"The Federal Circuit did not mince words about Phillips's litigation strategy, describing it as 'sandbagging' Magēmā with a 'bait-and-switch.'"
In Magēmā Technology LLC v. Phillips 66, No. 24-1342 (Fed. Cir. Sept. 8, 2025) ("Magēmā, slip op."), the U.S. Court of Appeals for the Federal Circuit reversed a jury verdict finding no infringement of plaintiff Magēmā's patent by defendant Phillips. At first glance, the case appears to involve an ordinary patent dispute over methods for "hydroprocessing" marine fuel oil. But beneath the surface lies a compelling story about how Magēmā's patented invention sought to clean up the dirtiest fossil fuel on earth that drove the billion-dollar trans-ocean shipping industry for over a century, and how Phillips evaded Magēmā's proof of infringement through textbook discovery abuse and trial misconduct, requiring the Federal Circuit's intervention.
The legal drama centers on a classic litigation bait-and-switch strategy as dirty as the marine fuel at issue in the case. During discovery, Magēmā (pronounced "Maggie Mae," like the Beatles song) demanded certain refinery flashpoint data'the temperature at which fuel vapors can ignite'from Phillips's marine fuel production facility needed to prove infringement of the patent claims. Phillips, however, convinced the magistrate judge presiding over the dispute that collecting the requested flashpoint data from inside the refinery's active processing units would be "too dangerous" and assured the court that Magēmā could rely instead on flashpoint estimates prescribed by industry standards.
Then, at trial, Phillips reversed course, telling the jury that Magēmā's flashpoint estimates were inherently unreliable and worthless in assessing Magēmā's proof of patent infringement. Without actual refinery flashpoint data, Magēmā was set adrift with no meaningful way to chart a course to victory. When Magēmā sought a curative instruction to explain the evidentiary bind Phillips had created, the district court refused to throw a lifeline. And after trial, while acknowledging Phillips's obvious misconduct, the court ruled that any error arising from Phillips's tactics was harmless.
Just as Magēmā's patent sought to clean up the shipping industry's dirtiest fuel, the Federal Circuit found itself tasked with cleaning up Phillips's dirty trial tactics. The appellate court's analysis of general verdict forms and harmless error doctrine reveals how discovery gamesmanship can pollute an entire trial'and demonstrates the Federal Circuit's commitment to maintaining fairness in patent litigation. But first, one must understand the marine fuel at the core of this dispute and the regulatory earthquake that shook its century-old market, leading to Magēmā's invention.
The Sludge That Powered Globalization
We have all seen footage of quarter mile-long container ships sliding through international waters, their hulls stacked with thousands of steel containers bound for ports across the globe. Unseen is what sits deep in the vessels' engine rooms, a massive two-stroke engine the size of a four-story building churning steadily forward. These marine giants don't burn the clean diesel fuel familiar to motorists. Instead, they run on what looks and feels like liquid asphalt'a black, tarry residue left behind after refineries strip higher-grade fuels like diesel, gasoline, and jet fuel from crude oil.
This heavy marine fuel oil ("HMFO"), also known as bunker fuel, has been the fuel of maritime giants for more than a century. When crude oil enters a refinery, the high value products are drawn off through distillation, leaving behind a thick, viscous residue that refineries once considered waste. The shipping industry turned that waste into an economic advantage by designing enormous slow-speed two-stroke engines capable of burning the cheapest, and dirtiest, fuel on earth. See Magēmā, slip op. at 3.
The economics are compelling. For container ships hauling 20,000 boxes across oceans, where fuel represents 40-60% of operating costs, HMFO's price advantage is decisive. While distilled fuels like marine diesel oil ("MDO") and marine gasoil ("MGO") are cleaner and easier to handle, they cost significantly more. Although cheap, HMFO requires specialized handling'heating systems to keep it pumpable, purification equipment to remove water and contaminants, and colossal engines designed specifically for this low-quality fuel. The cost savings from HMFO justifies this complexity in vessels large enough to accommodate these cumbersome systems.
The dividing line has always been scale. Smaller vessels'ferries, offshore supply ships, naval craft'typically use MDO or MGO. But above roughly 20,000 to 30,000 deadweight tons, the economics shift decisively toward HMFO. And so HMFO became known as "the fuel of giants"'vessels so large that the cost and complexity of handling tar-like fuel is outweighed by its bargain-basement price. These economies of scale in maritime fuel selection have persisted across decades of technological improvements in ship design and propulsion.
The Regulatory Framework: ISO 8217 and MARPOL Annex VI
For decades, two international standards have defined HMFO's use, creating the invisible rulebook that governed maritime fuel worldwide.
ISO 8217:2017 sets the physical property requirements for marine fuels. Table 2 of this standard, which governs residual fuels like HMFO, specifies minimum and maximum limits for characteristics such as viscosity, density, stability, and crucially, flashpoint'the lowest temperature at which a fuel can vaporize to form an ignitable mixture. For safety reasons, ISO 8217 requires HMFO to have a flashpoint of at least 60'C (140'F). See Magēmā, slip op. at 3.
MARPOL Annex VI, incorporated into U.S. law through the Act to Prevent Pollution from Ships ("APPS") at 33 U.S.C. ' 1905-1915, sets limits on sulfur content in marine fuels. The U.S. Environmental Protection Agency promulgated regulations implementing APPS, which incorporate by reference the full text of Annex VI. See 40 C.F.R. ' 1043.100(b)(1). Before 2016, this standard allowed a generous 3.5% sulfur by weight. Fuels meeting both ISO 8217's physical properties and Annex VI's sulfur limits were considered compliant and could be sold globally as merchantable HMFO.
This regulatory framework tolerated remarkably dirty fuel. While ISO 8217 ensured minimum operational efficiency and safety standards, Annex VI's sulfur cap was so high that refineries could sell their dirtiest residue with minimal processing. The industry built its infrastructure accordingly with bunkering facilities, engine designs, and global supply chains all centered on burning this loosely regulated refinery sludge.
The 2016 Sulfur Reckoning
In October 2016, the International Maritime Organization ("IMO") announced revisions that sent shockwaves through this regulatory landscape. Beginning January 1, 2020, the sulfur cap in Annex VI was required to plummet from 3.5% to 0.5% by weight'a reduction of more than 85%. See Magēmā, slip op. at 3-4. Known as the "IMO Sulfur Cap," this single revision reshaped the entire economics of maritime fuel. And the 2016 announcement gave the industry less than four years to adapt. Shipowners were faced with two options.
The first option was switching to very low sulfur fuel oil ("VLSFO"), a higher-grade distilled fuel, to meet the new regulatory requirements. But this option comes at a high price. On average, VLSFO costs $150-200 per ton more than HMFO...
