Contract analysis

From: Alan Ngo <ango@calderwoodharkness.com> To: Rebecca Tanaka <rtanaka@optiwavesemi.com> Cc: Marcus Delgado <mdelgado@calderwoodharkness.com> Date: Mon, 06 Jan 2025 09:14:00 -0000 Subject: Optiwave v. Lumicore — Q4 2024 Litigation Status Update

Attachment: Case Team Status Report — Q4 2024 (case-team-status-report-q4-2024.docx)

Happy New Year to you both. I hope the holidays treated you well.

I am writing to provide our quarterly status update on *Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc.*, Case No. 2:24-cv-00319-JRG, pending in the United States District Court for the Eastern District of Texas, marshall Division, before Judge James R. Gilstrap. The case continues to progress well and remains on track for the scheduled February 2, 2026 jury trial (estimated 7–10 days).

I have attached our detailed Q4 2024 Case Team Status Report for your review, which includes granular discussion of each workstream, the updated risk matrix, and supporting exhibits. What follows below is a summary of the key developments organized by topic area.

Q4 2024 was a productive and consequential quarter. We achieved several key procedural milestones, including: (a) completion of our opening and reply claim construction briefing; (b) completion of four critical fact depositions; and (c) filing of multiple discovery motions. All deadlines under the Scheduling Order issued August 12, 2024 have been met to date, and we remain in full compliance with all Court-imposed ob

Claim construction briefing is now substantially complete, and we are turning our attention to hearing preparation.

- **November 15, 2024** — OWS filed its Opening Claim Construction Brief (50 pages), addressing all 12 remaining disputed terms out of the original 14 (2 terms were resolved by agreement). The brief was supported by the Declaration of Dr. Caroline Ashford (Professor of Electrical Engineering & Photonics, Northfield Institute of Technology) and the Declaration of Dr. Jian-Wei Huang (OWS CTO and named inventor), along

**Key Disputed Terms and Their Significance:**

I want to flag four terms that will be most consequential to the case:

- **"Waveguide multiplexer" ('847 Patent):** OWS proposes a broad construction — "an optical device that combines multiple optical signals of different wavelengths onto a single waveguide." Lumicore seeks to limit the term to arrayed waveguide gratings with slab couplers. If the Court were to adopt Lumicore's narrow construction, it could potentially affect the infringement analysis for the LumiLink 400G-ZR+ and Lumi

- **"Integrated on a silicon substrate" ('193 Patent):** Lumicore attempts to exclude hybrid bonding and heterogeneous integration from this term, which could affect coverage of the LumiEdge 1600G-LR. This will be one of the most closely contested terms.

- **"Micro-channel heat sink" ('562 Patent):** Lumicore proposes a narrow hydraulic-diameter range (10 µm to 200 µm) that would effectively engineer a design-around. OWS proposes the broader "less than 1 mm" construction, which is well-supported by the specification.

- **"Polarization-diverse grating coupler" ('015 Patent):** Lumicore's construction would require a specific two-dimensional grating coupler with a polarization-splitting element — narrower than the patent warrants.

Claim construction tutorial submissions are due in **February 2025**, and the **Markman hearing is scheduled for March 14, 2025**. Wendy Schultz is leading the preparation of the tutorial presentation and Markman hearing slides, and assignments have been distributed across the team.

I am cautiously optimistic that our constructions are well-supported by the intrinsic record, but I want to be candid that certain terms — particularly "integrated on a silicon substrate" — will be closely contested, and the outcome is not a certainty.

Fact discovery remains open and closes **May 1, 2025**. We made significant progress in Q4.

- **Dr. Jian-Wei Huang (OWS CTO) — November 5, 2024:** This went well. Dr. Huang presented clearly and credibly on prosecution history, intended claim scope, and the state of the art. He was well-prepared and handled cross-examination effectively.

- **Dr. Sandra Michaud (Lumicore CTO) — November 19, 2024:** This was one of the most important depositions in the case to date. Key testimony obtained: Michaud admitted reviewing OWS published application No. 2018/0123456 (corresponding to the '193 Patent) during the LumiLink 400G-ZR+ design phase. She denied knowledge of the *issued* patents until receipt of FairPoint Licensing Group's January 15, 2023 letter. Crit

- **Raymond Bautista (Lumicore General Counsel) — December 3, 2024:** This was a limited deposition due to extensive privilege assertions. Bautista confirmed receipt of FairPoint's January 15, 2023 licensing letter and testified he forwarded it to outside counsel (Hawthorne Vega & Cruz) within three business days. He refused to answer questions about the substance of any opinion-of-counsel letters Lumicore obtained,

- **Angela Reeves (FairPoint Licensing Group) — December 10, 2024:** Reeves confirmed FairPoint sent licensing letters on January 15, 2023 (identifying the '847, '193, and '562 Patents) and May 15, 2023 (adding the '015 Patent and expanding the accused products to include the 800G-DR8). She described an April 20, 2023 in-person meeting in Austin, TX where Lumicore's representatives showed, in her words, "no interest

**Deposition Completed in Early January 2025:**

- **Kevin Ng (Benchmark Semiconductor Analysis, LLC) — January 7, 2025:** Ng confirmed his teardown methodology, chain of custody for all accused product samples (LumiLink 400G-ZR+, LumiLink 800G-DR8, LumiEdge 1600G-LR), and identified specific structures corresponding to each asserted claim limitation across all four patents. This deposition locks in the foundation for our infringement case at trial.

Approximately 12 fact depositions remain to be taken before the May 1, 2025 close, plus all expert depositions. We will circulate a prioritization list shortly.

Of particular importance: a third-party subpoena was issued on **January 22, 2025** to **Melissa Chen**, a former Lumicore engineer now at Veridian Photonics, Inc. Her anticipated testimony is critical to the willful infringement case — she is expected to testify that Lumicore's LumiLink 400G-ZR+ design team accessed and reviewed OWS's published patent applications during the product design phase in 2021–2022.

Additionally, a third-party subpoena for Solara Optics records (directed to Gregory Falk as records custodian) was served in September 2024. Records relating to the '562 Patent have been received and are under review.

- **OWS** has produced approximately 182,000 documents (~1.4 million pages). - **Lumicore** has produced approximately 147,000 documents (~980,000 pages). - OWS's Second Set of Requests for Production (30 supplemental RFPs) was served November 4, 2024, targeting source-code repositories, photonic-IC mask files, and fabrication run data that were missing from Lumicore's initial production. - The ESI protocol (agreed A

- **Motion to Compel Production of Opinion-of-Counsel Letters (filed October 21, 2024):** This motion, supported by a memorandum and Wendy Schultz's declaration, argues that Lumicore waived attorney-client privilege by referencing "competent legal opinions" in its July 10, 2023 declination letter and by asserting advice-of-counsel as part of its willful infringement defense. Our reply was filed November 18, 2024. The

- **Lumicore's Motion for Protective Order re: Financial Data:** We opposed on October 7, 2024. The Court granted the motion in part, establishing a three-tier confidentiality framework (Confidential / Highly Confidential – Attorneys' Eyes Only / Highly Confidential – Source Code). This framework is working adequately, and Lumicore's product-level revenue, cost, and margin data have now been produced under AEO design

We also have an ongoing meet-and-confer with Lumicore's counsel regarding potential deficiencies in Lumicore's 30(b)(6) designee preparation, particularly on Topic 14 (non-infringing alternatives). We have a draft discovery dispute letter to the Court held in reserve pending the outcome of a supplemental deposition.

Our P.R. 3-1 Infringement Contentions were served on time on September 16, 2024, with detailed claim charts for all four patents. The contentions cover literal infringement of all asserted claims across all three accused product lines (LumiLink 400G-ZR+, LumiLink 800G-DR8, LumiEdge 1600G-LR). We also asserted doctrine of equivalents contentions for Claims 3 and 7 of the '193 Patent (coherent detection module limitati

Supplemental infringement contentions are being drafted and are anticipated for April 2025, incorporating newly obtained Lumicore design files including RTL schematics and photonic-IC layout files designated Highly Confidential – Source Code.

**7. INVALIDITY CONTENTIONS — INITIAL ASSESSMENT**

Lumicore served its P.R. 3-3 Invalidity Contentions on October 14, 2024, citing 23 prior-art references in total. We completed internal analyses for all four patents in November 2024. Key observations:

- **'847 Patent:** Lumicore's strongest invalidity argument is Takahashi et al. (*IEEE Photonics Technology Letters*, March 2014), asserted as anticipation. Our initial analysis identifies distinguishing limitations that Takahashi does not disclose, but this will require careful expert treatment.

- **'562 Patent:** Faces arguments based on Bergmann (U.S. Patent No. 8,412,007) and Dr. Li Wei's OFC 2013 conference paper. Priority date and swearing-behind evidence are being developed.

- **'015 Patent:** Faces a prior-conception defense based on Lumicore's own internal design documents dated 2016–2017. We view this as weak due to corroboration deficiencies and credibility concerns, and it is a potential target for partial summary judgment.

- **Secondary Considerations of Non-Obviousness:** Our secondary considerations evidence is strong: commercial success of OWS products practicing the asserted patents (~$310 million of OWS's $487.3 million FY 2023 revenue is attributable to practicing products); evidence of long-felt need; failure of others (3 competitors attempted similar designs); and evidence of copying by Lumicore.

- **IPR Watch:** No inter partes review petitions have been filed by Lumicore to date. The one-year deadline under 35 U.S.C. § 315(b) runs to approximately May 1, 2025 (one year from service of the complaint). We are monitoring this closely and have a contingency brief drafted opposing any motion to stay.

The willful infringement case has been materially strengthened by Q4 developments. The evidentiary pillars now include:

- FairPoint's licensing letters (January 15, 2023 and May 15, 2023) establishing actual notice; - Lumicore's continued launch of the LumiEdge 1600G-LR in Q4 2023 *after* receiving notice; - Bautista's deposition admission that no design-around analysis was commissioned before the LumiEdge launch; - Michaud's admission that OWS published applications were reviewed during the design phase; - Anticipated testimony from

Enhanced damages under 35 U.S.C. § 284 remain a significant component of the damages case. Post-notice lost profits are estimated at approximately $109.2 million.

Our damages theories remain three-pronged:

- **Lost Profits (Panduit):** ~$128.9 million (based on projected accused-product revenue of $714.6 million through Q4 2025, 38.2% market-share displacement, and OWS's 47.3% gross margin on competing products). - **Reasonable Royalty (Georgia-Pacific):** ~$37.5 million on non-lost-profit sales at a proposed 8.5% royalty rate (supported by five comparable licenses identified, ranging from 6.5% to 10.2%). - **Enhanced

The total damages demand remains approximately **$210 million** (blended/rounded per the complaint).

Dr. Lawrence Keating of Meridian Economic Consulting Group is developing his damages model; expert reports are due June 15, 2025. Lumicore's product-level financial data (now produced under AEO) shows gross margins ranging from 52.1% (LumiLink 400G-ZR+) to 58.3% (LumiEdge 1600G-LR), which will inform the model.

We also have a price erosion analysis in progress: the average selling price of 400G-ZR transceivers declined approximately 18.7% from Q3 2022 to Q4 2023, attributable in part to Lumicore's market entry. This supports incremental damages beyond a lost-unit-volume analysis.

A damages update memorandum incorporating actual FY 2024 Lumicore revenue data (when produced) is targeted for February 2025.

| Category | Amount | |---|---| | C&H fees incurred through January 2025 | ~$3,201,600 | | Costs incurred through January 2025 | ~$198,400 | | **Total billed to date** | **~$3,400,000** | | Approved litigation budget (per Ridgeline Capital / OWS Board Resolution No. 2024-07) | $18,500,000 | | **Remaining budget** | **~$15,100,000** |

The burn rate is in line with our projections. The claim construction phase allocation ($2.1 million) is tracking within budget.

Expert fees are budgeted at approximately $2.8 million total (Dr. Ashford — $1.1M; Dr. Keating — $950K; Gregory Falk — $375K; Benchmark — $375K). Expert work will ramp significantly beginning Q1/Q2 2025 as expert reports are due June 15, 2025.

The blended cap rate of $925/hour negotiated with Ridgeline is being honored, and all invoices have been reconciled to the cap. The success fee component (5% of net recovery above $150 million) remains in effect per the engagement letter.

For your calendars, the critical path forward:

- **February 2025** — Claim construction tutorial submissions due - **March 14, 2025** — **Markman hearing** before Judge Gilstrap (this is the next critical event; the team is preparing 60+ hearing slides and a preparation memorandum for my oral argument) - **May 1, 2025** — Fact discovery closes (~12 remaining fact depositions, including Melissa Chen) - **~May 1, 2025** — One-year IPR deadline (monitoring for any p

The detailed risk assessment is included in the attached Q4 2024 status report. At a high level: OWS's case is in strong posture. The infringement evidence from Benchmark's teardowns, Lumicore's own design files, and deposition testimony is compelling. The willful infringement case has been materially strengthened by the Q4 depositions. Claim construction remains the most significant near-term variable. Invalidity de

We recommend continued aggressive prosecution of the case. There has been no settlement overture from Lumicore to date.

Rebecca and Franklin, I would welcome the opportunity to schedule a call at your convenience to walk through this report in greater detail or address any questions. Please let me or Marcus know what works for your schedules, and we will coordinate.

The full case team — Marcus Delgado, Wendy Schultz, Omar Siddiqui, and I — along with our local counsel Jim Callahan at Whitmore & Callahan LLP remain fully engaged and available.

Thank you for your continued confidence in the team.

**Alan Ngo** Partner, intellectual Property Litigation Calderwood & Harkness LLP 350 South Grand Avenue, 48th Floor Los Angeles, CA 90071 T: (213) 555-8214 E: ango@calderwoodharkness.com