Over the last two weeks, two Taiwanese LED manufacturers Harvatek and Knightbright decided to settle patent disputes with Cree, ending a nearly two year lawsuit. Both Taiwanese vendors agreed to sign patent royalties for an undisclosed sum. Few details have been released about the conditions of the settlements. It is becoming clearly evident that Cree’s strategy is centered on cashing in from its LED patent portfolio, said a LEDinside analyst, who chose to remain anonymous.

“Many white LED patents in the industry are about to expire,” said the analyst. “I believe once Nichia’s white LED patent expires, patent barriers established by the top five LED manufacturers in the industry will weaken.”

Some manufacturers are considering to sell their patents, or sign patent license agreements with other manufacturers, he added. “It will be increasingly difficult to block new competitors to enter the market with LED patent barriers, so cashing in on the patents or signing patent royalty agreements has become a viable strategy.”

Harvatek’s decision to sign a confidential settlement with Cree is a surprising development, considering it filed a countersuit in 2014. On Sept. 15, 2014, Cree sued Harvatek and Knightbright for infringing six white LED patents in Western District of Wisconsin. Three of the patents involved were related to white LED patents for lighting and display, two were related to encapsulants, and one was Apparatus and method for use in mounting electronic elements. Harvatek filed a countersuit in response in U.S. courts on December 2014, but eventually sealed its settlement.

The two Taiwanese LED companies involved in the lawsuit cases have signed royalty bearings that will allow them to use Cree’s LED patents globally, as part of the their settlement condition. In either case, the recent developments affirm Cree’s strategy is shifting towards licensing LED patents and collecting patent royalty fees to boost its revenue.

(Author: Judy Lin, Chief Editor, LEDinside)