June 16 might go down in plastics history as independence day for the metallocene market.
On that date, Dow Chemical Co. and Exxon Chemical Co. settled a legal fight involving metallocene technology used to make enhanced plastic resins. With the lawsuits out of the way, many are predicting increased commercial success for metallocene-based materials.
Dow of Midland, Mich., and Houston-based Exxon released few details of the settlement, saying only that it covers ``alternatives to litigation for resolution of future patent disputes and the licensing of certain patent rights.''
The deal ended litigation and other disputes in the United States, Germany, the Netherlands and the United Kingdom.
``Extensive litigation has placed a cloud over this breakthrough technology,'' said Ed Gambrell, global vice president for Dow's Insite-brand technology. ``With the cloud removed from Dow and Exxon's metallocene-related patents, the full benefit of this technology can immediately impact the marketplace.''
James Harris, Exxon polymers senior vice president, added that the settlement ``will be good for customers of metallocene-technology-based products by reducing uncertainty and encouraging them to expand commercialization.''
The settlement also involves Univation Technologies, the technology licensing partnership between Exxon and Union Carbide Corp. of Danbury, Conn.
Exxon still is involved in a metallocene patent lawsuit with Phillips Petroleum Corp. of Bartlesville, Okla. Exxon also was awarded $171 million in damages in a patent-infringement lawsuit against Mobil Corp. before the two firms agreed to merge.
Exxon has used its Exxpol metallocene technology to make enhanced polyethylene, polypropylene and plastomers, while Dow has used its Insite-brand technology to produce PE, plastomers and ethylene-styrene interpolymers.
DuPont Dow Elastomers, a venture between Dow and DuPont of Wilmington, Del., also uses Insite to make elastomers and hydrocarbon rubbers.
Suppliers tout metallocene-based materials for their improved toughness, puncture resistance, purity and clarity.
Balaji Singh, president of Houston's Chemical Market Resources Inc. consulting group, said potential licensees and processors will be more comfortable with the legal threat removed from the technology.
``To survive, Dow and Exxon have to convince the rest of the polyolefins world to go after their technology,'' Singh said. ``That wasn't happening a lot because people were concerned about what would happen if they went with either Dow or Exxon and the other side won in court.''
Two resin producers working with Tarrytown, N.Y.-based consultants IBM Chem Systems have said they're interested in licensing metallocene technology but have been reluctant because of the Dow-Exxon feud, according to IBM Chem Systems President Robert Bauman.
``This clears the way for licenses,'' Bauman said.
``In order for the market to move forward quickly, [producers] need to retrofit existing polyethylene lines,'' he said. ``And since the metallocenes are drop-in technology, they can probably do that for less than $1 million per line.''
To date, metallocene technology primarily has affected the linear low density PE film market. Both Dow and Exxon have a lot to gain in this area, since Dow ranks first in North American LLDPE production with a 24 percent market share, and Exxon ranks second at 14.5 percent. In total North American PE production, Exxon ranks second and Dow third.
Some industry observers had speculated that ongoing work by other companies in the metallocene/single-site catalyst area may have reduced the value of the Dow/Exxon work. Both Phillips and Nova Chemicals Ltd. of Calgary, Alberta, are producing commercial grades of metallocene PE.
Borealis A/S of Stathelle, Norway, DSM NV of Sittard, Netherlands, and BASF AG of Ludwigshafen, Germany, also have metallocene or single-site projects in development.
Dow and Exxon officials declined to comment on the impact of those other projects, but Singh and Bauman both doubted that they had much effect.
``Between Dow and Exxon, they cover so much of the technology that even if others had their own technology, it wouldn't be superior,'' Singh said.
``Nobody in their right mind is developing new technology,'' Bauman added. ``Dow and Exxon are way out in front.''