Unocal Flexes its Muscle

EL SEGUNDO, Calif. -- Unocal Corp. said it filed suit against Valero Energy Corp., seeking damages from the large independent refiner for making cleaner burning gasoline using Unocal's patents without a license agreement.

Unocal said it was seeking damages from Valero, which it says has refused to discuss a license agreement, for willful infringement of two of its five fuel patents. Included in the suit are refineries owned by Ultramar Diamond Shamrock Corp., which Valero bought last year.

Unocal said it is seeking damages triple the 5.75 cent-per-gallon rate imposed in earlier cases and is seeking a mandatory license for court-ordered royalty payments for future infringement by Valero.

"Valero has publicly stated it has been producing gasoline in complete disregard of our patents," said Unocal spokesman Barry Lane. "That constitutes willful infringement."

Valero officials have yet to comment on the case. The San Antonio-based firm is among the top three U.S. refiners, producing roughly 2 million barrels of gasoline each day.

A handful of U.S. refiners, including Citgo Petroleum, Williams Energy, and Tesoro Petroleum, have made license agreements with Unocal since it offered the anti-smog gasoline blends, but many others have chosen to contest the patents.

In 1995, six companies with large refining operations sued Unocal, challenging the validity of Unocal's patents, and lost. Unocal was awarded more than $69 million
for infringements which covered about 29 percent of the gasoline made by the companies from March 1, 1996 to July 31, 1996.