Saturday, June 11, 2005

Enforcement of Unocal patents to end under terms of Chevron deal

Patents of Unocal directed to a cleaner gasoline have been under scrutiny for some time. Although they survived a validity challenge brought by competitors, they were currently the subject of an FTC investigation. Now, it the takeover of Unocal by Chevron goes through, the patents will no longer be enforced.

from the LA Times:

U.S. regulators, claiming a victory for California motorists, approved Chevron Corp.'s proposed $16.4-billion purchase of Unocal Corp. on Friday after the companies agreed to surrender Unocal's long-contested patents on the state's cleaner-burning gasoline.

The Federal Trade Commission said the pact would save California drivers as much as $500 million a year because competitors would not have to pay royalties to Unocal and, eventually, to Chevron for making the reformulated gasoline — royalties that would have been passed on to drivers.


The FTC's suit would be dropped under the agreement. In turn, Unocal and Chevron agreed to "cease and desist from any and all efforts" to enforce the patents or collect royalties on them, and instead will "release all relevant gasoline patents to the public," according to their consent decree.

Unocal and Chevron also agreed to dismiss all pending patent-related lawsuits that included legal battles between Unocal and other oil companies. Much of that litigation was effectively on hold pending the outcome of the FTC case.

The agreement was praised by Unocal's competitors and by state Atty. Gen. Bill Lockyer, who had helped the FTC oppose the patents. "No drivers need more relief at the pump" than Californians, and "this agreement helps provide that relief," he said in a statement.

Several of the major oil companies also had opposed the patents, including industry leader Exxon Mobil Corp.; BP, which owns the Arco brand; Shell Oil, a unit of Royal Dutch/Shell Group; and Valero Energy Corp. Chevron itself had fought the patents before reaching the Unocal deal.

"We are very gratified by the actions of the FTC," Shell said in a statement. BP spokesman Phil Cochrane said his company was "quite encouraged" by the deal but was reviewing it before commenting further.


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