FTC Reopens Unocal Antitrust Investigation on Patented Standards-Setting
On July 7, 2004, the Federal Trade Commission announced that it has reinstated charges that the Union Oil Company of California violated antitrust laws by defrauding the California Air Resources Board in connection with regulatory proceedings regarding development of patented gasoline formulations.
The Commission's opinion holds that "as a matter of law . . . misrepresentation can warrant denial of Noerr-Pennington protection, but that false petitioning loses Noerr-Pennington protection only in limited circumstances, such as when the petitioning occurs outside the political arena; the misrepresentation is deliberate, factually verifiable, and central to the outcome of the proceeding or case; and it is possible to demonstrate and remedy this effect without undermining the integrity of the deceived governmental entity."
According to the FTC's complaint, Unocal illegally acquired monopoly power in the technology market for producing Phase 2 “summer-time� CARB gasoline during the 1990's by misrepresenting that certain information was non-proprietary and in the public domain, while at the same time pursuing patents that would enable it to charge substantial royalties if the information were used by CARB. The complaint alleges that through these misrepresentations, Unocal induced CARB to adopt reformulated gasoline standards that substantially overlapped with Unocal’s patent rights. The Commission’s latest opinion did not rule on the factual validity of these allegations, which have not yet been subject to trial, but rather rejected an earlier decision by the agency's Administrative Law Judge on the legal insufficiency of the FTC's complaint.
Click here for the latest information on "In the Matter of Union Oil Company of California."
The Commission's opinion holds that "as a matter of law . . . misrepresentation can warrant denial of Noerr-Pennington protection, but that false petitioning loses Noerr-Pennington protection only in limited circumstances, such as when the petitioning occurs outside the political arena; the misrepresentation is deliberate, factually verifiable, and central to the outcome of the proceeding or case; and it is possible to demonstrate and remedy this effect without undermining the integrity of the deceived governmental entity."
According to the FTC's complaint, Unocal illegally acquired monopoly power in the technology market for producing Phase 2 “summer-time� CARB gasoline during the 1990's by misrepresenting that certain information was non-proprietary and in the public domain, while at the same time pursuing patents that would enable it to charge substantial royalties if the information were used by CARB. The complaint alleges that through these misrepresentations, Unocal induced CARB to adopt reformulated gasoline standards that substantially overlapped with Unocal’s patent rights. The Commission’s latest opinion did not rule on the factual validity of these allegations, which have not yet been subject to trial, but rather rejected an earlier decision by the agency's Administrative Law Judge on the legal insufficiency of the FTC's complaint.
Click here for the latest information on "In the Matter of Union Oil Company of California."
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