocal spokesman Barry Lane.
“We’re going to cooperate with the FTC’s investigation. We believe, when they’re done, they will find we acted properly and lawfully.”
Unocal, which disclosed the FTC investigation last week, has been awarded $91 million in U.S. courts for patent infringements and has since signed eight licensing agreements with refiners, worth 1.2 cents to 3.4 cents a gallon.
Unocal was among several oil companies advising on the California Air Resources Board and Environmental Protection Agency’s efforts to implement a cleaner-burning gasoline and had close knowledge of the types of fuel that would be required under the rules.
“It would be in the best interest of Unocal to input and help shape regulations made by the EPA and the CARB,” researcher Michael Croudace wrote senior Unocal officials in an internal memo dated November 1990.
This “leaves the door open for other oil companies to use our gasoline formulas through licensing agreements. This is far more than could be gained from any other competitive advantage,” the letter stated.
Though Unocal was not required to disclose its patent application under U.S. patent law, Exxon contends that it had an obligation as one of the members of the advisory panel to divulge to the EPA and CARB information that would affect consumer cost.
