press release

Court rules Unocal RFG patent application was proper; company to seek royalties

El Segundo, Calif., Aug. 31, 1998 - The final phase of the trial of Unocal Corporation's suit against six of the world's largest oil companies over Unocal's reformulated gasoline patent concluded today in favor of Unocal.

Federal District Court Judge Kim Wardlaw today ruled that Unocal Corporation acted properly during the course of the application and review for a patent on new reformulated gasolines with the U.S. Patent and Trademark Office.

Earlier, a Federal District Court jury upheld the validity of Unocal's reformulated gasolines patent and awarded the company damages of 5-3/4 cents per gallon of gasoline manufactured by the defendants that infringed on that patent.

"We are pleased with the judge's ruling. Our conduct has been proper throughout the entire research and patent application process, and this latest ruling confirmed that one more time," said Roger C. Beach, Unocal chairman and chief executive officer. "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."

Beach noted the company has been prepared to discuss reasonable licensing arrangements with the defendants and other refiners since the patent was announced in 1995. "Our patent assists refiners in complying with the California Air Resources Board Phase 2 reformulated gasoline regulations, and thus helps to improve air quality throughout California," Beach said.

During the earlier jury phase of the trial, evidence presented showed that 1.19 billion gallons, or 29.1 percent of the total California reformulated gasoline manufactured by the defendants between March 1, 1996, and July 31, 1996, infringed on Unocal's patent. Of that, 60 percent was premium grade gasoline (92 octane or greater), which accounts for about one-fifth of the total gallons manufactured. Based on the jury award of 5-3/4 cents per gallon, Unocal would collect approximately $69 million from the six defendants for the five-month period.

Unocal will request an accounting of infringement by the defendants for the period from July 31, 1996, to the present, seeking damages on those infringing gallons.

"At this rate of infringement, though, the jury award and subsequent licensing fees should not have a significant impact on consumers," Beach said. "Of course, the ultimate impact will be determined by the refiners."

Unocal conducted its independent research into cleaner burning gasolines to meet anticipated federal Clean Air Act goals without having to resort to ineffective fuels, controversial additives, or costly alternative vehicles. The company's research found that by controlling the Reid Vapor Pressure, olefin content, distillation boiling points and other properties of gasoline, one could achieve significant reduction in tailpipe emissions. Unocal's emissions research, the invention of the gasoline formulations and filing of the patent application all preceded the CARB Phase 2 regulations. In fact, Unocal shared its research findings with CARB prior to the finalization of the Phase 2 regulations. The company applied for the patent in December 1990, CARB issued the final Phase 2 regulations in November 1991. The U.S. Patent and Trademark office awarded Unocal the patent in February 1994.

Updated: August 1998