Clean Air Never Smelled So Bad: Union Oil Co. of California v. Atlantic Richfield Co.

1. 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., 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 well settled law regarding how patent claims are interpreted. The patent at issue involves Unocal's "novel" reformulated gasoline. Reformulated gasoline is currently required by the Environmental Protection Agency (EPA) in many metropolitan areas to help curb pollution caused by automobile emissions. 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 invalidating Unocal's reformulated gasoline patent. By affirming the district court, the Federal Circuit has agreed to enforce Unocal's monopoly over reformulated gasoline. Unocal's patent has already led to wild gasoline price fluctuations, gasoline supply uncertainties, and worse yetgasoline produced around Unocal's patent, which is not as environmentally friendly. As a matter of environmental law, this last point is a reminder that other forces impact the effectiveness of environmental legislationin this case, the Clean Air Act.

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 well-established conflict-of-laws doctrine, proposing that the Unocal decision does not square with equitable principles of "preserving the purposes of both" the Patent Act and the Clean Air Act.

1. BACKGROUND
2. An Introduction to Patent Law
3. 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." Congress has accordingly enacted patent statutes that allow a broad range of subject matter to be patented. If an 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. "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."

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. The profitability of patents provides the necessary means for recapturing investment costs associated with research and development.

1. 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). 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 mattermethods, machines, articles of manufacture, compositions of matter, and improvements on any of these classes. Courts have generally accepted that useful inventions need only be capable of some beneficial use. In other 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. 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."

Section 102 requires that an invention must be new, or novel, to be patentable. 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." Generally, "[p]rior art may take the form of issued patents, published materials, commercial activities, or other forms of [public] knowledge and use." Before determining whether the prior art "anticipates" a claim, one must interpret, or construe, the claima question of law for the court. A patent claim is anticipated if a single prior art reference contains "each and every element" of the claima question for the fact-finder.

The nonobviousness requirement is closely related to the novelty requirement. If the invention is novel, then further inquiry must be made to determine if it is "new enough." 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." 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.

Section 112 provides that "[t]he specification shall contain a written description of the invention . . . ." 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. 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.

1. 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. Ground-level ozone is the primary component of smog and is created by a chemical reaction between volatile organic compounds (VOC) and nitrogen oxides (NOx). RFG is intended to improve urban air quality by reducing vehicle tailpipe emissions of VOC, NOx, and other toxic air pollutants. The required presence of oxygenates in RFG also increases the combustion efficiency of gasoline and reduces carbon monoxide emissions.

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. The EPA published its final rule in 1994, establishing emission reduction standards and enforcement provisions for RFG. To ensure that the RFG program would be acceptable to all parties, the EPA proposed a two-step approach for implementing RFG standardsPhase I RFG would be required by 1995, with the more stringent Phase II RFG (RFG2) requirements to be in place by 2000. The CAA requires RFG only in the nine cities with the most severe smog problems, but other areas with smog problems are provided an "opt-in" option. RFG, contributing about thirty percent of the gasoline sold in the United States, is currently used in seventeen states and the District of Columbia. 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 RFG2CaRFG2 and, more recently, CaRFG3. Most importantly, CaRFG2 and CaRFG3 fully satisfy federal RFG2 requirements. CaRFG3, while further reducing vehicle emissions, is primarily targeted at phasing out Methyl Tertiary-Butyl Ether (MTBE) by 2004.

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. 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). 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." 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.

1. 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. The joint study agreement explicitly provided that each participant retained the right to pursue its own independent research of reformulated gasolines. Unocal, an oil 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. 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.

The '393 patent purports to describe "[a]n unleaded gasoline fuel, suitable for combustion in an automotive engine . . . ." 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." Eight gasoline variables are used throughout the claims to describe the gasoline formulations that directly reduce these emissions. 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.

Gasoline blends, as complex mixtures of hydrocarbons, can be patented as new, useful, and nonobvious compositions of matter. 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. Undoubtedly, this potential obstacle compelled the world's largest publicly-owned refiners to bring the invalidity suit that is the topic of this Note.

1. RECITATION OF THE CASE
2. Case History

Five refiners brought suit against Unocal in the United States District Court for the Central District of California seeking a declaratory judgment that the '393 patent was invalid on the grounds of anticipation, obviousness, and lack of a sufficient written description. Unocal counterclaimed, alleging willful infringement by the refiners. 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." The district court then denied the refiners' motion for judgment as a matter of law (JMOL) that sought to overturn the jury verdicts. The district court also ruled, in a separate opinion, that Unocal did not commit inequitable conduct before the PTO.

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. 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. This section serves to briefly summarize the key points from both the majority and dissenting opinions.

1. AnticipationThe 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. 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.'" 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. 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." The Federal Circuit endorsed this claim construction, concluding that the claims cover only "standard automotive gasoline" and not a broader class of gasolines.

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. 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." Accordingly, the Federal Circuit affirmed the district court's denial of JMOL on the grounds of anticipation.

1. Written DescriptionSplit 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. 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." 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. The jury affirmatively answered forty-one times that a sufficient written description supported each claim in question. The Federal Circuit panel reviewed these jury findings for substantial evidence but did not reach a unanimous conclusion.

1. Majority OpinionUnocal Demonstrated Possession of the Claimed Subject Matter. Two of the three judges on the Unocal panel held that substantial evidence supported the jury's findings and the trial judge's JMOL ruling. 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]." 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. 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." "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." Because the record reflected substantial evidence of adequate written description, the panel majority affirmed the district court's denial of JMOL.
2. Judge Lourie's DissentInadequate Written Description. Judge Lourie squarely disagreed with the written description ruling of the majority. He focused his dissent on the underlying rationale for the written description requirementto show that the inventor had possession of the invention claimed at the time the application was filed. 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. 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." "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." Judge Lourie argued that teaching how to make various gasoline compositions does not show possession of any of the claimed gasoline compositions. This view of the facts and the precedent led Judge Lourie to vote against the majority. Because he would have reversed the district court's denial of the motion for JMOL based on inadequate written description, Judge Lourie did not reach the anticipation issue.
3. ANALYSIS
4. 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. 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. The Federal Circuit construed the '393 patent claims as compositions of matter. Citing the Federal Circuit opinion in In re Spada, the majority pointed out that claimed compositions should not be narrowed to specific uses. 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. The Spada holding followed naturally from the prior Federal Circuit holding in Titanium Metals Corp. of America v. Banner: "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." Simply put, for composition claims, the novelty inquiry focuses solely on the novelty of the composition, rather than on the novelty of the use. 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 limitationthereby limiting the claims to cover only "standard automotive gasoline." 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." Furthermore, the specification describes smog from automobile exhaust as the problem that Unocal's invention addresses. The specification also describes Unocal's testing procedures and results, which includes data from numerous ordinary passenger automobiles. 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. This claim construction is a significantand unjustifieddeviation from Federal Circuit precedent. One month after the Unocal decision, a Federal Circuit panel decided STX, L.L.C. v. Brine, Inc., 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. A key issue was whether preamble language should be construed as a claim limitation. 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." The court ruled that the preamble phrase, "which provides improved playing and handling characteristics," is not essential in distinguishing the claimed subject matter over the prior art because it merely states a purpose or intended use. Rowe v. Dror 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. 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. A key to this decision was the stated recognition, in the patent specification, of the difference between angioplasty catheters and other types of catheters. 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. This is not the case in Unocal, where the claimed fuel composition is structurally the same, regardless of its use. The preamble and specification in this case, just like in STX, merely offer an intended use for the claimed compositionas a fuel for an automobile. Thus, the Federal Circuit panel erred in the 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. The Supreme Court, however, in the 1895 case McCarty v. Lehigh, 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. 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 suitable for combustion in an automotive engine." 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.
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. Assuming 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." In other words, Unocal should not be allowed to re-patent a composition that already existed for a different use. 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. 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.
4. 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 questionshould 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. Watson obtained approval to sell a c competing 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), to use labeling almost identical to SmithKline Beecham's copyrighted label. 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 . . . ." The Second Circuit reached this decision by addressing the apparent conflict between two federal statutesthe Hatch Waxman Amendments and the Copyright Act. Applying well-established conflict-of-laws precedent, the court adopted an interpretation that "preserves the purposes of both and fosters harmony between them." Additionally, the Second Circuit evaluated the traditional analysis applied to statutes based on 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. 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." 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. 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, 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. 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 productive capacity of its population" and "to encourage and assist the development and operation of regional air pollution prevention and control programs." 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. "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." 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." The practical effect of a "valid" Unocal patent is to establish an economic incentive for refiners to blend gasolines with a higher T50 value, which results in higher emissions than Unocal's patented gasoline blends. 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 margins (with ensuing accountability to shareholders), and reduced volumes (with ensuing negative impact on gasoline prices). This is far from approaching Congress's intended "encouragement" of the RFG program. Alternatively, refiners could choose to pay the court-induced 5.75 cents-per-gallon royaltyor a lesser-negotiated royaltyto produce gasoline on the patent. 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. These effects neither promote the public's welfare nor the productive capacity of the public, both stated objectives of the Clean Air Act.
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. 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. The Supreme Court has many well-defined propositions with respect to government takings "involving real, as opposed to personal or intangible, property." A regulation or statute that deprives the owner of all use or value of real property nearly always constitutes a taking. 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. With respect to the taking of intellectual property rights, only one recent case has analyzed such an issue, and the court resolved the issue by balancing the aforementioned factors, as if the property were real property. 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. 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. This negative impact is offset by other factors, most notably the character of the government action. As discussed previously, the Clean Air Act serves to promote the public welfare and is probably the most direct method for curtailing the serious, on-going environmental problems in the United States. 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. 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. 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.'" The auto industry began producing vehicles meeting those standards shortly thereafter in 1993. "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 . . . ." As discussed earlier, the '393 patent arguably does not reward Unocal for its contribution to societyas is the case with the inventors of catalytic converters, but rather rewards Unocal for its successful exploitation of the patent system, while simultaneously undermining the Clean Air Act efforts. As in SmithKline Beecham, Unocal's intellectual property rights are subservient to the greater good of societya good in the form of 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 conclusionthe more recent, more specific federal policy takes precedent over the older, broader federal statute.
4. 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, and raising further doubts as to who the true inventor of the gasoline composition was. 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. 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. The Supreme Court in United States v. Singer Manufacturing Co. said it best: There is a public interest here which the parties have subordinated to their private endsthe 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.

Questions

1. Analyze the role of Noerr-Pennington immunity in limiting the ability to challenge UNOCAL's actions before regulatory agencies.
2. Assess how strong you believe UNOCAL's competitors' arguments against immunity were. How likely do you think they are to succeed?
3. After the FTC's second ruling in favor of UNOCAL, how has the position of both UNOCAL and the common interest litigation group changed. Who has the stronger arguments at this point?