(Author: Judy Lin, Chief Editor, LEDinside)

Nichia announced Tuesday that it had won another LED patent infringement suit against Everlight in Dusseldorf Court in Germany, and filed another four patent suits against Chinese LCD TV manufacturer TCL Multimedia Technology Holdings, LED retailers Lowe’s Hone, and LED distributors L G Sourcing and Feit Electric. Feit Electric is the most recent plaintiff to be included in the Japanese LED manufacturers list of companies where it is seeking for injunctions that prohibit the sale and distribution of infringing products, but there has not been much changes in its patent suit strategy. The company is following a trajectory similar to 2016 in its patent suit approach. LEDinside also estimates Feit Electric might cave into arriving a settlement in a similar way that it did with Cree in 2016.

In this article LEDinside addresses LED patent trends throughout the year, notably Nichia set a new trend in the industry of suing distributors and retailers of selling patent infringing products instead of LED chip manufacturers. This move influenced other manufacturers, such as Seoul Semiconductor and Cree to adopt a similar strategy. Most manufacturers sued chose settlement and cross licensing to resolve the patent disputes.

The growing trend of companies taking on legal action indicates the challenging economic environment in 2016, which made milking other companies for long overdue patent royalties a method to expand company income. Another reason noted by Roger Chu, Research Director of LEDinside is waiting for a few years, companies that win the legal disputes are able to increase compensations from court rulings. Certain rulings are based on the number of years the patent was infringed, and revenue from these patent infringed products. As the economic environment becomes more challenging, companies are seeking to protect their patents and interests.

Big LED manufacturers become more active in protecting patents and intellectual property

If the LED industry issued an award for the most law suits filed in 2016, leading Japanese manufacturer Nichia would have bagged the trophy. The LED chip manufacturer founded in 1956, holds key YAG phosphor, blue and white LED chip patents filed suits against long term Taiwanese rival Everlight, distributors such as B&Q, and TV manufacturers Vizio and TCL.

Nichia headed the trend of suing distributors, end market application manufacturers, which became increasingly common in 2016, as companies searched for a solution to severe the roots of demand for unpatented LED products. A review of Nichia plaintiffs in 2016, generates a long list as seen below. Most of the patents in question are related to its YAG patents. Nichia’s victory against Everlight appeal in August 2016 in German Federal Court of Justice was significant because it overturned a previous YAG patent invalidation ruling, the effect snowballed throughout the year with U.S. courts and German courts ruling in Nichia’s favor.

Table 1: Nichia major patent suits and settlements throughout 2016 in descending order (Organized by LEDinside)

Everlight has refuted Nichia’s claims of patent victories, and clinched a few legal victories in 2016, particularly in Taipei’s court. For the record, though, the Japanese LED manufacturer has been far more effective in courts in the later half of 2016.

Related articles for further reading

1. Everlight Refutes Nichia’s Patent Lawsuit against Mouser
2. Everlight to File Another Patent Invalidation Case against Nichia in Germany
3. Everlight Wins Taiwan White LED Patent Invalidation Lawsuit Against Nichia
4. U.S., Japan and Germany Uphold Favorable Ruling of Everlight Request to Invalidate Nichia YAG Patents
5. Everlight Rebuts Nichia YAG Patents is Invalid in Ongoing Legal Case in Beijing
6. Everlight’s Recent Patent Dispute Wins and Losses against Nichia

Before the end of 2016, Korean LED manufacturer Seoul Semiconductor issued a stern warning against 29 companies over patent infringement issues, showing a more aggressive streak in legal battles. Throughout 2016, the Korean LED manufacturer Seoul Semiconductor wrapped up a series of patent disputes against Japanese lens maker Enplas in 2016, and won most of the suits related to backlight and lens technology in U.S. and Taiwan courts. The company also filed suits against Kmart for selling products that infringed their backlight and lens proprietary technologies.  

Altogether, the most notable suits of the year came from its subsidiary Seoul Viosys which headed UVA LED suits, filing two such suits in 2016. UVA LED is a niche market with lucrative profits where many LED manufacturers are hoping to grab shares. Lumileds for instance launched its first compact UVA LED product in late 2016, and there are other LED companies still vying after this particular market, such as Lite-On and Lextar. For Seoul Semiconductor to start defending its UVA LED suits this early on is rather surprising, but the scope of impact seems relatively limited. Yet, it is a strategy worth following up throughout 2017 as more LED companies intend to release their UV LED products.

Table 2: Seoul Semiconductor and Seoul Viosys LED patent disputes in 2016 in descending order

U.S. LED manufacturer Cree settled several major patent disputes in 2016, including with Feit Electric, Harvatek, and Knightbright. Cree sued the three companies in 2015 for infringing its white LED patents, but settled all three suits for an undisclosed sum of money and signed respective patent licensing agreements with all three companies. Cree would go on to sue several U.S. LED luminaire companies over patent infringement including Maxbrite and Emson Taclight in 2016. In the turn of events, one of its clients Optolum stood up against Cree filing a patent infringement suit against the LED chip company that has eventually ventured into the bulb and luminaire industries.

Table 3: Cree LED patent disputes and settlements in 2016 in descending order

Philips expands smart lighting alliance

Another trend LEDinside observed in 2016 is growing smart LED lighting patent alliances, partnerships, and GE’s red phosphor patent licensing strategies. Philips growing smart LED lighting consortium Enabled raised concerns from some in the industry that it might barricade other smart LED component manufacturers from entering the market. The Dutch lighting giant also launched an indoor lighting positioning program Yellow Dot. In a positive light, the alliance could help boost smart lighting market penetration, Philips concept of offering luminaire manufacturers the option to upgrade luminaires by fitting in smart LED lighting modules is a brilliant idea for promoting smart lighting in general, since the product still has relatively low market shares compared to traditional lighting. However, it can be difficult for other LED component manufacturers to sell their products for smart LED lighting applications. LED driver makers will probably be hit hardest if the component is a controller device.

Related articles for further reading

• GVA Lighting Enters Philips Lighting’s EnabLED Licensing Program
• Amerlux Joins Philips Lighting’s EnabLED Licensing Program
• Philips Lighting Launches Indoor Lighting Positioning Program Yellow Dot

Philips also signed several smart home lighting partnership agreements with major consumer electronic manufacturers Xiaomi, Huawei, Google and others. The agreement with Xiaomi and Huawei indicates Philips interest in grabbing shares in the vast Chinese market with compatible residential smart lighting products. Additionally, the company continued to extend the scope of its smart lighting partnership, and Hue’s compatibility with different operation systems. Competitor, GE is taking on a similar approach by integrating Alexa into its smart lighting products indicating for large lighting companies compatibility and added product values are now the focal for smart lighting manufacturers. GE also increased the number of red KSF phosphor licensing with Samsung, Suijing Optoelectronics and Jufei Opto, which can be used to raise its income from this particularly expensive phosphor technology.

Related articles for further reading

• Philips Lighting and Xiaomi Seal Smart Home Lighting Partnership Agreement in China
• Philips Lighting Forms Smart Lighting Partnership with Huawei
• Philips Hue Becomes Google Home Debut Partner

In the patent sector, leading LED manufacturer brands are suing smaller manufacturers, retailers, distributors of competitors as seen by Nichia’s actions against Everlight. Seoul Semiconductor and Cree have both used a similar approach against smaller lighting product manufacturers to stem demand for unpatented products, or to serve as a warning to the industry to prevent similar practices in the future. Another trend is companies expanding their patent alliances, or their network to boost income or prevent other competitors from taking on larger market shares. Seoul Semiconductor and Cree were both able to settle most of their patent suits against competitors, indicating an expanding patent network among the top five manufacturers. Philips is still more focused on expanding its smart lighting alliance, while GE has sealed more profitable red KSF phosphor powder patent licensing agreements throughout the year.