Oil Companies Give Unocal $91 Million

Unocal Corp. said Monday that rival oil companies have paid the full $91 million owed under a gasoline patent infringement case that some industry experts say is helping to boost the price of gas nationwide.

A U.S. District Court jury in Los Angeles found in 1997 that six major oil companies had infringed a Unocal patent on cleaner-burning reformulated gasoline. The jury ordered them to pay El Segundo-based Unocal 5.75 cents a gallon on 1.2 billion gallons produced in California during a five-month period in 1996.

The six companies, now reduced to five by the recent wave of oil industry mergers, were Atlantic Richfield Co., since acquired by BP Amoco; the Chevron USA Inc. subsidiary of Chevron Corp.; Exxon Corp. and Mobil Corp., which have since merged to become Exxon Mobil; the Shell Oil Products Co. subsidiary of Royal Dutch/Shell Group; and Texaco Inc.

A federal appeals court panel upheld the patent in March, and the full appeals court declined to rehear the case despite a petition by California Atty. Gen. Bill Lockyer, who accused Unocal of abusing the patent process. Lockyer claimed the patent will increase gas prices in the state by about a nickel a gallon.

And though Unocal is not collecting any gas license fees in the Midwest or other parts of the country where new, cleaner-burning gasoline was required starting June 1, some refiners and blenders contend that fear of violating the broad patent has hampered their ability to make the new gas, adding to high prices in those areas.

Unocal last week denied that its patents for cleaner-burning gasoline are a factor in the Midwestern price spikes. If it were collecting license fees there, the company said, the effect would be less than 2 cents a gallon.

Some of the remaining companies subject to the ruling said they still intend to appeal to the U.S. Supreme Court. But the companies were required to pay the $69-million judgment and subsequent interest after the most recent appeals court loss.

“We definitely believe we’ll collect [the money] back,” said Dave Dickson, spokesman for Exxon Mobil Corp. in Irving, Texas.

With interest, the total reached $91 million, slightly less than the $95 million recently estimated by Unocal. Unocal will record a $55-million after-tax gain, or about 23 cents a share, in the second quarter, spokesman Barry Lane said.

Unocal will return to federal court soon to ask for a nationwide accounting by the five defendants for gasoline produced after the five months covered by the original decision, Lane said. This and other gas patents put Unocal in the enviable position of earning money off gasoline even though the company has not refined or sold it since it sold those operations in 1997 to Tosco Corp.

Unocal’s stock fell 50 cents to close at $34.31 on the New York Stock Exchange.