WASHINGTON -- Shell Oil faces a lawsuit for past royalties on a
plastic-making patent after failing to convince the U.S. Supreme
Court that it can't be forced to pay any fees after a patent's been
The high court on Monday rejected Shell's appeal of a decision
that permits Germany's Studiengesellschaft Kohle (SGK) to proceed
with a suit seeking royalties for plastic that Shell produced at a
Texas plant from 1987 to 1993.
SGK's suit charged that Shell violated a licensing agreement by
failing to pay fees that were due under a contract that permitted
Shell to use SGK's patented technology for making polypropylene
During an initial court fight, Shell challenged the validity of
SGK's patent. A federal appeals court agreed that SGK's patent is
The appeals court nonetheless said SGK could ask for royalties
under the licensing contract for the period before Shell first
questions about the patent's validity.
In its high court appeal, Shell unsuccessfully argued that once a
patent has been declared invalid, companies that agreed to pay a
patent-licensing fee should be free from liability for earlier
"The invalidity of the licensed patent should end any ability (by
SGK) to recover any additional or past due royalties under any legal
theory," Shell argued.
SGK is an arm of Germany's non-profit Max-Planck Institute for
The appeals court ruling sends the case back to a trial court for
further proceedings to see whether Shell actually used SGK's
previously patented process to make plastic at a plant in Seadrift,
Shell argues that the Seadrift plant used different technology.
If a court finds that Shell's process did use technology covered
by SGK's patent, Shell could be liable for royalties it would have
been charged up to the date when Shell first challenged the patent's
SGK's lawyer, Nathaniel Kramer, said damages against Shell could
reach "seven figures" if SGK ultimately wins the case. The lawsuit,
however, has not proceeded far enough for more than the broadest
estimate of potential damages, he said.
Houston-based Shell has since sold that polypropylene business to
Union Carbide. Shell is a unit of Royal Dutch Petroleum. The case
is Shell Oil vs. Studiengesellschaft Kohle, 97-533.
In other Supreme Court action Monday:
* The justices sought the federal government's views about whether
insurance companies can be sued for stiff penalties under a federal
racketeering law, without usurping state authority to regulate the
The high court asked the Justice Department to file a brief
outlining its position in an appeal by Humana. …