Cree’s patent lawsuit against Feit Electronics and Unity Opto has sounded a warning bell for Chinese LED industry, according to a ledsw.com report.

Cree has filed a complaint to the U.S. International Trade Commission (ITC) requesting for an import ban of Feit Electric, Unity Opto and other LED manufacturer products that have infringed Cree patents and had “false and misleading advertising claims”, such as meeting Energy Star labels requirements. ITC has opened investigation into the matter on February 12 to decide whether Feit companies in U.S., Xiamen, Unity Opto and its distributor Unity Microelectronics had infringed patents. The investigation is titled “Certain Light-Emitting Diode Products and Components Thereof, ITC Inv. No. 337-TA-747.” 

Eight patents are involved in the lawsuit and the scope includes epiwafer, LED package and comprehensively covers the entire LED supply chain, said Yafei Zhang, an intellectual property engineer at LPA, China’s LED patent association.

Other Chinese manufacturers are not completely safe, though.

“Chinese companies that have not been sued by Cree are not exactly unproblematic,” said Yinsheng Sun, a lawyer and member of LPA’s legal committee. “It just means these Chinese manufacturers are not big enough to threaten Cree’s profits. Most of the LED technology involved in the recent lawsuit are upstream LED technology, which are legally protected in the U.S. Moreover, Cree has also acquired patent protection in China, which is something we are very worried about. If Cree intentionally forms an alliance with other top LED lighting giants, such as Philips, Osram and others, they could use their patent pool or patent alliance to prevent Chinese companies from manufacturing and selling the above mentioned patent-protected products in China. The Chinese LED industry could wind up in a situation similar to the DVD industry, and never recover from the slump. Cross-licensing patent agreements between the top five global LED manufacturers also remains opaque. You might be able to prevent Cree from suing your company, but not other LED vendors.”

Patent pools and alliances are the result of very normal business competition, but the above reasoning is not an exaggerated claim, said Sun. Few Chinese LED manufacturers could escape unscathed, if international LED lighting giants started to tighten their grips on patent networks.

Is Cree testing the waters in this recent patent lawsuit? Or is this actually the prelude to international lighting manufacturers strategy of eventually netting in LED manufacturers? Feit’s Xiamen office, Taiwanese LED manufacturer Unity Opto, and Unity Microelectronics all have ties with China. Could this lawsuit be aimed towards China? And what will the impact be on Chinese LED manufacturers?

LPA has spoken with Guangdong Intellectual Property Office (GDIPO) and gained further background information on the case since ITC opened investigations, said the associations’ deputy secretary Wang Hua. LPA has evaluated the impact from the investigation and will try to minimize the damage and impact it will have on China’s LED industry. The association will be working along with GDIPO and Shenzhen University’s College of Optoelectric Engineering. A meeting will be held at the college on March 20, to discuss the response strategy.

Manufacturers involved in the case have not commented on the case.