(Author: Judy Lin, Chief Editor, LEDinside)

The intensity of patent wars heated up in the last two years, especially among leading manufacturers in the industry such as Cree, who has filed suits against Asian rivals from 2015-2016. In its latest case against Taiwanese LED manufacturer Unity Opto and its American client Feit Electric, the two defendants might be willing to settle the case with Cree.

On Tuesday Cree announced it received a favorable decision from the U.S. International Trade Commission (ITC) in its investigation of Unity Opto and its client Feit Electric sell of products that allegedly infringed Cree’s patents.

The ITC findings found Unity Opto and Feit Electric had infringed four patents, which can be seen in the chart below:

(Source: USTPO, Table organized by LEDinside)

The ITC also validated Cree’s allegations that Unity Opto and Feit Electric had falsely advertised LED bulbs with ENERGY STAR ratings, when in fact the products failed to meet the energy efficiency standards.

The patent dispute stretches back to Feb. 12, 2015, when Cree filed a complaint to ITC alleging Unity Opto and Feit Electric violated section 337 of the Tariff Act of 1930 for importing and selling certain LED products and components that had infringed Cree’s patents. The complaint also alleged false advertising of certain products under section 43 (a) of the Lanham Act, 15 USC § 1225(a).

Cree requested in its complaint for the ban of the sales of Unity Opto and Feit Electric products in U.S.

So how will the recent ITC decision impact LED manufacturers in the industry?

“Considering the patent dispute has been in process for nearly one year, Unity Opto clients were already aware of potential implications, which would have been reflected in the client dynamic fairly early”, said a LEDinside analyst. “It is highly likely Unity Opto and will choose to settle the suit with Cree and choose to pay its way out.”

Preceding patent infringement lawsuits Cree filed against Taiwanese LED manufacturers Knightbright and Harvatek ended with the companies choosing to settle. Earlier this year, Knightbright and Harvatek paid Cree undisclosed sums in patent royalties, and signed patent licensing agreements. With these companies setting an example, it is highly probable Unity Opto would follow the same route.

On a more optimistic note, since this is only ITC’s initial decision, there could be changes in its final determination, which is to be announced by Nov. 29, 2016.

Cree has been more aggressive in its patent deployment strategies from 2014-2015, which resembles “turf wars”, said another LEDinside analyst that declined to be named.

“Basically, Cree is trying to block competition in U.S. by reducing competitors’ market share there,” he said. “Its recent strategy will also deter other LED manufacturers from entering the U.S. market.”

With LED market conditions becoming increasingly challenging in the last two years, Cree is focusing its attention on protecting its patents and deployed various patent suits to keep competitors in check. If the ITC final ruling results in the ban and sale of certain Unity Opto products in U.S. it would reduce the Taiwanese company’s market share there, but would not completely destroy its market presence. It is likely Unity Opto will extend an olive branch in the form of costly patent licensing agreements to reach a settlement with Cree.