Amicus Curiae Brief — Atlantic Richfield Co. v. Union Oil Co. of California

COPRECTED COPY

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SEP 14 2000

No. 00-00-249

IN THE a

Supreme Court of the United States

OCTOBER TERM, 2000

ATLANTIC RICHFIELD COMPANY, CHEVRON U.S.A., INC.,

EXXON MOBIL CORPORATION, MOBIL OIL CORPORATION, .

SHELL OIL PRODUCTS COMPANY, AND TEXACO REFINING

AND MARKETING, INC..,

Petitioners,

Vv.

UNION OIL COMPANY OF CALIFORNIA,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

MOTION FOR LEAVE TO FILE AMICUS CURIAE BRIEF

AND BRIEF OF AMICUS CURIAE

GENERAL MOTORS CORPORATION

IN SUPPORT OF PETITION FOR CERTIORARI

FREDERICK A. FROMM, JR. EDWARD W. WARREN

DAVID W. SCHRUMPF Counsel of Record

GEORGE A. GROVE STUART A.C. DRAKE

General Motors Corporation GRANTA Y. NAKAYAMA

300 Renaissance Center JEFFREY BOSSERT CLARK

P.O. Box 3000 Kirkland & Ellis

Detroit, MI 48265-3000 655 Fifteenth Street

(313) 665-4879 Washington, D.C. 20005

(202) 879-5000

Counsel for General Motors

Corporation

September 14, 2000

a EE ELE OT Oe 4

eck sear er ee

an

DISCLOSURE STATEMENT

Pursuant to Supreme Court Rules 24.1(b) and 29.6. General

Motors Corporation hereby declares that it has no parent

corporations. No publicly held company owns more than 10%

of the stock of General Motors Corporation.

(11)

ill

TABLE OF CONTENTS

Page

DISCLOSURE STATEMENT ............00.2--005: i

TARE Cet 6.5.06 ea be eee ill

TABLE GP AUTRE AIGS 6s ceca ccnetwsecabessess Iv

MOTION FOR LEAVE TO FILE A BRIEF AMICUS

CUARGRD 6 aks can veee cece eee ere l

IDENTITY AND INTERESTS OF AMICUS CURIAE ...2

er AR CU CURGEE 650i a ses dapeeeeeanaies 5

INTRODUCTION AND SUMMARY OF ARGUMENT . 5

Pvt 0 | a rere Shes ero ae 6

I. This Case Is Exceptionally Important to National

Environmental Policy and the Economy ......... 6

A. The Loss of Proper Gasoline Volatility

eo PUP Pe ee ee 7

B. The Economic Impact of the ‘393

i Sr prey re rT 1]

II. Patent Applicants Should Not Be Permitted

Merely to Anticipate Regulatory Requirements,

Nor to Adapt Such Opportunistic Patents to Final

Regulatory Requirements Through the Process of

Se nee bor ee se ee 13

III. | The Lower Courts Here Should Never Have

Validated a Patent Resting Purely on

Preexisting Innovations, and Did So Only by

Ignoring This Court’s Clear Precedent. ......... 18

CROLL bio ks 4 sue aed eee 19

eo

en

iV

TABLE OF AUTHORITIES

CASES

Ansonia Brass & Copper Co. v. Elec. Supply Co.,

a SE er ee 19

Eli Lilly and Co. v. Medtronic, Inc.,

RE EOD kn hicks cs acnecanicccaccs 16

Geier v. American Honda Motor Co.,

ee 2

General Electric Co. v. Jewel Incandescent Lamp Co.,

MPP RRP OOED Picnic a cduacicaceascec 49

General Motors Corp. v. Toyota Motor Corp.,

667 F.2d 504 (6th Cir. 1981), cert. denied, 456 U.S.

ee as oy hs ewe wind 13

McCarty v. Lehigh Valley R. Co.,

I os ss ices da dawhvonn 19

Medtronic, Inc. v. Lohr,

a ek ass esave kak s 2

Pope Mfg. Co. v. Gormully,

ee a 16

Smith v. Nichols,

88 U.S. (21 Wall.) 112 (1874) ............... 19

CONSTITUTIONS AND STATUTES

Se 14, 16

ee 16

Ee ee ee ee 17

a 10

TS ET rs ee 13

REGULATORY MATERIAL

62 Fed. Reg. 68,196 (Dec. 31, 1997) ................ 11

Vv

CONGRESSIONAL HEARINGS

Senate Agriculture Committee Hearings on Energy Cost and

Agriculture, 2000 WL 23831729 (July 20, 2000)

(statement of James McCarthy, General Manager,

CITGO Petroleum Corporation) ............... 3

Senate Energy and Natural Resources Committee Hearings on

Gasoline Supply Problems, 2000 WL 23831565 (July

13, 2000) (statement of Red Cavaney, President and

CEO, American Petroleum Institute) ........ 11-12

House Judiciary Committee Hearings on Competitive

Problems in the Oil Industry, 2000 WL 23831097 (June

28, 2000) (statement of Chairman Henry J. Hyde) 12

MISCELLANEOUS

Alexei Barrionuevo, Majors Battle Unocal over Clean

Gasoline Patent, HOUSTON CHRON., Aug. 27, 2000 12

California Air Resources Board, EMFAC 2000 Emission

Inventory Model Version 1.99 (May 2000) ..... 10

California Southland Focus: Unocal to Seek More Damages in

Patent Suit, L.A. Times, Aug. 17,2000 ........ 12

Clean Air, Empty Pockets, THE WASH. TIMES, Sept. 10, 2000

ib bid hw a AT ARN ek 12

Congressional Research Service, RL30592: Midwest Gasoline

Prices: A Review of Market Developments (June 28,

2000), available at <http://www.cnie.org/nle/eng-

62.htmi¥PatentedRFG> ... 02... cc cee: 12-13

Frank Dabbs, Bottom Lines, OILWEEK, July 3,2000 .... 12

J. C. Ellis, Future Automotive Fuels, SAE Technical Paper

SOUNGE POO. THOT CESTE) x 65 ocetadcvuwkces 8,9

Finding Relief for Motorists the Issue, DENVER ROCKY

MOUNTAIN NEWS, July 3,2000 .............. 12

GM Bids for Radically New Gasoline, OIL AND GAS J. (Jan. 1,

oS | er rr re ee eee: ee 15

GM Still Wants Costly Light Gasoline, OIL AND GAS J. (Oct. 2,

FREED 3h vaxdcudko ee kee ee 15

vi

Gasoline Price Spikes Spark US Political Firestorm, OIL AND

OAS J., FORY 10, DOUG www. cee cccccccunc. 12

Tom Hamburger, Ciresi Case Examined in Gasoline Price

Increases: Oil Company Patent Case May Have Had

Role, Some Say, STAR-TRIBUNE, July 6,2000 ... 12

High Crude Prices, Patent Victory Push Unocal to Record

Earnings in Second Quarter, A.P. NEWSWIRES, July 27,

OE Sein VaasWiNeacsee hc ea tO ee 1]

John B. Heywood, INTERNAL COMBUSTION ENGINES:

FUNDAMENTALS (1988) ..................... 7

Kenji Kanehara et. al., Analyzing the Influence of Gasoline

Characteristics on Transient Engine Performance, SAE

Technical Paper Series No. 912392 (1991) ...... 9

Midwest Gasoline Prices, Presented by FTC Chairman Robert

Pitofsky, Before the Committee on Commerce, U.S.

House of Representatives (June 28, 2000), available at

<www.ftc.gov/OS/2000/06/gasolinecommerce.htm>

teach oR ews Laake ane es eee cel 12

MoTOR VEHICLE FACTS AND FIGURES (Ward’s

Communications 1999) ..................... 10

Christopher Palmeri, et al., Who's to Blame? OPEC? Refiners?

Speculators? Regulators? Yes, Yes, Yes, and Yes,

BUSINESS WEEK, July 3,2000 ................ 12

Patent Case Could Threaten Enviro Compliance, 10

AMERICAN POLITICAL NETWORK GREENWIRE,

Pee se or ae. ee ous yo eee 12

D. A. Patterson and N. A. Henien, EMISSIONS FROM

COMBUSTION ENGINES AND THEIR CONTROL ( 1972) 8

U.S. Environmental Protection Agency, THE BENEFITS AND

COSTS OF THE CLEAN AIR ACT, 1970T0 1990 ....6

U.S. Environmental Protection Agency, Office of Mobile

Sources, Fact Sheet OMS-12: Milestones in Auto

Emissions Control (Aug. 1994) ............... 6

U.S. Environmental Protection Agency, NATIONAL AIR

POLLUTION TRENDS, 1900-1996, App. B ........ 11

No. 00-00-249

SE AACE RRNA NONRANDOM IO ME REO

IN THE

Supreme Court of the United States

OCTOBER TERM, 2000

ATLANTIC RICHFIELD COMPANY, CHEVRON U.S.A., INC.,

EXXON MOBIL CORPORATION, MOBIL OIL CORPORATION,

SHELL OIL PRODUCTS COMPANY, AND TEXACO REFINING

AND MARKETING, INC.,

Petitioners,

V.

UNION OIL COMPANY OF CALIFORNIA,

Respondent

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Federal Circuit

MOTION FOR LEAVE TO FILE AMICUS CURIAE BRIEF BY

GENERAL MOTORS CORPORATION

IN SUPPORT OF PETITION FOR CERTIORARI

Pursuant to Supreme Court Rule 37.2(b), General Motors

Corporation (“General Motors” or “GM”) respectfully requests

leave of the Court to file this brief amicus curiae in support of

Petitioners, Atlantic Richfield Company, et al.' Counsel for all

Petitioners have consented by letter to the filing of this brief.

' Pursuant to Supreme Court Rule 37.6, General Motors states that no

counsel representing a party to this case authored this motion or brief in

whole or in part and that no person or entity other than General Motors

Corporation or its counsel made a monetary contribution to the preparation

or submission of this motion or brief.

5

An original letter of consent will be lodged with this Court.

Counsel for Respondent, Union Oil Company of California, has

withheld its consent, necessitating this motion. __

IDENTITY AND INTERESTS OF AMICUS CURIAE

General Motors is the world’s largest automotive

manufacturing corporation. GM employs more than 388,000

people and works with over 30,000 supplier companies

worldwide.

For the North American market, GM designs, manufactures,

and markets vehicles for the Buick, Cadillac, Chevrolet, GMC,

Oldsmobile, Pontiac, Saab, and Saturn nameplates. In 1998,

GM North America produced approximately 5 million vehicles,

had sales and revenues of $94.2 billion, and employed 229,000

people. GM also has substantial interests in digital

communications, financial and insurance services, locomotives,

and heavy-duty automatic transmissions. GM has more than

260 major subsidiaries, joint ventures, and affiliates around the

world.

When its interests are affected or where its participation may

prove helpful to this Court, General Motors has regularly filed

briefs amicus curiae. See, e.g., Geier v. American Honda

Motor Co., 120 S. Ct. 1913 (2000); Medtronic, Inc. v. Lohr,

518 U.S. 470 (1996).

GM’s interests are adversely affected by the enforcement of

the patent at issue in this case. The control of motor exhaust

emissions today requires a systems approach, in which

sophisticated emissions control hardware on the vehicle is

combined with the use of “low-emission” gasolines in the

engine. Gasoline-powered GM cars and trucks will not provide

optimal emissions control performance unless they are operated

on those “low emission” fuels, which permit the most efficient

possible operation of their engines.

As explained more fully below, the Unocal patent at issue

in this case and other Unocal patents derived from this one

a"

3

cover some of the most important fuel properties needed for

optimal control of vehicular emissions. Refiners not owned or

operated by Unocal can be expected to act in an economically

rational manner. Faced with the prospect of paying royalties to

Unocal under the patent contested here, the refiners will

predictably choose to produce fuel blends that are not optimal

for modern vehicles, since that choice will be cheaper — even

though making that choice will impose large social costs in

terms of increased vehicle emissions.”

The consequences of refiners acting in the economically

rational manner will be disbeneficial for GM and the motoring

public. If the cleanest possible gasolines are not plentifully

available, GM and other vehicle manufacturers wil! face

increased pressure to try to reduce emissions further with

additional emissions-control hardware on the vehicle. That

additional hardware, in turn, will increase the costs of new

vehicles and complicate GM’s efforts to build simple and

durable emissions-control systems.

General Motors’ participation in this case will also bring to

the Court’s attention matters that might otherwise go unnoticed.

GM is a leader not only in the production of new motor

vehicles but also in research on motor vehicle fuels. GM

participated in the same environmental regulatory processes

that gave rise to the “low-emission” gasoline rules whose

implementation has been stymied by the Unocal patent. GM’s

amicus curiae brief explains why, using peer-reviewed

scientific and automotive engineering literature, this case has

exceptional importance to the nation’s efforts to reduce

automotive emissions and achieve improved air quality.

* See Senate Agriculture Committee Hearings on Energy Cost and

Agriculture, 2000 WL 23831729 (July 20, 2000) (statement of James

McCarthy, General Manager, CITGO Petroleum Corporation) (“CITGO’s

Lake Charles Refinery has the ability to produce about 15,000 barrels per

day of summer grade RFG, but to avoid the patent issue, we have cut

production to about 4,000 barrels per day.”).

ee

a ee

Based on the foregoing, General Motors hereby moves to file

the following brief amicus curiae in support of Petitioners in

this case.

Dated: September 14, 2000

FREDERICK A. FROMM, JR.

DAVID W. SCHRUMPF

GEORGE A. GROVE

General Motors Corporation

300 Renaissance Center

P.O. Box 3000

Detroit, MI 48265-3000

(313) 665-4879

Respectfully submitted,

EDWARD W. WARREN

Counsel of Record

STUART A.C. DRAKE

GRANTA Y. NAKAYAMA

JEFFREY BOSSERT CLARK

Kirkland & Ellis

655 Fifteenth Street

Washington, D.C. 20005

(202) 879-5000

Counsel for General

Motors Corporation

5

INTRODUCTION AND SUMMARY OF ARGUMENT

This isa highly significant case, with far-reaching patent-law

ramifications, as well as for the nation’s efforts to improve air

quality. In this case, two judges comprising the majority of a

Federal Circuit panel blessed a naked attempt by a refiner to

hijack a series of environmental regulations for its own benefit.

The results are (1) a significant reduction in the environmental

benefits that could otherwise have been achieved by the

pertinent regulations, (2) the imposition of millions of dollars

of unnecessary cost on the national economy, (3) increases the

prices of gasoline, (4) gasoline supply shortages, and (5) the

perversion of the proper functioning of the patent laws.

The Court should not countenance those results. It should

grant review because two fundamental legal errors were made

in this case.

First, the Federal Circuit entirely ignored the regulatory

context in which Unocal sought and obtained this patent,

turning a blind eye to Unocal’s effort to hijack the regulatory

process for private gain — a move that resulted here in no

invention enriching society and which, as a result, runs afoul of

numerous patent-law doctrines. The patent laws of this country

were not intended to permit one company falsely to claim

“invention” of basic, long-understood relationships between the

chemical composition of gasolines and the efficient operation

of the motor vehicle engines in which those fuels are used.

Second, the Federal Circuit upheld the validity of Unocal’s

patent despite the fact that it was wholly anticipated by high-

performance automotive gasolines that were well-known in the

refining industry and used in such prominent applications as

automotive endurance and racing trials. The Federal Circuit

Shook two important pillars of patent law. It effectively

inserted new text into the claims actually made by Unocal.

And it condoned the grant of a new patent for what amounted

to a self-evident new use for an old product.

6

ARGUMENT

J This Case Is Exceptionally Important to National

Environmental Policy and the Economy.

Each year, the nation spends tens of billions of dollars to

control emissions from the sources of urban air pollution.’ A

major portion of that investment in cleaner air has been made

in the technologies needed to reduce emissions from motor

vehicles. Under the test conditions specified by EPA, a typical

new car sold in America is the cleanest in the world, and

produces tailpipe emissions of hydrocarbons that are less than

five percent of similar emissions from new cars sold in the

1960s, prior to emission controls.*

Most of the emissions reductions that have been achieved in

automobiles have been the result of the improved vehicle

hardware, starting with catalytic converters, coupled with the

various sophisticated computer controls used on modern

engines. Much more recently, EPA and the State of California

have begun to require gasoline refiners to produce “clean”

gasolines that help cars and trucks to control emissions not only

under laboratory conditions, but also in ordinary use on the

road under everyday driving conditions.

As indicated by Petitioners, the °393 patent will greatly

increase the cost of gasoline in California, in part by making it

more expensive for refineries to meet California’s

requirements. See Pet. at 9-11. There is, however, much more

at stake for the rest of the nation if the Unocal patent is

enforced.

Efforts by the oil industry to blend gasolines that avoid

Unocal’s royalties can be predicted to increase the level of

> U.S. Environmental Protection Agency, THE BENEFITS AND COSTS OF

THE CLEAN AIR ACT, 1970 TO 1990, at ES-2 (Oct. 1997).

* U.S. Environmental Protection Agency, Office of Mobile Sources, Fact

Sheet OMS-12: Milestones in Auto Emissions Control (Aug. 1994).

Ae REE

7

automotive air pollution in some of America’s largest urban

centers. This will frustrate the intent of more stringent motor

vehicle emissions standards set by the government, and

squander the public’s investment in cleaner vehicle

technologies.

A. The Loss of Proper Gasoline Volatility Controls

Some background on the interaction between gasoline and

the modern internal combustion engine is necessary in order to

appreciate the adverse environmental effects of the ’393 patent

on automotive emissions control.

Gasoline is composed of hundreds of different chemical

compounds, which are refined for use in spark-ignited

automotive engines. The “volatility” of gasoline — which is its

propensity to change from a liquid to a vapor state — is critical

to the proper operation of an internal combustion engine.

Strictly speaking, a gasoline engine does not operate on

liquid gasoline — it depends upon the combustion of gasoline

vapor and oxygen to release the energy in the gasoline tank and

propel the vehicle down the road.* Gasoline must be vaporized

to the greatest possible degree in order to burn properly and

completely in the combustion chamber for maximum

efficiency, and to obtain the lowest emissions of unburned fuel

and the best engine performance.

If the specific quantity of gasoline injected into the

combustion chamber fails to vaporize completely, unstable

combustion will result. This often causes engine misfire,

roughness in engine operation potentially leading to stalling,

and substantial increases in unburned-fuel hydrocarbon

emissions. Even the best gasoline engines are especially

sensitive to misfire and increased hydrocarbon emissions —

especially during engine warm-up where sufficient engine heat

> John B. Heywood, INTERNAL COMBUSTION ENGINES: FUNDAMENTALS 4

(1988).

8

is not available to help in vaporizing the gasoline, and the

catalytic converter has not yet reached operating temperature.°

The use of gasolines with optimal volatility characteristics is

therefore particularly central to clean engine operation.

Gasoline volatility is measured in a number of different

ways. A common method of representing gasoline volatility is

called the distillation curve, which tracks the temperature at

which a specific percentage of the gasoline moves from the

liquid to the vapor state. A typical distillation curve for

gasoline is shown on Figure 1 below.’ On Figure 1, the y-axis

shows the temperature to which a given sample of gasoline is

heated; the x-axis shows the percentage of gasoline evaporated

as the gasoline is heated. The three dots along the distillation

curve indicate three points at which volatility is routinely

measured: the “T10” point, indicating the temperature at which

10 percent of the gasoline will vaporize, the “T50” point at

which 50 percent will vaporize, and the “T90” point at which

500 >

w he

8 8

4 4

N

S

+

Temperature °F

T10

0 10 20 30 40 50 60 70 80 90 100

% Evaporated

° See, e.g., J. C. Ellis, Future Automotive Fuels, SAE Technical Paper

Series No. 720617, 118 (1971).

Adapted from D. A. Patterson and N. A. Henien, EMISSIONS FROM

COMBUSTION ENGINES AND THEIR CONTROL 55 (1972).

90 percent will vaporize.

The so-called “mid-range” volatility of gasoline, shown in

the shaded area of Figure 1 around the T50 value, is the main

area of concern here. The °393 patent applies as a general

matter to gasoline blends with a T50 value of less than 215° F.

Any blend with a T50 of 215° F or below may come within the

scope of the Unocal patent and require royalties. The practical

effect of the Unocal patent is thus to create an economic

incentive for non-Unocal refiners to blend gasolines with a T50

value above 215° F. That option is entirely within the

requirements of EPA regulations, but it nonetheless inevitably

increases tailpipe emissions for the reasons explained below.

The peer-reviewed technical literature, which includes data

from General Motors and many other research organizations

over many years and under a wide variety of engine operating

conditions, demonstrates conclusively that gasolines with

higher mid-range (T50) volatilities will produce higher

emissions under normal operating conditions. The reason for

this is simple. Gasolines with a relatively high T50 value —

those needed to avoid the Unocal patent — will be slow to

vaporize, especially during the time before the converter is

“warmed up” and able to work efficiently.

If a gasoline has a higher T50 value than covered by the

Unocal patent, a significant portion of the hydrocarbon

compounds in the gasoline will pass through the engine and the

catalytic converter during the initial operation of the engine,

and enter the atmosphere.* Once in the atmosphere, those

hydrocarbons can contribute to the formation of urban ozone or

“smog” conditions in the troposphere — a phenomenon of

longstanding concern to Congress in the Clean Air Act, and the

Kenji Kanehara et. al., Analyzing the Influence of Gasoline

Characteristics on Transient Engine Performance, SAE Technical Paper

Series No. 912392, 7 (1991); J. C. Ellis, Future Automotive Fuels, SAE

Technical Paper Series No. 720617, 118 (1971).

10

target of huge national expenditures.”

One theoretical solution to the problem of gasolines with

excessive T50 values might be to require vehicles to pass

tailpipe hydrocarbon emissions tests when operated on these

higher volatility fuels. That result would be perverse — indeed,

the very aim of the EPA regulations that govern in this area

would be frustrated by requiring additional regulation and even

greater expenditures of public and private resources.

Even that alternative, however, would address only a small

part of the problem. For there is essentially no way the

government could impose a new tailpipe emissions testing

standard on the more than 175 million gasoline-powered cars

and light trucks already on the road in the U.S. today.'° Once

a vehicle has been designed and assembled at the factory, and

then sold to the public, its basic emissions control properties,

as a practical matter, cannot be altered in the field.

For those 175 million vehicles already on the road, most of

which will remain in service for more than 10 years,'' the shift

upward in mid-range volatility that is entirely predictable as an

economic matter as a result of the Unocal patent will

inexorably increase emissions levels. EPA, the States, and the

automobile industry cannot take any practical steps related to

the hardware already on those vehicles to address the problem

created by widespread use of gasolines with poor mid-range

volatility properties.

To put the matter in context, consider the impact of a 4

percent increase in hydrocarbon emissions from the fleet of 175

° See, eg, 42 U.S.C. §§ 7511-75l1la (classification of ozone

“nonattainment” areas and measures required to reduce ozone in such areas);

note 3 supra (cost estimates for national emissions control measures).

'© MOTOR VEHICLE FACTS AND FIGURES, 37, 39 (Ward’s Communications

1999). This number includes all U.S. vehicles outside California.

'' California Air Resources Board, EMFAC 2000 Emission Inventory

Model Version 1.99 (May 2000).

1]

million gasoline-powered light-duty vehicles reported to be in

daily use. An increase of that magnitude is expected from an

8.8 percent shift in T50, according to the literature.'* [he

national vehicle population (excluding California, which has its

own emission regulations) would experience an increase of

almost 21,000 tons in hydrocarbon emissions over a typical

“ozone season,” which in most U. S. cities lasts about 90 days

a year, stretching from late spring until late summer.'* In terms

of additional sources of smog-forming emissions, that is the

equivalent of placing about nine million additional cars on the

road in America’s most congested urban areas.

B. The Economic Impact of the ‘393 Patent

The vices of Unocal’s patent are not limited to its

environmental consequences. The District Court’s disposition

of this case, affirmed by the Federal Circuit, has increased the

cost of producing a gallon of gasoline covered by the Unocal

patent by 5.75 cents per gallon. Of course, that increased cost

to refiners and the higher prices paid by consumers have

redounded to Unocal’s benefit. See, e.g., High Crude Prices,

Patent Victory Push Unocal to Record Earnings in Second

Quarter, A.P. NEWSWIRES, July 27, 2000. Not surprisingly,

this result deserves the considerable attention it has attracted

from members of Congress" and from the media.'°

'2 An increase of 8.8% in T50 is the average difference between fuels

above and below the Unocal limit of 215° F. The EPA’s “Complex

Model,” described in 62 Fed. Reg. 68,196 (Dec. 31, 1997), calculates the

emission increase that results from changes in fuel properties.

‘3 Increase applied to light-duty vehicle hydrocarbon emission inventory

published in U.S. Environmental Protection Agency, NATIONAL AIR

POLLUTION TRENDS, 1900-1996, App. B.

'* In addition to the hearings held by the Senate Agriculture Committee,

referred to supra note 2, the Senate’s Committee on Energy and Natural

Resources held hearings (see, e.g., Senate Committee on Energy and Natural

Resources Hearings on Gasoline Supply Problems, 2000 WL 23831565

(July 13, 2000) (statement of Red Cavaney, President and CEO, American

(continued...)

12

Indeed, both the Federal Trade Commission and the

Congressional Research Service have concluded that the

Unocal patent may be one ingredient in the dramatic increase

in retail gasoline prices throughout the Midwest this past

summer. According to the FTC, the Federal Circuit’s decision

upholding Unocal’s patent for some

formulations of RFG may have caused some

refineries to change RFG blends in an apparent

effort to avoid infringement or high royalty

payments, leading to production delays and

decreased refinery throughput.

Midwest Gasoline Prices, Presented by FTC Chairman Robert

Pitofsky, Before the Committee on Commerce, U.S. House of

Representatives (June 28, 2000), available at

<www.ftc.gov/OS/2000/06/gasolinecommerce.htm>; see also

Congressional Research Service, RL30592: Midwest Gasoline

Prices: A Review of Market Developments (June 28, 2000),

'* (...continued)

Petroleum Institute)), as did the House Commerce Committee, (see, e.g.,

Pet. at 10), and the House Judiciary Committee (see, e.g., House Judiciary

Committee Hearings on Solutions to Competitive Problems in the Oil

Industry, 2000 WL 23831097 (June 28, 2000) (statement of Chairman

Henry J. Hyde)).

'S See, e.g., Clean Air, Empty Pockets, THE WASH. TIMES, Sept. 10, 2000,

at B2; Alexei Barrionuevo, Majors Battle Unocal over Clean Gasoline

Patent, HOUSTON CHRON., Aug. 27, 2000, at 9; California Southland

Focus: Unocal to Seek More Damages in Patent Suit, L.A. TIMES, Aug. 17,

2000 at C2; Patent Case Could Threaten Enviro Compliance, 10 AMERICAN

POLITICAL NETWORK — GREENWIRE, No. 9, Aug. 17, 2000; Gasoline Price

Spikes Spark US Political Firestorm, OIL AND GAS J., July 10, 2000, at 22;

Tom Hamburger, Ciresi Case Examined in Gasoline Price Increases: Oil

Company Patent Case May Have Had Role, Some Say, STAR-TRIBUNE, July

6, 2000, at 10A; Christopher Palmeri, et al., Who's to Blame? OPEC?

Refiners? Speculators? Regulators? Yes, Yes, Yes, and Yes, BUSINESS

WEEK, July 3, 2000, at 36; Frank Dabbs, Bottom Lines, OILWEEK, July 3,

2000, at 46; Finding Relief for Motorists the Issue, DENVER ROCKY

MOUNTAIN NEWS, July 3, 2000, at 41A.

13

available at <http://www.cnie.org/nle/eng-62.html#Patented

RFG>.

Il. Patent Applicants Should Not Be Permitted Merely

to Anticipate Regulatory Requirements, Nor to

Adapt Such Opportunistic Patents to Final

Regulatory Requirements Through the Process of

Amendment.

The Unocal patent at issue here can only be understood

against the background of the regulatory and engineering

framework set forth above. Under any _ reasonable

understanding of the patent laws, Unocal’s “discovery” should

not be patentable at all. Quite simply, Unocai’s patent rests on

nothing more than a prediction of the shape and form of

California regulations (at the patent-application stage) or a

regurgitation of those California regulations (after the

regulations were issued, and as the patent was being amended).

The Unocal patent does not involve a situation like the one

where regulators (in California or elsewhere) imposed stricter

standards for tailpipe emissions and the result was the invention

of the catalytic converter. Compare General Motors Corp. v.

Toyota Motor Corp., 667 F.2d 504 (6th Cir. 1981) (upholding

GM’s patent on a type of catalytic converter), cert. denied, 456

U.S. 937 (1982). The catalytic converter was an innovative

device whose invention was necessary to comply with such

regulations — but, in no sense was it a device which was simply

a direct outgrowth or nearly complete regurgitation of the

regulations themselves. A typical clean-air environmental

regulation which provides that only x grams per mile of

nitrogen oxides (a precursor to smog formation), see, e.g.,

Clean Air Act § 202 Table G, 42 U.S.C. § 7521 Table G, may

be emitted by a vehicle does nothing to inform vehicle

manufacturers how to achieve such an emissions level. Yet

Unocal’s patent essentially does nothing more than play back

the regulations themselves.

14

The California RFG regulations that were being developed

in the 1990s by the California Air Resources Board (“CARB”)

and refiners (including Unocal) define the entirety of Unocal’s

supposed innovation. The California RFG regulations at issue,

for example, provided limits on Reid Vapor Pressure (“RVP”),

TSO (temperature causing 50% evaporation), T90 (temperature

causing 90% evaporation), olefins, paraffins, and aromatics

(three different types of hydrocarbons), as well as an octane

rating. The claims made by Unocal in the ‘393 patent impose

similar limits. See Pet. App. 58a-64a.

Against the regulatory backdrop, it is impossible to conceive

of the ‘393 patent and the claims based upon it as contributions

to “Science and [the] useful arts.”'® Unocal did not design a

new emissions control device like the catalytic converter to

meet a new regulatory goal. All that Unocal did was to parrot

the essence of the regulatory limits set by CARB. Indeed,

Unocal admitted that its patent was filed in anticipation of

CARB’s regulations. See JA379, 564-65.

Perhaps it would have been a contribution to human

knowledge sufficient to warrant patent protection if Unocal’s

engineers had run thousands of empirical tests on a range of

fuel compositions permissible under the California regulations,

in order to discover the narrow range of compositions that were

optimal in meeting some specific metric — such as the

maximum feasible emissions reduction under a given set of test

condition at the lowest possible cost. That is manifestly not

what happened here. Unocal’s only “insight” was that

controlling certain chemical properties in gasoline would

reduce emissions — an insight wholly captured by the California

regulations, and in any event well-known in the automotive and

oil industries for many years before."

'° U.S. Const., art. I, section 8, cl. 8.

'” For its part, GM had launched the campaign for cleaner gasolines in the

(continued...)

15

Nevertheless, as the undisputed evidence in the record

demonstrates, the Unocal patent does not represent a discovery

even in that limited sense — instead, it covers literally “trillions”

of combinations under the regulations. JA742-43. Asa Unocal

representative stated after the patent was issued and was first

made known to CARB and to the refining industry, “almost any

gasoline that would be practical to make and meet the [CARB]

requirements would fall under the scope of our patent.” JA473.

It is also critical to note one more point in the strange history

of the Unocal patent — namely, how it was amended to take

account of the final form of the regulations. That history

appears on pages 3-4 and 15-16 of Petitioners’ brief. In GM’s

view, the most striking example of Unocal’s regulatory

opportunism is Unocal’s treatment of the olefin content of

“low-emission” fuel. Excessive olefin content in gasoline can

lead to engine gumming and valve sticking, and therefore olefin

content must be controlled to ensure optimal engine operation.

At first, Unocal asserted in its patent application that the

“best” emissions results were to be achieved by driving olefin

levels down to “essentially zero.” After CARB’s regulations

failed to require that level of control, Unocal amended its

patent to mirror the requirements of the regulations. See

JA465. This example surely undermines any attempt by

Unocal to argue that, while the insight of altering relevant

chemical properties of gasoline to reduce emissions was known

to regulators and to the auto and oil industries, Unocal’s

contribution was to determine by how much to alter those

'7 (...continued)

technical community almost a generation ago. See GM Still Wants Costly

Light Gasoline, OIL AND GAS J. (Oct. 2, 1972) (“General Motors has put

refiners on the spot again to come up with a radically new, more costly

gasoline to help meet clean-air standards for 1975 model autos.”); GM Bids

for Radically New Gasoline, OL AND GAS J. (Jan. 17, 1972) (providing

GM’s specifications for a new gasoline that would enable it to meet tighter

emissions standards, including, inter alia, limits on RVP, T10, T50, T90,

olefins, and aromatics).

a le ae

16

chemical properties to achieve optimal emissions benefits.

The need to protect innovation is the driving force of the

patent laws. See U.S. Const. art. I, sec. 8, cl. 8 (“The Congress

shall have Power . . . To promote the progress of science and

useful Arts, by securing for limited Times to Authors and

Inventors the exclusive Right to their respective Writings and

Discoveries.”) (emphasis added); 35 U.S.C. § 101 (“Whoever

invents or discovers any new and useful process, machine,

manufacture, or composition of matter, or any new and useful

improvement thereof, may obtain a patent therefore .. . .”)

(emphasis added).

Because there is no innovation by Unocal involved in its

*393 patent, that patent should have been invalidated by the

lower court. The majority of the Federal Circuit panel declined

to do this based on a fundamental misapprehension of the

constitutional and statutory scope of the patent law under this

Court’s well-established precedent stretching back at least as

far as Pope Manufacturing Co. v. Gormully, 144 U.S. 224, 234

(1892). This is that unique case under patent law where the

thing claimed to be patented — far from being a novel invention

— was simply a recasting of regulatory requirements in the form

of sweeping claims that are entirely self-evident.

The Federal Circuit’s majority turns a deaf ear to a series of

congressional actions and judicial decisions warning the need

for a careful inquiry into the interactions between patent law

and regulatory law. See, e.g., Eli Lilly and Co. v. Medtronic,

Inc., 496 U.S. 661 (1990) (exploring relationship between the

patent laws and the medical device regulatory schema in light

of an amended Food, Drug, and Cosmetic Act). The failure to

consider regulatory background here exposes the crippling

weaknesses in the Federal Circuit’s opinion.

For example, in response to the argument that no specific

chemical compositions for the fuel being patented were

specified, the Federal Circuit answered that those skilled in the

art of refining know how to mix petroleum stocks to achieve

17

any set of specific properties, and thus a list of chemical -

properties in the ‘393 patent is equivalent to instructions on

how to use the patent in learned practice. See Pet. App. 3a.

But in the context of the CARB regulations, which can be read

to make similar chemical-property “claims,” it is apparent that

there is no innovation — nothing new — in Unocal’s ‘393 patent

that CARB itself did not “invent” when it wrote its regulations.

Similarly, the Federal Circuit responds to the argument that

the Unocal patent is invalid because it does not prescribe a

precise set of chemical properties, but rather ranges of

properties, by stating that this “form of description does not

offend [35 U.S.C.] § 112.” Pet. App. at 15a (citation omitted).

According to the lower court, this is so because the list of

ranges for chemical properties would allow a skilled refiner to

produce a specific gasoline blend, and thus, in context,

Unocal’s claims are a specific-enough set of instructions. See

id.

But that rationale collapses back into the Federal Circuit’s

earlier explanation for why it was not necessary for Unocal to

state its claims in terms of a specific chemical composition.

The same weaknesses appear again once the role of the CARB

regulations is considered - CARB defined the range of required

chemical properties and Unocal simply repeated them or

modified them. That is no basis for a valid patent. Rather, it

is a recipe for defeating the very purpose of reformulated

gasoline regulations, since the imposition of Unocal’s royalties

will encourage non-Unocal refiners to blend away from

Unocal’s “discovery” to the detriment of the motoring public

and environmental protection.

Additionally, it is plain that the CARB regulations

themselves also implicitly state ranges because they set

chemical-property cut-off points that must be met for any

gasoline that is to be lawfully sold.

18

Ill. The Lower Courts Here Should Never Have

Validated a Patent Resting Purely on Preexisting

Innovations and Did So Only by Ignoring this

Courts’ Clear Precedent.

Two bedrock limitations in patent law are: first, that a court

may not read into a patent claims that are not there in order to

limit the scope of the patent and thus to distinguish it from

prior art, and second, that a patentee does not possess a true

patent (and thus cannot defeat an anticipation defense) if he

simply adapts for a new use a product another has already

discovered. Here, the Federal Circuit ran afoul of both of these

important principles.

As the Federal Circuit forthrightly noted: “The claims of the

‘393 patent recite either ‘[a]n unleaded gasoline suitable for

combustion in an automotive engine’ or [a]n unleaded gasoline

fuel suitable for combustion in a spark ignition automotive

engine.” Pet. App. 10a. But fuels with the characteristics of

the claims made in the Unocal ‘393 patent were already

available in the prior art for use in such engines. See Pet. 21-22

and JAS553-55.

To avoid this glaring problem, the District Court and the

Federal Circuit both read a key limitation into the patent claims

that was not actually present in the patent’s text. Since it has

no anchor in the patent’s text, the lower courts could only

describe the new claim limitation they were adding in

conceptual terms alternately as “fuels that will regularly be

used in autos” (an ambiguous term itself, since race cars are

every bit as much autos as vehicles mass produced for the

consumer market) or “standard automotive gasoline.” Pet.

App. 10a (emphasis added). On that basis, the lower courts

were able to reject the refiners’ anticipation defense to patent

validity because the claims for racing gasolines and for

“standard” or “regular[]” gasolines are different, see id. at 1 la.

Of course, it has long been known that “[t]he difficulty [with

19

such an approach] is that, if we once begin to include elements

not mentioned in the claim in order to limit such claim and

avoid a defense of anticipation, we should never know where

to stop.” McCarty v. Lehigh Valley R. Co., 160 U.S. 110, 116

(1895). The panel’s lapse in this regard thus places its decision

squarely in conflict with other cases of the Federal Circuit

following McCarty.

Even if it were proper claim construction to engage in a

process of judicial amendment of claims by insertion of

additional limiting text where some judges exercising hindsight

on the applicant’s behalf might think it appropriate, the Federal

Circuit’s decision here would still not be free of error.

As an indication of the majority’s hyper-technical modus

operandi, the court failed to appreciate that it should make no

difference whether the prior art containing identical or similar

chemical properties involved “standard” gasolines or racing-car

gasolines. “It is not an invention to perceive that the product

which others had discovered had qualities they failed to detect.”

General Elec. Co. v. Jewel Incandescent Lamp Co., 326 U.S.

242 (1945); see also Ansonia Brass & Copper Co. v. Electrical

Supply Co., 144 U.S. 11, 19 (1892); Smith v. Nichols, 88 U.S.

(21 Wall.) 112, 119 (1874).

Whether Unocal’s “innovation” was borrowed first-hand,

from racing gasolines, or second hand, from racing gasolines by

way of CARB’s RFG regulations, the result should be the same

— declaration of the ‘393 patent’s invalidity and reversal of the

judgment here.

CONCLUSION

The Federal Circuit’s rationale upholding the Unocal patent

should be reversed on the grounds set forth in this brief and in

the brief of the Petitioners. This is plainly a case where the

Federal Circuit lost the forest for the trees. Its overly technical

parsing of the doctrines it has propounded to elucidate the

patent laws failed to recognize the fundamental point that in

this case Unocal had done no more than to hijack the

environmental regulations of a state body for its own private

gain.

So that the Court can consider and properly resolve

important questions of patent law in a case of great significance

for the environment and the economy, General Motors

respectfully requests that the Court grant the Petition for

certiorari, and set this case for briefing and oral argument.

Dated: September 14, 2000

FREDERICK A. FROMM, JR.

DAVID W. SCHRUMPF

GEORGE A. GROVE

General Motors Corporation

300 Renaissance Center

P.O. Box 3000

Detroit, MI 48265-3000

(313) 665-4879

Respectfully submitted,

EDWARD W. WARREN

Counsel of Record

STUART A.C. DRAKE

GRANTA Y. NAKAYAMA

JEFFREY BOSSERT CLARK

Kirkland & Ellis

655 Fifteenth Street

Washington, D.C. 20005

(202) 879-5000

Counsel for General Motors

Corporation