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Read the law review articles entitled "Fuel for Thought: Clean Gasoline and Dirty Patents" and "Clean Air Never Smelled So Bad: Union Oil Co

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Read the law review articles entitled "Fuel for Thought: Clean Gasoline and Dirty Patents" and "Clean Air Never Smelled So Bad: Union Oil Co. of California v. Atlantic Richfield Co." that are found in Module Three. Then consider the strategic position of UNOCAL. How did granting the patent improve their competitive position? How did that competitive position change when the patent was upheld? What options do UNOCAL's competitors have at this point? Assess how Noerr-Pennington immunity makes challenging this case in the FTC difficult. Evaluate how despite the difficulties created by Noerr-Pennington a challenge was still possible.
1557 NOTE CLEAN AIR NEVER SMELLED SO BAD: UNION OIL CO. OF CALIFORNIA V. ATLANTIC RICHFIELD CO. TABLE OF CONTENTS I. INTRODUCTION .....................................................................1558 II. BACKGROUND .......................................................................1559 A. An Introduction to Patent Law....................................1559 1. The Rationale for Having Patent Laws...............1559 2. Key Requirements for Obtaining a Patent..........1560 B. Reformulated Gasoline Primer....................................1562 C. Unocal’s Reformulated Gasoline Patents....................1565 III. RECITATION OF THE CASE....................................................1567 A. Case History..................................................................1567 B. Anticipation—The Prior Art is Not Tailored to Automotive Gasolines...................................................1569 C. Written Description—Split Decision by the Panel.....1570 1. Majority Opinion—Unocal Demonstrated Possession of the Claimed Subject Matter...........1570 2. Judge Lourie’s Dissent—Inadequate Written Description.............................................................1571 IV. ANALYSIS ..............................................................................1573 A. Unocal’s Claims Do Not Define Novel Compositions.1573 1. The Majority’s Claim Construction Included Unjustified Preamble Limitations .......................1573 2. Even if the Preamble Limitation is Appropriate, the Court’s Construction is Too Narrow..............1576 3. Unocal Patented the Wrong Invention.................1576 B. Resolving Unocal with Conflict-of-Laws Analysis.....1578 1558 HOUSTON LAW REVIEW [38:1557 1. A Conflict Between Federal Statutes— “Preserving the Purposes of Both”........................1578 2. The Unocal Decision Undermines the Federal Clean Air Act.........................................................1579 3. Reversing the Unocal Decision Would Not Impair the Patent Laws........................................1581 V. CONCLUSION .........................................................................1584 [The Patent Acts were] passed for the purpose of encouraging useful invention and promoting new and useful improvements by the protection and stimulation thereby given to inventive genius . . . .”1 I. INTRODUCTION What was already a fairly controversial Federal Circuit Court of Appeals case became even more so on February 20, 2001. On that date, the Supreme Court denied certiorari for Union Oil Co. of California v. Atlantic Richfield Co., 2 a case that has many environmental law and patent law experts wondering, “Now what?” Even though all the parties to the suit are oil-patch giants, the real losers may be the citizens of the United States, who must now suffer through the resulting environmental fallout. As a matter of patent law, Unocal disturbed what was wellsettled law regarding how patent claims are interpreted.3 The patent at issue involves Unocal’s “novel” reformulated gasoline.4 Reformulated gasoline is currently required by the Environmental Protection Agency (EPA) in many metropolitan areas to help curb pollution caused by automobile emissions.5 The even cleaner-burning reformulated gasoline required by the California Air Resources Board is the cause of the dispute in the Unocal case. Five major refiners, each producers of reformulated gasoline in California, sued Unocal in an attempt to avoid infringement by 1. Bauer & Cie. v. O’Donnell, 229 U.S. 1, 10 (1913). 2. 208 F.3d 989 (Fed. Cir. 2000), cert. denied, 69 U.S.L.W. 3156 (Feb. 20, 2001) (No. 00-249) [hereinafter Unocal]. Note that, for simplicity, Union Oil Co. of California will be referred to by its common name, Unocal, for the remainder of this Note. 3. Refer to Part II.A infra (explaining the basics of patent law). 4. Refer to Part II.C infra (providing relevant background on Unocal’s reformulated gasoline patents). 5. Refer to Part II.B infra (presenting the technical and legislative aspects of reformulated gasoline in the United States in general, as well as in California). 2002] UNION OIL CO. OF CALIFORNIA 1559 invalidating Unocal’s reformulated gasoline patent. By affirming the district court, the Federal Circuit has agreed to enforce Unocal’s monopoly over reformulated gasoline.6 Unocal’s patent has already led to wild gasoline price fluctuations, gasoline supply uncertainties, and worse yet—gasoline produced around Unocal’s patent, which is not as environmentally friendly.7 As a matter of environmental law, this last point is a reminder that other forces impact the effectiveness of environmental legislation—in this case, the Clean Air Act.8 This Note argues that the Federal Circuit erred on three grounds in the Unocal case. First, Part III.C recounts Judge Lourie’s dissenting opinion arguing that Unocal’s patent fails the written description requirement of 35 U.S.C. § 112. Part IV.A of this Note addresses the failure of the novelty requirement under 35 U.S.C. § 102, positing that the Federal Circuit erred by not realizing that Unocal was claiming an old fuel composition. Finally, Part IV.B reviews the Unocal patent in light of wellestablished conflict-of-laws doctrine, proposing that the Unocal decision does not square with equitable principles of “preserving the purposes of both”9 the Patent Act and the Clean Air Act. II. BACKGROUND A. An Introduction to Patent Law 1. The Rationale for Having Patent Laws. The Patent Clause of the United States Constitution provides that Congress shall have the 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.”10 Congress has accordingly enacted patent statutes that allow a broad range of subject matter to be patented.11 If an 6. Refer to Part III infra (reciting the case history, including the Federal Circuit’s majority and dissenting opinions). 7. Refer to notes 144–50 infra and accompanying text (depicting specific problems caused by the enforcement of the Unocal patent). 8. Refer to Part II.B infra (discussing the legislative intent and expected execution of the Clean Air Act Amendments of 1990). 9. SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharm., Inc., 211 F.3d 21, 28 (2d Cir. 2000), cert. denied, 531 U.S. 872 (2001) (relying on the well-settled conflict-of-laws standard in Zenith Electrics Corp. v. Exzec, Inc., 182 F.3d 1340, 1347 (Fed. Cir. 1999)). 10. U.S. CONST. art. I, § 8, cl. 8. 11. 35 U.S.C. § 101 (1994) (“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 therefor, subject to the conditions and 1560 HOUSTON LAW REVIEW [38:1557 inventor is willing to disclose to the public the substance of his or her discovery, then that inventor is granted “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States” from the grant date of the patent to an expiration date twenty years from the effective filing date.12 “The federal patent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of new, useful, and nonobvious advances in technology and design in return for the exclusive right to practice the invention for a period of years.”13 The exclusionary benefits of a patent offer clear competitive advantages to the patent owner by significantly reducing competition, preventing others from entering the specific portion of the marketplace covered by the patent claims, and creating direct profits from the invention through licensing.14 The profitability of patents provides the necessary means for recapturing investment costs associated with research and development.15 2. Key Requirements for Obtaining a Patent. Title 35 of the United States Code, generally referred to as the “patent statute,” “governs all [patent] cases in the Patent and Trademark Office” (PTO).16 According to the patent statute, a discovery must be useful, novel, and nonobvious in order to be patentable. The patent statute also requires full disclosure of the invention by the inventor for a patent to issue. These basic tenets of patent law are the sources of conflict in the Unocal case, and are discussed briefly in this section. Section 101 outlines five major classes of patentable “new and useful” subject matter—methods, machines, articles of manufacture, compositions of matter, and improvements on any of these classes.17 Courts have generally accepted that useful inventions need only be capable of some beneficial use.18 In other requirements of this title.”). 12. 35 U.S.C. § 154 (1994). 13. Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 150–51 (1989). The Supreme Court also noted that “[t]he attractiveness of such a bargain . . . depend[s] almost entirely on a backdrop of free competition in the exploitation of unpatented designs and innovations.” Id. at 151. 14. See M. Henry Heines, A ChE’s Guide to Patents, CHEM. ENG’G PROGRESS, Oct. 2000, at 92. 15. Id. 16. MANUAL OF PATENT EXAMINING PROCEDURE 1 (7th ed. 2000) [hereinafter MPEP]. 17. 35 U.S.C. § 101 (1994). 18. 1 DONALD S. CHISUM, CHISUM ON PATENTS: A TREATISE ON THE LAW OF 2002] UNION OIL CO. OF CALIFORNIA 1561 words, the PTO should not inquire as to whether an invention of a new means is more effective than the existing means of achieving the same useful purpose.19 Furthermore, commercial viability is not a requirement for utility, so that “an inventor can file a patent application early enough to explore and develop commercial viability while the application is pending.”20 Section 102 requires that an invention must be new, or novel, to be patentable.21 The novelty requirement is met by any difference between the claimed subject matter and the “prior art,” “a term that represents the state of the art preceding the invention.”22 Generally, “[p]rior art may take the form of issued patents, published materials, commercial activities, or other forms of [public] knowledge and use.”23 Before determining whether the prior art “anticipates” a claim, one must interpret, or construe, the claim—a question of law for the court.24 A patent claim is anticipated if a single prior art reference contains “each and every element” of the claim—a question for the fact-finder.25 PATENTABILITY, VALIDITY AND INFRINGEMENT § 4.02[1], at 4-3 to 4-4 (2001) (citing various district and circuit court cases which held that limited usefulness has not been regarded as grounds for finding a patent invalid for lack of utility). The courts generally follow principles first set out by Circuit Justice Story in 1817: By useful invention, in the statute, is meant such a one as may be applied to some beneficial use in society, in contradistinction to an invention, which is injurious to the morals, the health, or the good order of society. It is not necessary to establish, that the invention is of such general utility, as to supersede all other inventions now in practice to accomplish the same purpose. It is sufficient, that it has no obnoxious or mischievous tendency, that it may be applied to practical uses, and that so far as it is applied, it is salutary. Bedford v. Hunt, 3 F. Cas. 37, 37 (C.C.D. Mass. 1817). 19. 1 CHISUM, supra note 18, § 4.02[1], at 4-5 (citing cases which held that improvement to the prior art is not a prerequisite to patentability). 20. Heines, supra note 14, at 93. 21. 35 U.S.C. § 102 (1994). 22. Heines, supra note 14, at 93. Three conditions of patentability essentially define what is meant by novelty. 1 CHISUM, supra note 18, § 3.01, at 3-4. An invention is novel unless it was: ?? known or used in the United States, or patented or described in a printed publication anywhere in the world prior to the filing of the patent application, 35 U.S.C § 102(a); ?? described in a United States patent of another inventor prior to the applicant’s invention, 35 U.S.C. § 102(e); or ?? invented by another inventor who did not abandon, suppress, or conceal her invention, 35 U.S.C. § 102(g). Id. 23. Heines, supra note 14, at 93. 24. Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995). 25. Jamesbury Corp. v. Litton Indus. Prods., Inc., 756 F.2d 1556, 1560 (Fed. Cir. 1985). 1562 HOUSTON LAW REVIEW [38:1557 The nonobviousness requirement is closely related to the novelty requirement.26 If the invention is novel, then further inquiry must be made to determine if it is “new enough.”27 Section 103 requires that differences between the patent claim and the prior art must not be obvious at the time the invention was made “to a person having ordinary skill in the art.”28 The conclusion as to the obviousness of an invention turns on whether a hypothetical person with ordinary skill and knowledge in the art to which the invention pertains with full knowledge of all the pertinent prior art, when faced with the problem to which the claimed invention is addressed, would be led naturally to the solution adopted in the claimed invention or at least would naturally view that solution as an available alternative.29 Section 112 provides that “[t]he specification shall contain a written description of the invention . . . .”30 The purposes of the written description requirement are to assure that the inventor “was in full possession of the claimed subject matter” at the original filing date, and to allow other inventors to seek patents for later improvements that build on the patent’s teachings.31 The written description requirement is a factor when, for example, an inventor adds a claim to a patent application that is different in scope from the original claims.32 B. Reformulated Gasoline Primer The Clean Air Act Amendments of 1990 (CAA) directed the EPA to establish a reformulated gasoline (RFG) program that would significantly reduce urban smog.33 Ground-level ozone is 26. 1 CHISUM, supra note 18, § 3.01, at 3-4. 27. Id. at 3-5. 28. 35 U.S.C. § 103 (1994). 29. 2 CHISUM, supra note 18, § 5.04[1], at 5-263. 30. 35 U.S.C. § 112 (1994). 31. 3 CHISUM, supra note 18, § 7.04, at 7-136. 32. Id. at 7-137 (“Claims can thus be barred by the description requirement even though the original specification adequately teaches how to make and use the subject matter of the claims.”). See also In re Wright, 866 F.2d 422, 424 (Fed. Cir. 1989) (“When the scope of a claim has been changed by amendment in such a way as to justify an assertion that it is directed to a different invention than was the original claim, it is proper to inquire whether the newly claimed subject matter was described in the patent application when filed as the invention of the applicant.”); In re Smith, 481 F.2d 910, 914 (C.C.P.A. 1973) (“The specification as originally filed must convey clearly to those skilled in the art the information that the applicant has invented the specific subject matter later claimed. When the original specification accomplishes that, regardless of how it accomplishes it, the essential goal of the description requirement is realized.” (citations omitted)). 33. Clean Air Act § 211(k)(1), 42 U.S.C. § 7545(k)(1) (1994) (“Such regulations shall 2002] UNION OIL CO. OF CALIFORNIA 1563 the primary component of smog and is created by a chemical reaction between volatile organic compounds (VOC) and nitrogen oxides (NOx).34 RFG is intended to improve urban air quality by reducing vehicle tailpipe emissions of VOC, NOx, and other toxic air pollutants.35 The required presence of oxygenates in RFG also increases the combustion efficiency of gasoline and reduces carbon monoxide emissions.36 Throughout 1991, the EPA entered into regulatory negotiations with representatives from the petroleum and automobile manufacturing industries, as well as with other interested parties, to develop specific proposals for implementing the RFG program.37 The EPA published its final rule in 1994, establishing emission reduction standards and enforcement provisions for RFG.38 To ensure that the RFG program would be acceptable to all parties, the EPA proposed a two-step approach for implementing RFG standards—Phase I RFG would be required by 1995, with the more stringent Phase II RFG (RFG2) requirements to be in place by 2000.39 The CAA requires RFG require the greatest reduction in emissions of ozone forming volatile organic compounds (during the high ozone season) and emissions of toxic air pollutants (during the entire year) achievable through the reformulation of conventional gasoline . . . .”). 34. U.S. Environmental Protection Agency, The Plain English Guide to the Clean Air Act: The Common Air Pollutants, at http://www.epa.gov/oar/oaqps/peg_caa/ pegcaa11.html (last updated Sept. 5, 2000). Ground-level ozone should not be confused with stratospheric ozone, which is a natural layer that protects the Earth from harmful radiation. RICHARD P. BRENNAN, DICTIONARY OF SCIENTIFIC LITERACY 232 (1992). 35. U.S. Environmental Protection Agency, Emission Facts: Reformulated Gasoline 2, EPA 420-F-99-040 (Nov. 1999) [hereinafter EPA Emission Facts]. RFG was designed to reduce smog-forming emissions by a combined 105,000 tons per year in RFG-use areas by 2000 (Phase II of the program), which is the equivalent of eliminating emissions from about 16 million automobiles. Id. Additionally, the RFG program will reduce emissions of toxic air pollutants such as benzene by about 24,000 tons per year in RFG-use areas, equivalent to eliminating the toxic emissions from about 13 million automobiles. Id. 36. Texas Natural Resource Conservation Commission, The Reformulated Gasoline (RFG) Program, at http://www.tnrcc.state.tx.us/air/ms/rfg.html (last visited Jan. 18, 2002). Oxygenates have been used in conventional gasoline as gasoline extenders and octane enhancers since the 1970s, with their first application as a means of reducing carbon monoxide emissions in the late 1980s. U.S. Environmental Protection Agency, Is Reformulated Gasoline a “New” Gasoline?, EPA 420-F-95-007 (Apr. 1995). Methyl Tertiary-Butyl Ether (MTBE) and ethanol are the primary oxygenates blended into gasolines. Id. Apart from the RFG program, the CAA also requires the use of oxygenates in conventional gasoline for regions that do not meet federal carbon monoxide standards. 42 U.S.C. § 7545(m) (describing the “oxygenated fuels program”). 37. U.S. Environmental Protection Agency, Origin of the Reformulated Gasoline Program, EPA 420-F-95-001 (Apr. 1995) [hereinafter EPA Origin of RFG]. 38. Regulation of Fuels and Fuel Additives: Standards for Reformulated and Conventional Gasolines, 59 Fed. Reg. 7716, 7716 (Feb. 16, 1994) (codified at 40 C.F.R. pt. 80). 39. Id. The EPA requires refineries to produce RFG in accordance with the “complex emissions model,” which measures compliance through eight gasoline variables (environmental effect in parentheses): 1564 HOUSTON LAW REVIEW [38:1557 only in the nine cities with the most severe smog problems,40 but other areas with smog problems are provided an “opt-in” option.41 RFG, contributing about thirty percent of the gasoline sold in the United States, is currently used in seventeen states and the District of Columbia.42 Because California has the most serious air quality problems in the United States, the California Air Resources Board (CARB) has required, since 1996, the statewide production of an even cleaner-burning gasoline than federal RFG2—CaRFG2 and, more recently, CaRFG3.43 Most importantly, CaRFG2 and CaRFG3 fully satisfy federal RFG2 requirements.44 CaRFG3, while ?? Reid vapor pressure (RVP), maximum (during summer months, reduces evaporative emissions) ?? oxygen content, minimum (reduces carbon monoxide emissions in engine exhaust during engine start-up and warm-up) ?? benzene content, maximum (reduces emissions of this toxic air pollutant) ?? total aromatics content, maximum (reduces toxic exhaust emissions, including benzene) ?? sulfur content, maximum (reduces impact on automobile’s catalytic converter) ?? olefins content, maximum (reduces the amount of NOx exhaust) ?? two distillation limitations (T50 and T90), maximum (reduces evaporative emissions) Energy Information Administration, Demand and Price Outlook for Phase 2 Reformulated Gasoline, 2000 [hereinafter EIA RFG Demand], available at http://www.eia.doe.gov/ emeu/steo/pub/special/rfg4.html (last modified Aug. 6, 1999). See also Characteristics of California Phase 2, available at http://www.chevron.com/prodserv/fuels/bulletin/ phase2rfg/char.shtml (last visited Jan. 18, 2002). 40. Clean Air Act § 211(k)(10)(D), 42 U.S.C. § 7545(k)(10)(D) (1994). Los Angeles, San Diego, Chicago, Houston, Milwaukee, Baltimore, Philadelphia, Hartford, and New York City were the original “covered areas” targeted by the CAA. EPA Origin of RFG, supra note 37. St. Louis joined the list of required control areas beginning in 1999. EIA RFG Demand, supra note 39. 41. 42 U.S.C. § 7545(k)(6). 42. EPA Emission Facts, supra note 35, at 1. For a current list of all cities that participate in the RFG program, see Energy Information Administration, Areas Participating in the Reformulated Gasoline Program, available at http://www.eia.doe.gov/ emeu/steo/pub/special/rfg2.html (last modified June 15, 1999). 43. See California Air Resources Board, Fact Sheet 3: Comparison of Federal and California Reformulated Gasoline 1 (Feb. 1996) [hereinafter CARB Fact Sheet 3]; CAL. CODE REGS. tit. 13, §§ 2261–2262 (2000) (codifying the CaRFG2 and CaRFG3 standards). 44. See CARB Fact Sheet 3, supra note 43, at 1. To help give some perspective on the difference in requirements of federal and California RFG, the following table compares fuel properties for the various reformulated blends: Fuel Properties RFG RFG2 CaRFG2 CaRFG3 RVP, psi 7.0 6.7 6.8 6.8 Oxygen, wt % 2 2 2 2 Benzene, vol. % 0.8 0.8 0.8 0.7 Aromatics, vol. % 27 25 22 22 Olefins, vol. % 8.5 8.5 4 4 Sulfur, ppm 130 130 30 15 2002] UNION OIL CO. OF CALIFORNIA 1565 further reducing vehicle emissions, is primarily targeted at phasing out Methyl Tertiary-Butyl Ether (MTBE) by 2004.45 Of course there is a price for cleaner-burning fuel. To meet the stringent RFG2 and CaRFG3 requirements, most refiners must invest to upgrade their facilities and often must use more expensive blending ingredients.46 Depending on the refiner, RFG2 is expected to increase production costs by 2.5 to 4 cents per gallon above conventional gasoline production costs (about 0.5 cents per gallon above Phase I RFG).47 The “price at the pump” may also be impacted by the more complicated petroleum logistics created by numerous RFG grades, which cause the system to be vulnerable to “local outages and price spikes.”48 Additionally, RFG2 is more expensive to the consumer because of the 1.5 to 2.0 percent reduction in fuel economy compared to conventional gasoline.49 C. Unocal’s Reformulated Gasoline Patents In October 1989, fourteen domestic oil companies and three domestic automakers entered into an agreement to develop improved gasoline formulations that would reduce vehicle emissions.50 The joint study agreement explicitly provided that each participant retained the right to pursue its own independent research of reformulated gasolines.51 Unocal, an oil T50, deg. F 210 207 200 203 T90, deg. F 329 321 290 295 See id. (comparing CaRFG2 to RFG and RFG2); § 2262 (comparing CaRFG2 and CaRFG3). Refer to note 39 supra (discussing the effects of each gasoline variable). 45. § 2262.6(a)(2). 46. CARB Fact Sheet 3, supra note 43, at 2. See also EIA RFG Demand, supra note 39 (suggesting that the inclusion of high-cost oxygenates in gasoline processing is a key element of the RFG price premium). 47. EIA RFG Demand, supra note 39 (claiming that these price premiums “may fluctuate by as much as [one] cent per gallon depending on the market price of oxygenates”). But see CARB Fact Sheet 3, supra note 43, at 2 (predicting that CaRFG2 would create a 5 to 15 cents per gallon cost premium above conventional gasoline, including the 2 to 5 cents per gallon premium needed to meet federal Phase I RFG). 48. EIA RFG Demand, supra note 39. “Some parts of the [United States] are more dependent than others on external gasoline supply sources.” Id. The increased number of gasoline grades (“product proliferation”) has resulted in reduced interstate pipeline flexibility and has also necessitated much greater product segregation at storage terminals. Id. 49. Id. (citing studies which confirm the theoretical estimates of fuel economy loss due to the required use of oxygenates). 50. Unocal Web page, Auto/Oil Study Provisions, at http://www.unocal.com/rfgpatent/ rfgao.htm (last visited Jan. 18, 2001). 51. Id. (disclosing paragraph 6-B of the Auto/Oil Air Quality Improvement Research Program (AQIRP) agreement that provides: “Each Member (and each Associate Member) 1566 HOUSTON LAW REVIEW [38:1557 company participant in this study, continued its independent RFG research, filed its first patent application stemming from this research on December 13, 1990, and subsequently received U.S. Patent No. 5,288,393 (the ‘393 patent) on February 22, 1994. 52 Unocal shared the results of its independent research with CARB in June 1991, five months prior to CARB’s issuance of the CaRFG2 regulations and seven months after filing for the ‘393 patent.53 The ‘393 patent purports to describe “[a]n unleaded gasoline fuel, suitable for combustion in an automotive engine . . . .”54 The ‘393 patent discloses that the gasoline is formulated by “blending various hydrocarbon streams in a refinery, to reduce or minimize emissions of CO, NOx, and/or hydrocarbons upon combustion in a spark-induced automotive internal combustion engine.”55 Eight gasoline variables are used throughout the claims to describe the gasoline formulations that directly reduce these emissions.56 Each claim appears in dependent or multiple dependent form, and each claim has as many as six limitations describing the characteristics of each gasoline blend.57 shall retain the right to engage in independent research, alone or with others, including other participants in the Program, on any matter, including reformulated gasoline.”). 52. U.S. Patent No. 5,288,393 (issued Feb. 22, 1994) [hereinafter ‘393 patent]. Four subsequent patents also were issued to Unocal between 1997 and 2000 regarding reformulated gasoline. See U.S. Patent No. 5,593,567 (issued Jan. 14, 1997); U.S. Patent No. 5,653,866 (issued Aug. 5, 1997); U.S. Patent No. 5,837,126 (issued Nov. 17, 1998); U.S. Patent No. 6,030,521 (issued Feb. 29, 2000). 53. Unocal Web page, Timeline of RFG Patent Issues, at http://www.unocal.com/ rfgpatent/rfgtime.htm (last visited Jan. 18, 2002). 54. See, e.g., ‘393 Patent, claim 1, col. 18, ll. 64–65. The claim reads as follows: 1. An unleaded gasoline fuel, suitable for combustion in an automotive engine having the following properties: (1) a 50% D-86 distillation point no greater than 205?F; and (2) a Reid Vapor Pressure less than 7.5 psi. Id. 55. Id. at col. 5, ll. 31–35. 56. Id. at col. 1, l. 63 to col. 2, l. 2. The ‘393 patent contains 155 claims, which include up to eight gasoline variables: T10, T50, T90, olefin content, paraffin content, RVP, Research Octane Number (RON), and aromatics content. Compare with note 39 supra (discussing the eight variables used to measure federal RFG compliance). 57. Union Oil Co. of Cal. v. Atlantic Richfield Co., 208 F.3d 989, 991–92 (Fed. Cir. 2000). Claims said to be in dependent form refer back to and further limit another claim in the same patent. 37 C.F.R. § 1.75(c) (2000). For example, claim 32 of the ‘393 patent is a dependent claim that depends from claim 1: 32. An unleaded gasoline fuel as defined in claim 1 wherein the Reid Vapor Pressure is no greater than about 7.0 psi. ‘393 Patent, claim 32, col. 20, ll. 25–27. Any dependent claim that refers back to more than one other claim is known as a multiple dependent claim, and is subject to restricted use. 37 C.F.R. § 1.75(c). For example, claim 117 of the ‘393 patent is a good example of a multiple dependent claim: 117. An unleaded gasoline fuel as defined in claims 1, 32, 38, 43, 52, 60, 65, 61, 2002] UNION OIL CO. OF CALIFORNIA 1567 Gasoline blends, as complex mixtures of hydrocarbons, can be patented as new, useful, and nonobvious compositions of matter.58 Because Unocal’s ‘393 patent complies with both RFG2 and CaRFG2 regulations, it poses a potential legal obstacle to other refiners who wish to comply with these regulations by developing their own gasoline formulations.59 Undoubtedly, this potential obstacle compelled the world’s largest publicly-owned refiners to bring the invalidity suit that is the topic of this Note. III. RECITATION OF THE CASE A. Case History Five refiners brought suit against Unocal in the United States District Court for the Central District of California 115, 118, 45, 48, 99, 104, 109, 112, 44, 13, 93, 94, 72, 80, 75, 53, 113, 115, or 78 wherein the maximum 10% distillation point is 158ºF. ‘393 Patent, claim 117, col. 24, ll. 24–27. For example, claim 117, as it depends from claim 32, can be rewritten without the dependent claim language as follows: 117. [An unleaded gasoline fuel, suitable for combustion in an automotive engine, said fuel having a Reid Vapor pressure no greater than about 7.0 psi, a 50% D-86 distillation point no greater than 205ºF], wherein the maximum 10% distillation point is 158ºF. See id. (incorporating several generations of dependent claim elements, with dependent claims paraphrased in brackets). 58. Refer to note 11 supra and accompanying text. A cursory count by this author in the U.S. Patent Classification System (U.S.P.C.) Classification Index yielded thirty-four gasoline compositions that have been issued U.S. patents. See U.S. Patent and Trademark Office Web page (counting only gasoline fuel compositions from Class 208, Subclass 16— “Products and compositions which are claimed disclosed for use as fuels for internal combustion engines and which generally have a boiling range of below 400 to 425 degrees.”), at http://www.uspto.gov/web/offices/ac/ido/oeip/taf/def/208.htm (last visited Jan. 18, 2002). 59. See EIA RFG Demand, supra note 39 (implying that the implementation guidelines for the RFG program read on the claims for the ‘393 patent). The mere fact that Unocal’s protected patent rights overlap with government-mandated RFG requirements does not automatically make the patent invalid. For example, other patented automobile features such as seat belts and air bags are required by federal law for American automobiles. Approximately 318 seat belt patents are listed in the U.S.P.C. Index under Class 280, Subclass 801.1. See U.S. Patent and Trademark Office Web page, supra note 58 (“Apparatus wherein the vehicle is provided with a flexible, straplike member engageable with the body of a vehicle occupant and preventing, restraining, or limiting movement of the occupant relative to the vehicle . . . .”). Seat belts are required in automobiles by federal regulation through 49 C.F.R. § 571.208 S4.1.5.1(a)(2) (2000) (referencing the Standard No. 209 seat belt assembly that is specifically defined in 49 C.F.R. § 571.209). Approximately 426 air bag patents are listed in the U.S.P.C. Index under Class 280, Subclass 728.1. See U.S. Patent and Trademark Office Web page, supra note 58 (“Devices wherein the attachment comprises a bag designed to inflate upon impact of the vehicle with an external object and thereby confine a vehicle occupant in a protective environment . . . .”). Air bags have been required in automobiles since Sept. 1, 1997, according to guidelines set forth in 49 C.F.R. § 571.208 S4.1.5.3. 1568 HOUSTON LAW REVIEW [38:1557 seeking a declaratory judgment that the ‘393 patent was invalid on the grounds of anticipation, obviousness, and lack of a sufficient written description.60 Unocal counterclaimed, alleging willful infringement by the refiners.61 The district court realigned the parties, converting the declaratory judgment action into an infringement defense, and tried the issues to a jury. The jury returned a verdict in favor of Unocal on the issues of patent validity and willful infringement by the refiners, and assigned damages as a 5.75 cent-per-gallon “royalty.”62 The district court then denied the refiners’ motion for judgment as a matter of law (JMOL) that sought to overturn the jury verdicts.63 The district court also ruled, in a separate opinion, that Unocal did not commit inequitable conduct before the PTO.64 The refiners then appealed the district court’s denial of JMOL to the United States Court of Appeals for the Federal Circuit. According to the refiners, substantial evidence did not support the jury’s factual findings, and the district court erred in applying the law.65 On March 29, 2000, the Federal Circuit reconsidered the evidence with respect to the anticipation and adequate written description jury findings, and, sitting as a three-judge panel, voted 2 to 1 to affirm the validity of Unocal’s ‘393 patent.66 This section serves to briefly summarize the key points from both the majority and dissenting opinions. 60. Unocal, 208 F.3d at 994. The six named plaintiffs were Arco, Chevron, Exxon, Mobil, Shell, and Texaco. Id. at 989. 61. Id. at 994. 62. Id.; Cong. Research Serv. Report for Congress, RL30592: Midwest Gasoline Prices: A Review of Recent Market Developments (June 28, 2000) (describing the royalty damages assessed by the district court), available at http://www.cnie.org/nle/eng-62.html. 63. Union Oil Co. of Cal. v. Atlantic Richfield Co., No. CV-95-2379-KMW, slip op. at 5 (C.D. Cal. Mar. 10, 1998) [hereinafter Unocal I]. 64. Union Oil Co. of Cal. v. Atlantic Richfield Co., 34 F. Supp. 2d 1208, 1222 (C.D. Cal. 1998) [hereinafter Unocal II]. Applicants for U.S. patents and their representatives are subject to a duty of candor, good faith, and honesty in the prosecution of patent applications. 37 C.F.R. § 1.56 (2000). A breach of this duty constitutes inequitable conduct, and a court may deem an issued patent unenforceable. See Unocal, 208 F.3d at 1001. The five refiners claimed that Unocal withheld test data that would have been material to the patentability of the claims. Id. In finding in favor of Unocal on this issue, the district court also ruled that the allegations of inequitable conduct by the refiners were exceptional, justifying the award of attorney’s fees to Unocal. See Unocal II, 34 F. Supp. 2d at 1225. 65. Unocal, 208 F.3d at 994. 66. Id. at 1002. 2002] UNION OIL CO. OF CALIFORNIA 1569 B. Anticipation—The Prior Art is Not Tailored to Automotive Gasolines The Federal Circuit began its anticipation analysis by construing the claims of the ‘393 patent, which is a question of law.67 The court noted that each of the claims begins with the words “‘[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.’”68 The ‘393 patent clearly claims compositions of matter, and the Federal Circuit agreed with the district court that the scope of the claimed compositions should not be narrowed to specific uses.69 The district court had read each claim in light of the specification and concluded that the ‘393 patent claims cover “fuels that will regularly be used in autos, not that conceivably could be.”70 The Federal Circuit endorsed this claim construction, concluding that the claims cover only “standard automotive gasoline” and not a broader class of gasolines.71 67. Id. at 995 (explaining that the purpose for claim construction is to “‘elaborat[e] the normally terse claim language[] in order to understand and explain, but not to change, the scope of the claims’”(citation omitted)). 68. Id. An introductory phrase to a claim, such as these phrases, is referred to as the claim preamble. 69. See id. (proposing that the scope of composition claims cannot embrace uses of the composition because “otherwise [the] composition claims would mutate into method claims” (citing In re Spada, 911 F.2d 705, 708 (Fed. Cir. 1990))). 70. Id. (citing Union Oil Co. of Cal. v. Atlantic Richfield Co., No. CV-95-2379-KMW, slip op. at 7 (C.D. Cal. May 19, 1997)). 71. Id. at 995–96 (emphasis added). The court pointed out language both in the preambles to the claims and in the specification that supports such a claim construction. The preamble of claim 1 provides a good example of convincing preamble language that includes the use of the words “unleaded gasoline” and “automotive engine”: 1. An unleaded gasoline fuel, suitable for combustion in an automotive engine having the following properties . . . . ‘393 patent, claim 1, col. 18, ll. 64–65 (emphasis added). The court also cited several instances in the specification that support the conclusion that the invention was directed to automobile fuel compositions: One of the major environmental problems confronting the United States and other countries is atmospheric pollution (i.e., “smog”) caused by the emission of gaseous pollutants in the exhaust gases from automobiles. This problem is especially acute in major metropolitan areas, such as Los Angeles, Calif., where the atmospheric conditions and the great number of automobiles account for aggravated air pollution. Id. at col. 1, ll. 9–16 (emphasis added). A total of 22 different unleaded gasoline fuels was tested in a 1988 Oldsmobile Regency 98 automobile equipped with a 3800 cc V-6 engine. This automobile was selected because it represented a high sales volume product with close to the current state-of-the-art emission technology. Id. at col. 7, ll. 61–66 (emphasis added). 1570 HOUSTON LAW REVIEW [38:1557 The refiners essentially lost their appeal with respect to this claim construction because their key patent invalidity argument centered around certain aviation and racing fuels that anticipate Unocal’s claimed compositions under 35 U.S.C. § 102.72 Although the majority questioned whether the physical properties of these specialty fuels would otherwise have anticipated the ‘393 patent claims, it never reached a detailed analysis because “this alleged prior art does not include the limitation of being a standard automotive fuel composition.”73 Accordingly, the Federal Circuit affirmed the district court’s denial of JMOL on the grounds of anticipation.74 C. Written Description—Split Decision by the Panel Of the 155 claims issued with the ‘393 patent, Unocal disclaimed all but forty-one claims in view of this lawsuit.75 The written description requirement of 35 U.S.C. § 112, ¶ 1 “ensures that, as of the filing date, the inventor conveyed with reasonable clarity to those of skill in the art that he was in possession of the subject matter of the claims.”76 Accordingly, the district court judge presented the jury with a special verdict form asking it to determine separately whether each claim met this written description requirement.77 The jury affirmatively answered fortyone times that a sufficient written description supported each claim in question.78 The Federal Circuit panel reviewed these jury findings for substantial evidence but did not reach a unanimous conclusion.79 1. Majority Opinion—Unocal Demonstrated Possession of the Claimed Subject Matter. Two of the three judges on the Unocal panel held that substantial evidence supported the jury’s 72. Unocal, 208 F.3d at 996 (“[T]he aviation and racing fuels that allegedly invalidate the ‘393 claims do not anticipate because they do not contain each and every limitation of the claims.”). 73. Id. (“[T]he record does not show that the aviation and racing fuels otherwise have the claimed characteristics of the particular standard automotive fuels recited in the ‘393 patent.”). 74. Id. 75. Id. at 991–92. Unocal’s original patent application contained eighty-two claims. Id. at 1002 (Lourie, J., dissenting). During prosecution, 161 claims were added and 47 canceled. Id. (Lourie, J., dissenting). None of the 41 claims at issue in this case were part of the original application. Id. (Lourie, J., dissenting). 76. Id. at 997 (citing Vas-Cath, Inc. v. Mahurkar, 935 F.2d 1555, 1563–64 (Fed. Cir. 1991)). 77. Id. 78. Id. 79. See id. at 996, 1002 (Lourie, J., dissenting). 2002] UNION OIL CO. OF CALIFORNIA 1571 findings and the trial judge’s JMOL ruling.80 On appeal, the refiners argued that the specification does not describe the exact composition of the claims, but Circuit Judges Rader and Mayer held that the “ranges found in applicant’s claims need not correspond exactly to those disclosed in [the specification].”81 The Unocal majority concluded that the ‘393 patent sufficiently teaches “one of skill in the refining art” the effects of varying the properties of automotive gasolines to reduce emissions.82 In its opinion, this threshold was met through expert testimony at trial: “skilled refiners testified that the specification taught them that [Unocal] possessed the [claimed gasoline compositions] at the time of filing.”83 “On this precise question the jury received many days of testimony, heard from skilled refiners, reviewed graphs and claim charts, and examined the patent documents as guided by those skilled in the art.”84 Because the record reflected substantial evidence of adequate written description, the panel majority affirmed the district court’s denial of JMOL.85 2. Judge Lourie’s Dissent—Inadequate Written Description. Judge Lourie squarely disagreed with the written description ruling of the majority.86 He focused his dissent on the underlying rationale for the written description requirement—to show that 80. Id. at 997 (giving deference to the jury finding on written description). Judge Lourie found, however, that substantial evidence did not support the jury decision and therefore wrote a dissenting opinion. Refer to Part III.C.2 infra. 81. Unocal, 208 F.3d at 997 (quoting Vas-Cath, 935 F.2d at 1566). The majority discussed in great detail the past precedent related to using ranges in the claims to describe an invention, but warned against misuse of precedent because of the factsensitive nature of the written description inquiry. Id. at 1001. The Court of Customs and Patent Appeals (CCPA), the predecessor court of the Federal Circuit, held that the specification may support a set of claimed ranges, even though the claimed ranges are not repeated verbatim in the specification. In re Wertheim, 541 F.2d 257, 265 (C.C.P.A. 1976). However, the same court in In re Ruschig, 379 F.2d 990 (C.C.P.A. 1967), expressed concern about the use of ranges because, “rather than blaze marks on trees, the patentee had simply provided the public with a forest of trees.” Unocal, 208 F.3d at 1000 (citing In re Ruschig, 379 F.2d at 994–95). The Unocal majority distinguished the present case from Ruschig because the ‘393 patent teaches the desired properties of the gasoline compositions by recognizing that those of skill in the refining art know that those properties clearly define the claimed composition. Id. at 1001. To further support its view, the majority cited Ralston Purina Co. v. Far-Mor-Co, Inc., 772 F.2d 1570 (Fed. Cir. 1985), in which the Federal Circuit held that ranges do not need to correspond exactly to those disclosed in the original patent application. Id. (citing Ralston Purina, 772 F.2d at 1575). 82. Unocal, 208 F. 3d at 999. 83. Id. at 998–99. The majority put great weight on exhibits prepared for trial that showed in similar terms the claim limitation and the support for each limitation in the specification. Two such exhibits for claims 117 and 125 were reproduced in the published opinion. Id. 84. Id. at 1001. 85. Id. at 1002. 1572 HOUSTON LAW REVIEW [38:1557 the inventor had possession of the invention claimed at the time the application was filed.87 Because well-established case law finds that each claim in a patent constitutes a separate invention, a written description of the subject matter included in each claim must be provided in the specification in order to meet the written description requirement.88 Judge Lourie conceded that the specification generally described most of the particular claim limitations but insisted that “a general disclosure will not be sufficient to support narrowly claimed subject matter.”89 “The question is not whether each of the claim limitations finds support in the specification but whether the inventions claimed, fuels having specific combinations of characteristics, finds such support.”90 Judge Lourie argued that teaching how to make various gasoline compositions does not show possession of any of the claimed gasoline compositions.91 This view of the facts and the precedent led Judge Lourie to vote against the majority.92 Because he would have reversed the district court’s denial of the 86. Id. at 1002 (Lourie, J., dissenting). Judge Lourie stated that: No matter how an invention is claimed, it must be described in the specification. The claimed compositions were not so described. . . . These are general descriptions of how to make fuel compositions, not descriptions of the claimed compositions. . . . It is in fact undisputed that the specification discloses no distinct embodiments corresponding to any claim at issue. Id. (Lourie, J., dissenting). 87. Id. (Lourie, J., dissenting). 88. Id. at 1003 (Lourie, J., dissenting) (citing Jones v. Hardy, 727 F.2d 1524, 1528 (Fed. Cir. 1984)). 89. Id. (Lourie, J., dissenting) (citing, as in the majority opinion, the analogy found in Ruschig, that the written description requirement is akin to “‘blaze marks’ on specific trees that mark a trail through a forest”). Judge Lourie was also critical of the majority’s reliance on the two charts, prepared as exhibits for trial by Unocal, which demonstrated the support in the specification for claims 117 and 125. Id. at 1002 (Lourie, J., dissenting). He argued that these charts were actually “synthesized” by piecing together clauses from various parts of the specification in order to constitute the claimed gasoline compositions for claims 117 and 125. Id. (Lourie, J., dissenting). “Erroneously, they were accepted by the jury, the trial judge, and the appellate majority.” Id. (Lourie, J., dissenting). 90. Id. at 1004 (Lourie, J., dissenting). 91. Id. (Lourie, J., dissenting). Judge Lourie further posited that the majority had confused the written description requirement with the enablement requirement of 35 U.S.C. § 112, ¶ 1, stating that “a specification may enable one skilled in the art to make and use an invention and yet still not describe it.” Id. (Lourie, J., dissenting). 92. Interestingly, Judge Lourie suggested that the complexity of the case was the probable explanation for the erroneous result at trial and on appeal: Multiple claim dependencies and multiple claim limitations make [analyzing the claims] difficult. The complexity of the case is further increased by the way in which the patent application was prosecuted, with wholesale cancellation and addition of claims seemingly irrespective of whether their subject matter was properly disclosed. It is easy to see how one could go astray. Id. at 1005 (Lourie, J., dissenting). 2002] UNION OIL CO. OF CALIFORNIA 1573 motion for JMOL based on inadequate written description, Judge Lourie did not reach the anticipation issue.93 IV. ANALYSIS A. Unocal’s Claims Do Not Define Novel Compositions As discussed in Part II.A, the novelty requirement ensures that an invention is “new” before an inventor receives a patent monopoly.94 The Federal Circuit in Unocal applied traditional analyses to determine whether the ‘393 patent was novel, but carelessly misapplied precedent in reaching its conclusion. This section explores the Federal Circuit’s misapplication of precedent by addressing the following simple questions: ?? What did Unocal patent? ?? Did the claims define new subject matter? ?? Were the claims otherwise valid? 1. The Majority’s Claim Construction Included Unjustified Preamble Limitations. The first step in analyzing novelty is claim construction.95 The Federal Circuit construed the ‘393 patent claims as compositions of matter.96 Citing the Federal Circuit opinion in In re Spada, the majority pointed out that claimed compositions should not be narrowed to specific uses.97 The Spada court concluded that Spada’s patent covered only composition claims and held that the discovery of a nonobvious property of a previously known composition is not patentable.98 The Spada holding followed naturally from the prior Federal Circuit holding in Titanium Metals Corp. of America v. Banner: 99 “The discovery of a new property or use of a previously known composition, even when that property and use are unobvious from the prior art, can not impart patentability to claims to the known composition.”100 Simply put, for composition claims, the 93. Id. at 1002 (Lourie, J., dissenting). 94. Refer to Part II.A supra (discussing the policy reasons for patent law as well as the key requirements for patentability). 95. Refer to note 24 supra and accompanying text. 96. Refer to notes 69–70 supra and accompanying text. 97. Unocal, 208 F.3d at 995. 98. In re Spada, 911 F.2d 705, 708 n.4 (Fed. Cir. 1990) (explaining that whether Spada’s invention was a new use of a known composition was a moot issue because Spada did not seek a process patent). 99. 778 F.2d 775 (Fed. Cir. 1985). 100. In re Spada, 911 F.2d at 780. 1574 HOUSTON LAW REVIEW [38:1557 novelty inquiry focuses solely on the novelty of the composition, rather than on the novelty of the use.101 The Unocal majority’s next conclusion, however, was far less clear. After classifying the ‘393 patent claims as composition claims not limited to specific uses, the court deemed the claim preamble a claim limitation—thereby limiting the claims to cover only “standard automotive gasoline.”102 The Unocal court identified several justifications for the standard automotive gasoline limitation. According to the court, the claim language explicitly specifies “unleaded gasoline” for use in an “automotive engine.”103 Furthermore, the specification describes smog from automobile exhaust as the problem that Unocal’s invention addresses.104 The specification also describes Unocal’s testing procedures and results, which includes data from numerous ordinary passenger automobiles.105 Because Unocal tailored its research and patent to standard automotive fuels, the Federal Circuit concluded that the district court correctly read the claims to cover only standard automotive fuels.106 This claim construction is a significant—and unjustified—deviation from Federal Circuit precedent. One month after the Unocal decision, a Federal Circuit panel decided STX, L.L.C. v. Brine, Inc., 107 which provides guidance for when to construe preamble language as a claim limitation. In STX, the patentee sued Brine, Inc. for patent infringement of its lacrosse stick design.108 A key issue was whether preamble language should be construed as a claim limitation.109 The STX court opined that “where a patentee defines a structurally complete invention in the claim body and uses the preamble only to state a purpose or intended use for the invention, the preamble is not a claim limitation.”110 The court ruled that the preamble phrase, “which provides improved playing and handling characteristics,” is not essential in 101. See id. 102. Refer to notes 71–72 supra and accompanying text (recounting the preamble limitation added by the district and circuit courts). 103. Union Oil Co. of Cal. v. Atlantic Richfield Co., 208 F.3d 989, 995 (Fed. Cir. 2000) (citing language from the ‘393 patent, claim 1, col. 18, ll. 64–65). 104. Id. (citing the ‘393 patent, col. 1, ll. 9–16). 105. Id. at 996 (citing the ‘393 patent, col. 7, ll. 61–66). 106. Id. 107. 211 F.3d 588 (Fed. Cir. 2000). 108. Id. at 589. 109. Id. at 591. 110. Id. (quoting Rowe v. Dror, 112 F.3d 473, 478 (Fed. Cir. 1997)). 2002] UNION OIL CO. OF CALIFORNIA 1575 distinguishing the claimed subject matter over the prior art because it merely states a purpose or intended use.111 Rowe v. Dror112 provides additional guidance for determining the difference between structural limitations to a claim and mere intended purposes: The determination of whether preamble recitations are structural limitations or mere statements of purpose or use can be resolved only on review of the entirety of the patent to gain an understanding of what the inventors actually invented and intended to encompass by the claim. The inquiry involves examination of the entire patent record to determine what invention the patentee intended to define and protect.113 In Rowe, the Federal Circuit held that the “balloon angioplasty catheter” recited in the preamble was a structural limitation to the claimed general purpose catheter.114 A key to this decision was the stated recognition, in the patent specification, of the difference between angioplasty catheters and other types of catheters.115 The Unocal panel never engaged in an analysis similar to STX or Rowe to determine whether the ‘393 patent claims were structurally complete without the preamble recitation of “suitable for combustion in an automotive engine.” In Rowe, there was a distinct structural difference between a balloon angioplasty catheter and a general purpose catheter.116 This is not the case in Unocal, where the claimed fuel composition is structurally the same, regardless of its use.117 The preamble and specification in this case, just like in STX, merely offer an intended use for the claimed composition—as a fuel for an automobile.118 Thus, the Federal Circuit panel erred in the 111. Id. Interestingly, Judge Mayer of the Unocal majority was a participant in the STX unanimous opinion. 112. 12 F.3d 473 (Fed. Cir. 1997). 113. Id. at 478 (internal quotations and citations omitted). 114. Id. at 479. 115. Id. at 480 (pointing out that Rowe’s specification also taught “the use of ‘catheters and flexible probes which do not carry a balloon’ in non-angioplasty procedures as an alternative embodiment of Rowe’s invention”). 116. Refer to notes 114–15 supra and accompanying text (discussing the propriety of construing preamble language as a claim limitation). 117. See U.S. Patent No. 5,288,393, cols. 1–18 (issued Feb. 22, 1994). The specification clearly describes the use of the claimed compositions in automobiles to reduce exhaust emissions, but does not disclose any difference between the claimed compositions as used in an automobile and the claimed compositions as used as a different type of fuel. 118. Id. 1576 HOUSTON LAW REVIEW [38:1557 application of their own standard by including the preamble limitation in the ‘393 patent claim construction. 2. Even if the Preamble Limitation is Appropriate, the Court’s Construction is Too Narrow. It is a fundamental policy to interpret claims, if possible, so as to preserve patent validity.119 The Supreme Court, however, in the 1895 case McCarty v. Lehigh, 120 warned that reading extraneous limitations into claims for the purpose of sustaining a patent is not good policy: While this may be done with a view of showing the connection in which a device is used, and proving that it is an operative device, we know of no principle of law which would authorize us to read into a claim an element which is not present, for the purpose of making out a case of novelty or infringement.121 The Federal Circuit, by reading in the limitation “standard automotive gasoline,” went too far to preserve patent validity. The plain language of the ‘393 patent claim preamble teaches “[a]n unleaded gasoline fuel suitable122 for combustion in an automotive engine.”123 Even if the Federal Circuit truly believed that a preamble limitation was appropriate, the ‘393 patent should only be anticipated by prior art that: (1) has the same composition, and (2) is suitable for combustion in an automobile. What is “regularly used” as automotive fuel is not a plausible limitation.124 3. Unocal Patented the Wrong Invention. Because the Federal Circuit disposed of the anticipation issue immediately after construing the claims, a detailed analysis of the prior art compositions does not exist in the Unocal opinion.125 Assuming 119. 1 CHISUM, supra note 18, § 3.02[1], at 3-17. 120. McCarty v. Lehigh Valley R. Co., 160 U.S. 110 (1895). 121. Id. at 116 (“[I]f 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.”). 122. Emphasis added. Black’s Law Dictionary defines “suitable” as “fit and appropriate for their intended purpose.” BLACK’S LAW DICTIONARY 1448 (7th ed. 1999). Webster’s Dictionary defines “suitable” as “adapted to a use or purpose: fit.” WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2286 (1986). 123. E.g., ‘393 patent, claim 1, col. 18, ll. 64–65. 124. Refer to note 69 supra and accompanying text (describing the additional limitation used by the district and circuit courts). 125. Refer to notes 69–71 supra and accompanying text (discussing the reasons for the Federal Circuit’s affirmance of the district court’s decision). The Unocal majority questioned the record, which it claimed “does not show that the aviation and racing fuels otherwise have the claimed characteristics of the particular standard automotive fuels recited in the ‘393 patent.” Union Oil Co. of Cal. v. Atlantic Richfield Co., 208 F.3d 989, 2002] UNION OIL CO. OF CALIFORNIA 1577 that the refiners’ alleged prior art arguments are valid with respect to the claimed compositions, the law is well-settled in this area: “It is not invention to perceive that the product which others had discovered had qualities they failed to detect.”126 In other words, Unocal should not be allowed to re-patent a composition that already existed for a different use. 127 Even if the preamble language is applied to the ‘393 patent claims, the prior art racing fuels are “suitable” for combustion in an automobile engine and often are marketed in such applications. Unocal, intentionally or not, did nothing more than re-patent an existing composition, which is not allowable under the patent statute.128 Unocal, however, could have enjoyed the patent monopoly that it sought by simply patenting a method for reducing automotive emissions by utilizing the prior art fuel compositions.129 996 (Fed. Cir. 2000) (admitting that many of the aviation and racing fuels include properties that coincide with the properties claimed in the ‘393 patent). 126. Gen. Elec. Co. v. Jewel Incandescent Lamp Co., 326 U.S. 242, 249 (1945) (finding a useful quality in an old discovery “did not advance the frontiers of science in this narrow field so as to satisfy the exacting standards of our patent system”). 127. See 1 CHISUM, supra note 18, § 3.02[3], at 3-25 to 3-26 (“A prior identical product or process will anticipate even though it is contained in a different and nonanalogous art from that of the later invention . . . . [A]nticipation is not avoided by the discovery of a new use, property, or advantage of an old product or process.”); Titanium Metals Corp. of Am. v. Banner, 778 F.2d 775, 782 (Fed. Cir. 1985) (“Congress has not seen fit to permit the patenting of an old alloy, known to others through a printed publication, by one who has discovered its corrosion resistance or other useful properties, or has found out to what extent one can modify the composition of the alloy without losing such properties.”). 128. Refer to notes 21–25 supra (discussing the novelty requirement of 35 U.S.C. § 102). 129. Patenting a method or process of using an already patented composition is allowed under the patent laws. See 35 U.S.C. § 101 (1994); MPEP, supra note 16, § 806.05(h) (“A product and a process of using the product can be shown to be distinct inventions . . . .”). The author envisions numerous types of method claims that could have provided patent protection for Unocal’s invention. Some possible preambles for these hypothetical method claims include: A method for determining a suitable unleaded gasoline composition for automotive engines, comprising . . . or A method for blending unleaded gasoline fuels for use in automotive engines, comprising . . . or A method for reducing automotive engine emissions, comprising . . . . Two Unocal patents do not contain any method claims. See U.S. Patent Nos. 5,288,393 (issued Feb. 22, 1994) and 6,030,521 (issued Feb. 29, 2000) (each consisting only of composition claims). 1578 HOUSTON LAW REVIEW [38:1557 B. Resolving Unocal with Conflict-of-Laws Analysis The Unocal decision affected more than just the six major refiners involved. A striking omission from both the majority and dissenting opinions was a discussion of the public policy ramifications of upholding or invalidating the ‘393 patent. This section provides a discussion of one of these key public policy question—should Unocal’s ‘393 patent remain valid even if it undermines the Clean Air Act? 1. A Conflict Between Federal Statutes—“Preserving the Purposes of Both”. Unintentionally, the Second Circuit and the Federal Circuit created a dispute among the circuits on an important issue of law. In SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharmaceuticals, Inc., a pioneer drug manufacturer brought an action against a generic drug manufacturer for copyright infringement.130 Watson obtained approval to sell a c ompeting generic product, and was directed by the Food and Drug Administration (FDA), pursuant to the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetics Act (FFDCA),131 to use labeling almost identical to SmithKline Beecham’s copyrighted label.132 The United States Court of Appeals for the Second Circuit ruled on April 4, 2000, six days after the Unocal decision, that Watson could not be liable for copyright infringement under those circumstances. The Second Circuit found that “recognition of SmithKline’s claim here would severely undermine the Hatch-Waxman Amendments while its dismissal would not impair the copyright laws . . . .”133 The Second Circuit reached this decision by addressing the apparent conflict between two federal statutes—the HatchWaxman Amendments and the Copyright Act.134 Applying wellestablished conflict-of-laws precedent, the court adopted an interpretation that “preserves the purposes of both and fosters harmony between them.”135 Additionally, the Second Circuit evaluated the traditional analysis applied to statutes based on 130. 211 F.3d 21, 22 (2d Cir. 2000), cert. denied, 531 U.S. 872 (2000). 131. See Drug Price Competition and Patent Term Restoration Act of 1984, 21 U.S.C. § 355(j) (1994) [hereinafter Hatch-Waxman Amendments]. 132. SmithKline Beecham, 211 F.3d at 22. 133. Id. at 29. 134. Id. at 27–28. The Hatch-Waxman Amendments require generic drugs to utilize labeling that may infringe copyrights of pioneer drug labels. The Copyright Act works to prohibit such copying. Id. 135. Id. at 28 (drawing the conflict-of-laws standard from the Federal Circuit decision in Zenith Electronics Corp. v. Exzec, Inc., 182 F.3d 1340, 1347 (Fed. Cir. 1999)) (citation omitted). 2002] UNION OIL CO. OF CALIFORNIA 1579 priority of enactment and specificity in reconciling conflicts, as discussed in the recent Supreme Court case of FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000): The classic judicial task of reconciling many laws enacted over time, and getting them to “make sense” in combination, necessarily assumes that the implications of a statute may be altered by the implications of a later statute. This is particularly so where the scope of the earlier statute is broad but the subsequent statutes more specifically address the topic at hand . . . . [A] specific policy embodied in a later federal statute should control our construction of the earlier statute, even though it has not been expressly amended.136 The Second Circuit concluded that, because the purpose of copyright law is to encourage the production of creative works, the rejection of SmithKline Beecham’s claim would not cause drug producers to “lack the incentive to create labeling needed for FDA approval.” 137 On the other hand, upholding SmithKline Beecham’s copyrights would prohibit marketing of generic drugs, which is at great odds with public policy and the intent of the Hatch-Waxman Amendments.138 The Unocal case provides a similar conflict between federal statutes. Although the specific controversy deals only with a conflict between federal patent law and gasoline regulations promulgated by the state of California,139 a federal conflict-oflaws issue underlies the case. With RFG required by more and more metropolitan areas nationwide, the ‘393 patent will encounter increasing friction with the Clean Air Act’s mandated federal RFG2, as well as future, more stringent federal RFG blends.140 Although not addressed by the Federal Circuit panel in Unocal, this section explores the resolution of the Unocal case in light of SmithKline Beecham conflict-of-laws analysis. 2. The Unocal Decision Undermines the Federal Clean Air Act. Two of the stated congressional purposes for the Clean Air Act are “to protect and enhance the quality of the Nation’s air resources so as to promote the public health and welfare and the 136. SmithKline Beecham, 211 F.3d at 28 n.3 (quoting Brown & Williamson Tobacco Corp., 529 U.S. at 143) (internal quotation marks omitted). 137. Id. at 29. 138. Id. at 28. 139. Note that state regulations and statutes cannot trump federally-mandated patent rights because of federal preemption. See U.S. CONST. amend. X. 140. Refer to note 39 supra. 1580 HOUSTON LAW REVIEW [38:1557 productive capacity of its population”141 and “to encourage and assist the development and operation of regional air pollution prevention and control programs.”142 These purposes are significantly undermined by the Unocal holding, taking into account the probable reactions by both refiners and consumers throughout the United States. A Congressional Research Service Report addressed the then recent increase in gasoline prices nationwide, with Unocal’s ‘393 patent considered a factor.143 “Refiners have substantial latitude in which to formulate gasoline, and can choose to blend around the patents . . . [which can] cost them as much as [five] cents per gallon in higher manufacturing costs.”144 Additionally, the Federal Trade Commission (FTC) recently prepared a statement on the realized effects of the ‘393 patent, concluding that upholding Unocal’s patent has caused some refiners “to change RFG blends in an [apparent] effort to avoid infringement, leading to production delays and decreased refinery throughput.”145 The practical effect of a “valid” Unocal patent is to create an economic incentive for refiners to blend gasolines with a higher T50 value, which results in higher emissions than Unocal’s patented gasoline blends.146 Clearly, refiners are hurt by the enforcement of Unocal’s patents because they are forced to decide between infringement (with the ensuing legal battles), reduced margins147 (with ensuing accountability to shareholders), and reduced volumes148 (with ensuing negative impact on gasoline prices). This is far from approaching Congress’s intended “encouragement” of the RFG program. 141. Clean Air Act § 101(b)(1), 42 U.S.C. § 7401(b)(1) (1994). 142. § 101(b)(4), § 7401(b)(4). 143. See Cong. Research Serv. Report for Congress, RL30592: Midwest Gasoline Prices: A Review of Recent Market Developments (June 28, 2000) [hereinafter Midwest Gasoline Prices] (disclosing additional factors leading to increased gasoline prices, such as higher crude oil prices, pipeline problems, the required use of ethanol in RFG, and lower than expected inventories), available at http://www.cnie.org/nle/eng-62.html. 144. Id. 145. Summer Energy Concerns for the American Consumer: Hearing Before the Comm. on Commerce, 106th Cong. 14 (2000) (statement of Honorable Robert Pitofsky, Chairman, Fed. Trade Comm’n). 146. Brief of Amicus Curiae General Motors Corp. at 8–10, Union Oil Co. of Cal. v. Atlantic Richfield Co., 208 F.3d 989 (Fed. Cir. 2000) (No. 00-00-249) (detailing the negative combustion effects of gasoline blends with a T50 value greater than 215?F, which is the maximum T50 value covered by the ‘393 patent). 147. Refer to notes 46–49 supra and accompanying text (describing the types of production cost increases that are likely with more restricted gasoline blends). 148. Refer to note 145 supra and accompanying text (noting how some refiners may see a reduced throughput as a result of the ‘393 patent). 2002] UNION OIL CO. OF CALIFORNIA 1581 Alternatively, refiners could choose to pay the court-induced 5.75 cents-per-gallon royalty—or a lesser-negotiated royalty—to produce gasoline on the patent.149 The economic reality of this choice is to pass these additional royalty costs on to the consumer. The FTC’s Bureau of Competition reported to Congress on the effects these cost fluctuations would have on consumers: 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.150 These effects neither promote the public’s welfare nor the productive capacity of the public, both stated objectives of the Clean Air Act.151 3. Reversing the Unocal Decision Would Not Impair the Patent Laws. Is the Clean Air Act’s mandate to clean our environment a higher good than that of preserving Unocal’s arguably broad patent rights? This case is notably different from SmithKline Beecham in one important facet. Although not stipulated as a required element in resolving conflict-of-laws, the Second Circuit noted that SmithKline Beecham, in particular, stood to lose nothing from non-enforcement of its copyrights because it generated profits not from the copyrighted label, but rather from the drug patent and the exclusive periods free from competition that followed.152 By contrast, Unocal stands to lose significant profit-generating potential if the ‘393 patent is held unenforceable. Hence, a thorough balancing of Unocal’s patent rights and the public’s interests is required to complete the analysis. To declare Unocal’s valid patent unenforceable may be equivalent to a “government taking,” which stimulates discussion of Unocal’s Fifth Amendment rights.153 The Supreme Court has many well-defined propositions with respect to government 149. Refer to note 62 supra and accompanying text (recounting the district court’s award of back-royalties to Unocal). 150. Midwest Gasoline Prices, supra note 143. 151. Refer to note 140 supra and accompanying text. 152. SmithKline Beecham Consumer Healthcare, L.P. v. Watson Pharms., Inc., 211 F.3d 21, 29 (2d Cir. 2000), cert. denied, 531 U.S. 872 (2000). 153. See U.S. CONST. amend. V (providing that “private property [shall not] be taken for public use, without just compensation”). 1582 HOUSTON LAW REVIEW [38:1557 takings “involving real, as opposed to personal or intangible, property.”154 A regulation or statute that deprives the owner of all use or value of real property nearly always constitutes a taking.155 However, a regulation or statute that only deprives the owner of the most profitable use of real property may not constitute a taking, depending on other equitable factors. These factors include (1) the economic impact of the regulation or statute, (2) its interference with reasonable return on investment expectations, and (3) the character of the government action.156 With respect to the taking of intellectual property rights, only one recent case157 has analyzed such an issue, and the court resolved the issue by balancing the aforementioned factors, as if the property were real property.158 The issue in Unocal, like in SmithKline Beecham, is not whether Unocal would be deprived of all use of the ‘393 patent, but rather whether preventing Unocal from enforcing its “valid” ‘393 patent is a government taking.159 This also requires a balancing of the three aforementioned factors. One of the three factors clearly favors continued patent enforceability— interference with Unocal’s reasonable expectation of return on investment.160 This negative impact is offset by other factors, most notably the character of the government action.161 As discussed previously, the Clean Air Act serves to promote the public welfare and is probably the most direct method for 154. Thomas F. Cotter, Do Federal Uses of Intellectual Property Implicate the Fifth Amendment?, 50 FLA. L. REV. 529, 536–37 (1998) (summarizing the Court’s opinions concerning occupation of real property and interference with the use and enjoyment of real property). 155. Id. at 537. 156. Id. at 537 & n.56. See also MARGARET JANE RADIN, REINTERPRETING PROPERTY 125, 236 n.26 (1993). 157. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1013–14 (1984) (holding that some, but not all, government uses of trade secret information in accordance with a federal regulatory scheme are considered a “taking” of property, thus implicating the Fifth Amendment). 158. Cotter, supra note 154, at 550–55 (classifying Monsanto as the “Middle View” of three competing views as to how intellectual property “takings” should be treated). 159. Refer to note 153 supra and accompanying text. Note that Unocal only stands to lose its right to enforce its patent against infringers, but not its exclusive right to use the patented invention. Thus, Unocal would maintain some, but not the most important, value of the ‘393 patent. 160. See Monsanto, 467 U.S. at 1012 & n.15 (contending that “the value of a trade secret lies in the competitive advantage it gives its owner over competitors,” and that this advantage is diminished if others may use the property without compensation). 161. See id. at 1005 (citing “the character of the governmental action” as a factor to be considered when determining whether an action constitutes a taking). 2002] UNION OIL CO. OF CALIFORNIA 1583 curtailing the serious, on-going environmental problems in the United States.162 Before declaring this balancing test to be hopelessly unresolvable, it is important to consider other conflict-of-laws situations between the Patent Act and the Clean Air Act. One example is the requirement of catalytic converters in automobiles. In 1975, the first catalytic converters appeared in response to hydrocarbon and carbon monoxide (CO) emission standards promulgated by the Clean Air Act of 1970.163 Six years later, in 1981, new cars finally met these standards for the first time, mostly because of the mass deployment of sophisticated three-way catalysts with on-board computers and oxygen sensors.164 In response to the 1990 Clean Air Act Amendments, a major American auto company representative testified, “‘[W]e just do not have the technology to comply.’”165 The auto industry began producing vehicles meeting those standards shortly thereafter in 1993.166 “Clean Air Act requirements have created market opportunities and pressures for technology breakthroughs and performance improvements. Over and over again, industry has responded with great success . . . .”167 As discussed earlier, the ‘393 patent arguably does not reward Unocal for its contribution to society—as is the case with the inventors of catalytic converters, but rather rewards Unocal for its successful exploitation of the patent system,168 while simultaneously undermining the Clean Air Act efforts.169 As in SmithKline Beecham, Unocal’s intellectual property rights are subservient to the greater good of society—a good in the form of 162. Refer to Parts II.B & IV.B.2 supra (discussing the origins of reformulated gasoline in terms of the Clean Air Act Amendments of 1990 and subsequent EPA regulations, as well as the stated purpose of the Clean Air Act). 163. U.S. Environmental Protection Agency, Milestones in Auto Emissions Control, EPA 400-F-92-014 (Aug. 1994) [hereinafter Milestones in Auto Emissions Control] (describing an early catalytic converter design), available at http://www.epa.gov/otaq/12- miles.htm. See generally U.S. Patent No. 3,852,041 (issued Dec. 3, 1974). 164. Milestones in Auto Emissions Control, supra note 163. 165. Clean Air Act: Review and Oversight: Hearing Before the Subcomm. on Clean Air, Wetlands, Private Prop., and Nuclear Safety of the Senate Comm. on Env’t and Public Works, 106th Cong. 52, 58 (1999) (statement of Robert Perciasepe, Assistant Adm’r, Office of Air and Radiation, EPA). 166. Id. 167. Id. 168. See Petitioners’ Brief at 14–16, Union Oil Co. of Cal. v. Atlantic Richfield Co., 208 F.3d 989 (Fed. Cir. 2000) (No. 00-00-249) (alleging that Unocal conducted “regulatory gaming” by filing the ‘393 patent in anticipation of regulatory requirements, then amending the claims to “resemble” CARB’s final regulations). 169. Refer to Part IV.B.2 supra (arguing that the effects of the Unocal holding do not support the objectives of the Clean Air Act). 1584 HOUSTON LAW REVIEW [38:1557 specific regulations that protect public welfare. The Unocal patent undermines the Clean Air Act’s objectives, while a reciprocal analysis reveals little impact on the Patent Act, especially in light of other successful patents (such as catalytic converters) that co-exist with the Clean Air Act. A consistent reading of the facts of Unocal and SmithKline Beecham appears to converge at the same conclusion—the more recent, more specific federal policy takes precedent over the older, broader federal statute.170 V. CONCLUSION As discussed in this Note, the outcome of Unocal rubs against the basic tenets of patent law and environmental policy. The ‘393 patent arguably failed the written description requirement of 35 U.S.C. § 112, thereby revealing that Unocal did not have possession of its invention when the application was filed,171 and raising further doubts as to who the true inventor of the gasoline composition was.172 Furthermore, the ‘393 patent claims nothing more than a new use for an old composition, which fails the novelty test of 35 U.S.C. § 102.173 Lastly, upholding the ‘393 patent undermines the legislative intent of the Clean Air Act by placing unnecessary burdens on both refiners and consumers and by threatening environmental progress.174 The Supreme Court in United States v. Singer Manufacturing Co.175 said it best: There is a public interest here which the parties have subordinated to their private ends—the public interest in granting patent monopolies only when the progress of the useful arts and of science will be furthered because as the consideration for its grant the public is given a novel and useful invention. When there is no novelty and the public parts with the monopoly grant for no return, the public has been imposed upon and the patent clause subverted.176 Jeffrey J. Phillips 170. Refer to note 135 supra and accompanying text (paralleling the conclusions found by a recent Supreme Court conflict-of-laws case). 171. Refer to Part III.C.2 supra (recounting Judge Lourie’s spirited dissent). 172. Refer to note 166 supra (describing the alleged “regulatory gaming” practices of Unocal during the prosecution of the ‘393 patent). 173. Refer to Part IV.A supra. 174. Refer to Part IV.B supra. 175. 374 U.S. 174 (1963). 176. Id. at 199–200 (White, J., concurring) (citation omitted).