Unocal says PTO's 'initial rejection' of patent claims is 'common' in re-examination proceedings
El Segundo, Calif., Feb. 19, 2002 -- Unocal Corporation (NYSE: UCL) today said that it was not surprised or concerned over the initial rejection of the company's '393 cleaner burning gasoline patent claims by the U.S. Patent and Trademark Office (PTO).
"An initial rejection of the patent's claims is common in the re-examination process at the PTO," the company said. "We are confident that once the matter is fully reviewed, the patent will again be upheld as it was by the previous patent examiner, three Federal courts, and a unanimous jury."
Unocal said that the re-examination of the '393 patent will not have any impact on the damages previously collected by Unocal for patent infringement by a group of refiners.
Unocal noted that this re-examination is a normal, routine process as the PTO exercises its due diligence in addressing questions that are raised by various parties about our patents.
The PTO Office Action followed a request in March 2001 for re-examination of Unocal's '393 patent by the same group of refiners that lost a lengthy litigation in the Federal Courts spanning nearly six years involving the patent.
In January 2002, the PTO granted a request for a re-examination of Unocal's '126 patent. The PTO had earlier denied the request on the '126 patent.
Unocal said it would provide the examiner with details on why the company's claims were not obvious or anticipated in light of the state of knowledge at the time as reflected in the publications before the examiner.
After having lost at trial and at all levels of appeal -- including being denied cert by the U.S. Supreme Court -- the same refiner group is attempting to attack the patent with the same issues previously considered and rejected by the PTO, the jury and the U.S. District Court in California.
License agreements signed with 8 companies
Unocal has signed licensing agreements with eight companies, giving them the right to produce and blend cleaner burning gasolines using Unocal's patented formulations. The company said it is willing to negotiate commercial licensing agreements with all interested parties.
Unocal introduced a uniform licensing program that specifies a range of between 1.2 and 3.4 cents per gallon for volumes that fall under the Unocal patents. The licensee's rate per gallon is reduced as more utilization occurs. Unocal holds five patents on cleaner burning gasoline compositions.
Unocal believes that its patented formulations provide refiners and blenders with a cost-effective way of meeting California and Federal standards for cleaner-burning gasolines. The company estimates that licenses for the patents would add less than one cent to the cost of reformulated gasolines nationwide.
Background on Unocal patents and litigation
The U.S. Patent and Trademark Office granted Unocal the '393 patent (No. 5,288,393) on Feb. 22, 1994. The validity of the '393 patent has been the subject of lengthy litigation in the Federal courts. The '126 patent (No. 5,837,126; issued Nov. 18, 1998), which is an outgrowth of the company's earlier research, supplements the claims of the '393 patent.
In April 1995, Unocal was sued by six of the world's largest refiners, challenging the validity of the '393 patent. In 1997, a jury in the U.S. District Court in Los Angeles found the patent was valid and that the defendant companies had infringed. The jury awarded damages of 5.75-cents-per-infringing-gallon. Unocal received a payment of $69 million plus accrued interest and some attorneys' fees in June 2000 for infringement from March 1, 1996, to July 31, 1996. About 29 percent of the RFG gasoline manufactured by the defendants during that period infringed on the '393 patent.
The jury decision was upheld by the Federal Circuit Court of Appeals in May 2000. In February 2001, the U.S. Supreme Court declined to hear the case.
Unocal is pursuing additional damages from the defendants for infringement of its '393 patent during the period of Aug. 1, 1996, to Dec. 31, 2000.
About Unocal Corporation
Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. The company's principal operations are located in North America (Gulf of Mexico region, Permian Basin, Alaska and Canada) and in Asia (Thailand, Indonesia, Myanmar and Bangladesh). The company is also pursuing exploration programs in Brazil and West Africa.
Additional information about Unocal's patents for cleaner burning gasoline formulations is available on the company's web site, www.unocal.com/rfgpatent, and in its 2000 Annual Report on Form 10-K and subsequent reports filed with the U.S. Securities and Exchange Commission.
Updated: February 2002