press release

Unocal RFG patent upheld by appeals court; company to pursue royalties

El Segundo, Calif., March 29, 2000 -- Unocal Corporation today said that the Federal Circuit Court upheld the validity of Unocal's reformulated motor gasolines patent, confirming the earlier jury award of 5-3/4-cents per gallon for infringing motor gasoline production.

With the appeals court decision, Unocal will now ask the Federal District Court, Central District (Los Angeles) for an accounting of nationwide infringing gallons manufactured by the defendants for the period since Aug. 1, 1996, to the present, multiplied by 5-3/4-cents per gallon.

"The Circuit Court ruling confirms the patent protection for cleaner burning motor gasolines that Unocal invented in 1990," said Roger C. Beach, Unocal chairman and chief executive officer. "Unocal is willing to discuss its patent claims with refiners and negotiate appropriate licensing terms."

A jury in the Federal District Court, Central District (Los Angeles) found the Unocal patent was valid and that six defendant companies had infringed on the patent. The jury also awarded Unocal 5-3/4 cents per gallon in damages for infringement.

During the initial trial, evidence showed that 1.19 billion gallons, or 29.1 percent of the total California reformulated gasoline manufactured by the six defendant companies between March 1, 1996, and July 31, 1996, infringed on Unocal's patent. The jury's award for the five-month period totals approximately $91 million, including interest and attorney's fees.

"We believe that our patents offer a significant potential revenue stream to Unocal," Beach said. "The claims under the original "393" patent have been supplemented by additional patents. Unocal's patents may have application throughout the United States, not just California."

The "393" patent was awarded to Unocal by the U.S. Patent and Trademark Office on Feb. 22, 1994 (No. 5,288,393). The patent was awarded, and subsequently upheld at trial, for new, useful and nonobvious compositions of traditional motor gasolines that substantially reduce unwanted air emissions using current refining technology and motor vehicles. The compositions outlined in the patent involve specifications of various parameters in gasoline manufacturing, including Reid Vapor Pressure, olefin content, and the T50 and T90 distillation points.

A series of additional patents have been granted to Unocal since the "393" patent. These patents were an outgrowth of the earlier research and supplemented the claims of the earlier patent.

"We believe that motor gasolines falling within the claims of the "393" and the other patents offer significant air quality benefits, compared with old, traditional gasolines," Beach said. "These compositions go beyond the California Phase II regulations, and could have broad applications throughout the United States."

None of Unocal's patents require or exclude the use of MTBE.

Updated: March 2000