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

MOTION FILED

SEP 14 2000 vv)

No. 00-249

Inu The Supreme Court of the United States

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,

VS.

UNION OIL COMPANY OF CALIFORN‘A

Respondent.

On Petition for a Writ of Certiorari To The United

States Court of Appeals For The Federal Circuit

MOTION FOR LEAVE TO FILE BRIEF AND BRIEF

FOR MEMBERS OF CONGRESS DENNIS J.

KUCINICH, JOHN E. BALDACCI, THOMAS S.

BARRETT, WILLIAM O. LIPINSKI, CYNTHIA

McKINNEY, FRANK PALLONE, JR., AND BERNARD

SANDERS AS AMICI CURIAE IN SUPPORT OF

PETITIONERS

|

GENE E. GODLEY

Counsel of Record

ScoTT H. SEGAL

BRACEWELL & PATTERSON, L.L.P.

2000 K Street, N.W., Suite 500

Washington, D.C. 20006-1872

(202) 828-5800

Counsel for Amici Curiae

No. 00-249

In The

Supreme Court of the United States

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,

VS.

UNION OIL COMPANY OF CALIFORNIA

Respondent.

MOTION FOR LEAVE TO FILE BRIEF AMICUS

CURIAE AND BRIEF AMICUS CURIAE

Members of the House of Representatives of the United

States of America Dennis J. Kucinich, John E. Baldacci,

Thomas S. Barrett, William O. Lipinski, Cynthia McKinney,

Frank Pallone, Jr., and Bernard Sanders hereby respectfully

move for leave to file the attached brief amici curiae in the

above-referenced case. The consent of the counsel of record

for petitioners has been obtained. A letter of consent has been

filed with the Clerk of the Court. The counsel of record for the

respondent, Unocal, refused to give consent. Accordingly,

amici hereby move for leave to file the attached brief amici

curiae.

Amici are each Members of the U.S. House of

Representatives and have an interest in ensuring that the patent

dispute at issue in this case not jeopardize important aspects of

national public policy favoring clean and affordable fuel

supplies and favoring cooperative activities in anticipation of

federal regulations.

Participating as amici curiae, these Members of

Congress hope to aid the Court in its consideration of the

petition for wnt of certiorari by providing insight into the

complexities of the important federal policies at issue in the

above-referenced case.

Respectfully Submitted,

BS E.G —

Counsel of Record

SCOTT H. SEGAL

BRACEWELL & PATTERSON, L.L.P.

2000 K Street, N.W., Suite 500

Washington, D.C. 20006-1872

(202) 828-5800

Counsel for Amici Curiae

TABLE OF CONTENTS

Page

Interest of Amicus Curiae ......................... l

ie ee 2

ls os oo poked ton eee s ccc cc... 8

TABLE OF AUTHORITIES

FEDERAL CASES Page

Beckman Instruments, Inc. y. Chemtronics, Inc., 439 F.2d

orem borate Gee, FPO) ..:.........550... 8

Cummock v. Gore, 180 F.3d 282 (D.C. Cir. ie) SOCER Ee 6

FEDERAL STATUTES

wich = ae 7

CLEAN AIR ACT, 42 U.S.C. § 7401 et DE Med iee eg tan ss 5 3

DEPARTMENT OF ENERGY ORGANIZATION ACT

§ 102(9), 42 U.S.C. §7112(9) ................ 3

FEDERAL ADVISORY COMMITTEE ACT, 5 U.S.C.

ke 6

FEDERAL ENERGY ADMINISTRATION ACT OF 1974 § 2(a), 15

els 6 is vv ecevhe ceca. c: 3

MISCELLANEOUS

ALEXEI BARRIONUEVO, A Patent Fracas Pits Unocal

Corp. Against Big U.S. Oil Producers, Wall St. J.,

PME 17, 2000, MEAL. ow oo ccc cee. Oy

WILLIAM CLAIBORNE & CECI CONNOLLY, Presidential

Politics at the Pump, Wash. Post, June 22, 2000, at

Pampa SNR gaa hr eee ne a em ee 4

H.R. Rep. No. 92-1017 (1972), reprinted in 1972

eS oe ter eee ee 6

H.R. Rep. No. 106-674, at 47 (2000) .................. 8

LAWRENCE KUMINS, Cong. Res. Service Report to Congress

No. RL30592, Midwest Gasoline Prices: A Review of

Recent Market Developments (June 28, 2000) ..... 4

CATHY LANDRY, US EPA to Propose Credit Linked to

Ethanol, Platt's Oilgram News, June 29, 2000, at 1. 5

SUZANNE MCELLIGOTT, Unocai Collects on MTBE Patent,

Chemical Week, July 5, 2000/July 12, 2000, at 26. . 5

MIGDON SEGAL, Cong. Res. Service Report 93-614SPR,

Ethanol and Clean Air: The "Reg-Neg" Controversy

and Subsequent Events (June 22, 1993) .......... 7

Solutions to Competitive Problems in the Oil Industry, Part

3: Hearings Before the House Comm. on the

Judiciary, 106" Cong. (2000)(statement of Richard

G. Parker, Director, Bur. of Competition, FTC). .. . 3

Unocal Offers Truce in Gasoline Patent Row, Reuters,

August 18, 2000, available at

www.reuters.com/news company ............. 5

dis

In The

Supreme Court of the nited States

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,

VS.

UNION OIL COMPANY OF CALIFORNIA

Respondent.

BRIEF FOR MEMBERS OF CONGRESS DENNIS J.

KUCINICH, JOHN E. BALDACCI, THOMAS S.

BARRETT, WILLIAM O. LIPINSKI, CYNTHIA

McKINNEY, FRANK PALLONE, JR. AND BERNARD

SANDERS AS AMICI CURIAE IN SUPPORT OF

PETITIONERS

INTEREST OF AMICUS CURIAE !

Amici are Members of the House of Representatives of

the United States of America. Congressman Dennis J.

Kucinich represents the Tenth District of Ohio. Congressman

John E. Baldacci represents the Second District of Maine.

Pursuant to Rule 37.6 of the Rules of this Court, counsel hereby

certifies that the brief submitted on behalf of amici curiae Members of

Congress was not authored in whole or in part by counsel for a party, and

no person or entity other than the amici and their staff has made a monetary

contribution to the preparation of this brief.

2

Congressman Thomas M. Barrett represents the Fifth District

of Wisconsin. Congressman William O. Lipinski represents

the Third Distnct of Illinois. Congresswoman Cynthia

McKinney represents the Fourth District of Georgia.

Congressman Frank Pallone, Jr. represents the Sixth District of

New Jersey. Congressman Bernard Sanders represents the

State of Vermont. Amici have an interest in ensuring that the

patent dispute at issue in this case not jeopardize important

aspects of national public policy favoring clean and affordable

fuel supplies and favoring cooperative activities in anticipation

of federal regulations.

ARGUMENT

The Court of Appeals for the Federal Circuit has upheld

a patent for a fuel descriptive of an anticipated regulatory

requirement develcped by an administrative agency. The

agency was working in close cooperation with members of the

regulated community and public interest groups. By upholding

this patent, the Federal Circuit has inflicted substantial

collateral damage on two important federal policies. The first

policy, reflected in the federal Clean Air Act, is to produce

clean reformulated gasoline in an affordable manner. Congress

has expressly indicated in energy and antitrust legislation that

consumer interests are to be protected. The second policy,

reflected in the Federal Advisory Committee Act and other

statutes, is to encourage cooperative efforts in anticipation of

rulemaking in order to facilitate appropriate research and

implementation. By failing to consider adequately the context

in which the patent was developed, the Federal Circuit has

undermined these important public policy objectives to the

detriment of the consumer and the environment.

3

I. The Federal Circuit Decision Undermines the

Strong Federal Interest in Protecting the

Environment and the American Consumer

A. There Is a Strong Federal Interest Both in

Protecting the Environment and in

Protecting Gasoline Consumers.

The Congress of the United States adopted the Clean

Air Act, 42 U.S.C. § 7401 et seq., with the clear purpose in

mind "to protect and enhance the quality of the Nation's air

resources so as to promote the public health and welfare and

the productive capacity of its population." 42 U.S.C.

§ 7401(b)(1). In addition, Congress has been clear in both

federal energy policy’ and in antitrust policy’ that consumer

Federal Energy Administration Act of 1974 § 2(a), 15 U.S.C.

§ 761(a)("The Congress hereby declares that the general welfare and the

common defense and security require positive and effective action" to

ensure "the maintenance of fair and reasonable consumer prices" for

energy); Department of Energy Organization Act § 102(9), 42 U.S.C.

§ 7112(9)(purpose of Act "[t]o promote the interests of consumers through

the provision of an adequate and reliable supply of energy at the lowest

reasonable cost.").

: Solutions to Competitive Problems in the Oil Industry, Part 3:

Hearings Before the House Comm. on the Judiciary, 106" Cong.

(2000)(statement of Richard G. Parker, Director, Bur. of Competition,

FTC)("Consumer welfare is the goal of antitrust enforcement across all

industries. Its importance is particularly clear in the energy industry, where

even small price increases can strain the budgets of many consumers,

particularly those with low and fixed incomes, and of small business, and,

as a result, can have a direct and lasting impact on the entire economy. In

fiscal years 1999 and 2000 to date, the Bureau of Competition spent almost

one-third of its total enforcement budget on investigations in energy

industnies.") <http://www.house.gov/judiciary/park0628.htm>

As

4

welfare should be protected through maintaining adequate

energy supply and reasonable prices.

B. The Federal Circuit Decision Undermines

Consumer Protection Interests.

In the summer of 2000, American consumers were

treated to gasoline prices substantially higher than predicted by

industry or government.* The factors that contributed to this

gasoline price increase are many, including higher crude prices,

the use of ethanol in clean, reformulated gasoline ("RFG"),

pipeline problems, and low inventories of crude oil, gasoline,

and blendstocks.* However, another factor complicating the

situation for gasoline consumers was the continuing

controversy surrounding the patents for gasoline reformulation

claimed by the Unocal Corporation. These patent claims

imposed direct costs on refiners allegedly operating under the

teachings of the patent, and indirect costs for refiners

attempting to blend around the patents. Worse yet, given the

acknowledged tightness in RFG supplies in certain regions, the

Unocal controversy created a chilling effect forcing some

refiners to reconsider their continued participation in the RFG

program. Taken together, legal uncertainties present in this

case helped to perpetuate conditions under which the spot

° William Claiborne & Ceci Connolly, Presidential Politics at the

Pump, Wash. Post, June 22, 2000, at Al (referencing substantial increases

in gasoline prices, particularly related to reformulated gasoline markets in

the Midwest).

: Lawrence Kumins, Cong. Res. Service Report to Congress No.

RL30592, Midwest Gasoline Prices: A Review of Recent Market

Developments (June 28, 2000) (hereinafter "CRS Report"), at 1-2.

2 SAR nee We POPE Cat WA BEER AAS ER OF OTE NAL

5

market for RFG was quick to yield high prices and slow to

return them to more acceptable levels.°

While the litigants in this matter may legitimately

disagree over the aggregate effect of the Unocal patent on the

price of RFG, there can be no doubt that the atmosphere created

by the controversial origin of the patent has undermined the

stability of the RFG program. The Congressional Research

Service wrote that, "refiners using the Unocal process without

a license operate in an area of uncertainty, because the cost of

licensing the Unocal process has not yet been determined.

Some contend that this uncertainty created by the court decision

has adversely impacted RFG production." CRS Report at 7.

Essentially, the Federal Circuit has placed the policy

goals of environmental protection and consumer welfare

squarely in conflict by failing to consider the circumstances

under which the Unocal patent was developed, amended, and

ultimately granted.

This widespread consensus is discussed at Unocal Offers Truce in

Gasoline Patent Row, Reuters, August 18, 2000, available at

www.reuters.com/news company ("The patents are widely blamed for

contributing to high gasoline pump prices in the U.S. this year, making it

more difficult for refiners to meet new federally mandated clean burning

fuel requirements used at roughly a third of the nation's pump."). See also

Cathy Landry, US EPA to Propose Credit Linked to Ethanol, Platt's

Oilgram News, June 29, 2000, at 1 ("Some industry sources have said fear

of infringing on Unocal's RFG patent has played a role in the surging

Midwest RFG prices."); Suzanne McElligott, Unocal Collects on MTBE

Patent, Chemical Week, July 5, 2000/July 12, 2000, at 26 ("The [Unocal]

patent has been cited as a reason for the higher prices of gasoline where

reformulation is required."); Alexei Barrionuevo, A Patent Fracas Pits

Unocal Corp. Against Big U.S. Oil Producers, Wall St. J., August 17, 2000,

at Al (Unocal patent royalties "would probably be translated into higher

prices at the gas pump.").

6

Il. The Federal Circuit Decision Undermines the

Strong Federal Interest in Encouraging Open and

Balanced Cooperation Between the Regulated

Community, Public Interest Groups, and

Governmental Agencies in Developing

Environmental Standards

A. There Is a Strong Federal Interest in

Encouraging Cooperative Efforts to

Implement Environmental Programs.

The U.S. Congress has long recognized the value of

cooperative negotiations between industrial, public interest, and

governmental actors. See Federal Advisory Committee Act, 5

U.S.C. App. 2 § 2(a) (Congressional finding that such

cooperative negotiations "are frequently a useful and beneficial

means of furnishing expert advice, ideas, and diverse opinions

to the Federal Government."); see also Cummock v. Gore, 180

F.3d 282 (D.C. Cir. 1999). The adoption of statutes like FACA

was with the purpose in mind of preserving vital cooperative

efforts without subverting the process to the special interest

motivations of the participants. Id.; see H.R. Rep. No. 92-1017

(1972), reprinted in 1972 U.S.C.C.A.N. 3491, 3496 ("One of

the great dangers in the unregulated use of advisory committees

is that special interest groups may use their membership on

such bodies to promote their private concerns."). The use of

cooperative regulatory negotiation was a particularly critical

element in the development and implementation of the federal

RFG program. Such cooperation is essential to developing

complex programs, and to ensure that such programs are

implemented with a minimum of subsequent interference from

aaa a

either the courts or Congress.’

B. The Federal Circuit Decision Undermines

Cooperative Efforts.

Far more is at stake in the current case than the cost-

effectiveness of the federal RFG program. Unocal participated

in cooperative exercises with state and federal officials and

fellow members of the industrial community. Thereafter,

Unocal manipulated its patents through amendment to capture

the fruits of this joint labor.’ It did so without the "full, clear,

concise, and exact" statement required under applicable patent

law. 35 U.S.C. § 112. If the patent law allows Unocal to

benefit from participation in cooperative negotiations as cover

for its own pecuniary gain, the whole fabric of regulatory

negotiation and compromise may well fray. Barrionuevo,

supra, at Al (citing economists that "see the Unocal patent case

as cause for concern beyond the petroleum business. It could

discourage companies in high-technology and other industries

from collaborating on environmental standards, if rivals WOITy

that one of their number will patent the result, according to this

view."). The loss of cooperation undermines the regulatory

process, and can diminish environmental protection if research

See Migdon Segal, Cong. Res. Service Report 93-614SPR, Ethanol

and Clean Air: The "Reg-Neg" Controversy and Subsequent Events (June

22, 1993) at 3, available at www.cnie.org/n/e/air-7 html. ("This negotiation

was intended to keep the potentially controversial regulations out of the

courts, and to avoid future congressional involvement, by obtaining

agreement among all interested parties before the regulations were written.

EPA would then write the regulations, but this would presumably be a

straightforward and noncontroversial task, embodying the princ iples already

agreed to in the negotiated agreement.").

: Barnionuevo, supra, at A8 (describing Unocal's effort to

manipulate regulatory negotiations to benefit from patent applications).

8

efforts are thereby chilled. See H.R. Rep. No. 106-674, at 47

(2000)(environmental research necessary "to provide the

scientific knowledge and technologies necessary for preventing,

regulating, and abating pollution, and to anticipate emerging

environmental issues.").

CONCLUSION

The Patent Clause of the U.S. Constitution "does not

allow the granting of these valuable franchises to private

individuals, with consequent public detriment, unless there is

a concomitant public benefit." Beckman Instruments, Inc. v.

Chemtronics, Inc., 439 F.2d 1369, 1371 (5" Cir. 1970). Amici

respectfully submit that the context of regulatory development

in which the present patent was filed and amended presents

important public detriments (without corresponding benefits),

reflected in both consumer and environmental policy.

For the foregoing reasons, the petition should be

granted.

Respectfully submitted,

Cpe

NE E. DLEY

Counsel of Record

SCOTT H. SEGAL

BRACEWELL & PATTERSON, L.L.P.

2000 K Street, N.W., Suite 500

Washington, D.C. 20006-1872

(202) 828-5800

Counsel for Amici Curiae

Dated: September 14, 2000

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