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    Patents Under Fire

    Unocal unfazed by rejections of its patented fuel formulas.

    EL SEGUNDO, Calif.
    Unocal Corp. yesterday said it expects its reformulated gasoline patents to survive reexamination by the U.S. Patent and Trademark Office (PTO), despite an "initial rejection" of one of the key blends.

    The PTO decided on an initial rejection of the company's '393 formula as part of its examination into whether the patented blend overlaps with a previous expired fuel patent held by another company, a spokeswoman said. A second patent, '126, is also under review, the Associated Press reported.

    "An initial rejection of the patent's claims is common in the reexamination process at the PTO," Unocal said in a release. "We are confident that once the matter is fully reviewed, the patent will again be upheld as it was by the previous patent examiner."

    The initial rejection finding does not remove Unocal's right to royalties or damage awards for infringement on the proprietary fuel blend since it is only a preliminary action, PTO spokeswoman Brigid Quinn said.

    The patent office reviews come after U.S. refiners, angry over the prospect of royalty payments, raised questions about whether Unocal's patents are valid. Refiners' complaints have also triggered an ongoing federal investigation into whether the patents violate antitrust laws, the report said.

    Unocal's patents have been widely blamed for higher gasoline prices at the pumps by causing refiners to produce less of the anti-smog gasoline, used primarily in California and the Northeast, for fear of lawsuits.

    Unocal, an international oil and gas producing firm that operates no U.S. refineries, patented the anti-smog blends in the early 1990s after federal laws were imposed requiring cleaner-burning fuels at a third of the nation's pumps.

    Unocal has been challenged in court on a number of occasions since it acquired the patents, but has successfully defended them and recovered roughly $69 million in royalties, plus accrued interest, from refiners in California.

    Unocal late last month filed suit against Valero Energy Corp., seeking hundreds of millions of dollars in damages from the large independent refiner for willfully infringing on the patents.

    Valero, which would have to pay 17.25 cents per gallon for every infringing gallon it produced if Unocal wins the case, said it will vigorously fight the suit and expects the patents to be found invalid.

    Unocal has also signed agreements with eight refining companies since last year, including Citgo Petroleum Corp., Williams Energy, and Tesoro Petroleum Corp., giving them the right to produce and blend the patented cleaner burning gasolines for a fee of between 1.2 and 3.4 cents per gallon, the report said.

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