Issue 144 | December 17, 2003
Patent Law Not Within FTC's Jurisdiction
 In an "Initial Decision" announced on November 26, 2003, Administrative Law Judge (ALJ) D. Michael Chappell dismissed the Federal Trade Commission's (FTC's) complaint charging Union Oil Company of California (Unocal) with anticompetitive activities before regulatory and standards-setting organizations in connection with its reformulated gasoline (RFG) patents. The decision held that Unocal’s conduct before the California Air Resources Board (CARB) constituted a "petitioning of a governmental authority" that is entitled to antitrust immunity under the Noerr-Pennington doctrine, and that an evaluation of Unocal's separate activities with the Auto/Oil Air Quality Improvement Research Program (AQIRP) and the Western States Petroleum Association (WSPA) would require an "in depth analysis of substantial issues of patent law" that are not within the Commission's jurisdiction.

Under the Noerr-Pennington doctrine, genuine efforts to influence the exercise of government power through the political process, even if for anticompetitive purposes, do not create liability under the antitrust laws. In finding that the CARB rulemaking process was undertaken in a legislative, rather than adjudicative, context, the ALJ examined (1) the level of political discretion granted to CARB; (2) whether CARB was setting policy; (3) the procedures used during the rulemaking; and (4) the authority invoked by CARB in adopting the regulations. The ALJ also noted that CARB was not wholly dependent upon Unocal for its information.

With regard to the alleged standards-settings violation, the decision noted that to the extent that Unocal's statements to AQIRP and WSPA were part of a scheme to induce CARB to act, that conduct was also political petitioning protected by the Noerr-Pennington doctrine. Furthermore, to the extent that Unocal made statements to the AQIRP and WSPA that were independent of its alleged scheme against the CARB, those "allegations involve substantial issues of patent law and, thus, do not state an independent cause of action over which the Commission has jurisdiction as alleged in the Complaint."

In a similar case that was discussed in Issue 4 of this newsletter, the FTC accused Rambus Inc. of failing to properly discloses its patents to an industry standards organization in which it participated. Shares of Rambus gained nearly 19 percent when the Unocal decision was announced. That market volatility should also give new credence to those who question the need for more FTC intervention in patent matters.

The Initial Decision for "In the Matter of Union Oil Company of California" is viewable at
http://www.ftc.gov/os/caselist/d9305.htm. For more information on the FTC's involvement with patent matters, contact the author of this issue of "APLF Patent Law Updates," Bill Heinze (bill.heinze@tkhr.com), at Thomas, Kayden, Horstemeyer & Risley LLP in Atlanta, Georgia USA.

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