Mike: Interestingly, there is little or no information on the internet concerning Unocal's patent litigation. I think it is actually a good sign that this is not the kind of story that has proliferated to every corner of the www. In fact, after having researched the situation adnauseam, the only four sources of information I have located include: Forbes (June 16, 1997), The Oil & Gas Journal (sorry, don't have the cite on hand), The Wall Street Journal (July - , 1997) and Unocal's I.R. Department - all credible nonetheless. Unocal itself is keeping this very low profile. When I spoke with the gentleman in I.R. a few weeks ago, he was quite matter-of-fact about it all; he refused to hype it as some potential colosus; rather, he simply explained that Unocal's expert witnesses value the patent at $.05 - $.07 per gallon of gas formulated under it, while Shell, Exxon, Mobil, Chevron, Texaco and ARCO's experts valued it only at $.02 per gallon - classic litigation - each side adopting diametrically opposite positions. However, when questioned as to why there was no "talk" about the upside in the mainstream press, on the internet, or by the brokers, Unocal responded that the Majors (as setforth above) had so far done a good job of convincing everyone that they would be successful in the lawsuit. But, I also spoke with a patent attorney in Houston who was quoted in the Forbes article and actually authored the Oil & Gas Journal article (having spent considerable time studying the case) who was quick to point out that in order to defeat Unocal, the big boys have to prove to the federal judge that the U.S. Patent Office made a mistake in previously issuing Unocal the patent back in 1994. Keep in mind that a federal court with little or no patent expertise is not likely to second guess the U.S. Patent Office. Patents that face legal challenges such as this are left in tact by courts 65% of the time (see Oil & Gas Journal). Moreover, the standard of proof that the Majors must prove in court to strip Unocal of the patent is by "clear and convincing evidence." That is much higher than the typical standard of proof a claimant must prove in a civil lawsuit, that being by a "preponderance of the evidence," or essentially 51%. The "c and c" standard is more-or-less the civil analogue to the "beyond a reasonable doubt" standard in the criminal context. Point being, it will not be a "cakewalk" for Shell, Mobil et al. to convince the court that Unocal should be stripped of the patent. Nevertheless, please keep in mind that there are further variables that I have not included in this analysis (such as if the judge/jury decides to "split the baby" and only give Unocal $.03 - $.04 per gallon, the appellate process, as well as other allegations of wrongdoing that the Majors are asserting in the suit). But in my opinion, it boils down to this: It is indeed a rare occasion when one can buy a stock that has a reasonable chance of huge appreciation, all-the-while sleeping good at night knowing that if they don't win, you still have a solid stock with a 12 month price target of $50.00 per share. Do your own due diligence. I have.
Wade |
