Contract analysis

I. INTRODUCTION AND PURPOSE A. Objective of This Memorandum This memorandum constructs a detailed narrative of the hypothetical negotiation that would have taken place between Optiwave Semiconductor Corp. ("OWS") and Lumicore Technologies, Inc. ("Lumicore"), consistent with the framework established in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), to arrive at a reasonable royalty ra

1. Willing Licensor: Optiwave Semiconductor Corp. (OWS) Optiwave Semiconductor Corp. ("OWS") is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS is a fabless semiconductor company specializing in the design, development, and sale of silicon photonics chipsets and transceiver modules for high-speed data-center interconnects. As of its most recent fi

2. Willing Licensee: Lumicore Technologies, Inc. (Lumicore) Lumicore Technologies, Inc. ("Lumicore") is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore is a fast-growing entrant in the silicon-photonics transceiver market, targeting hyperscale data-center operators and telecom service providers. Lumicore completed its initial public offering on the Nasdaq exc

II. BACKGROUND INFORMATION AVAILABLE TO BOTH PARTIES AT THE HYPOTHETICAL NEGOTIATION DATE The hypothetical negotiation framework assumes that both parties are "reasonably and voluntarily trying to reach an agreement" and possess all relevant information bearing on the value of the license. Georgia-Pacific, 318 F. Supp. at 1120. This section compiles the universe of factual information that both OWS and Lumicore would

1. The '847 Patent (U.S. Patent No. 10,234,847) Title: "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss" Filing Date: September 14, 2016 Issue Date: March 19, 2019 Original Assignee: Optiwave Semiconductor Corp. The '847 Patent claims a multi-channel waveguide multiplexer structure fabricated on a silicon photonic integrated circuit (PIC) that achieves significantly reduced insertion loss

2. The '193 Patent (U.S. Patent No. 10,891,193) Title: "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate" Filing Date: April 7, 2017 Issue Date: January 12, 2021 Original Assignee: Optiwave Semiconductor Corp. The '193 Patent claims a coherent optical transceiver architecture in which both the transmitter and receiver optical paths — including modulator, photodetector, local oscillator, and

3. The '562 Patent (U.S. Patent No. 9,678,562) Title: "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks" Filing Date: November 22, 2014 Issue Date: June 13, 2017 Original Assignee: Solara Optics, Inc. Acquired by OWS: Asset Purchase Agreement dated June 15, 2018, for $34.5 million (among a portfolio of 12 patents) The '562 Patent claims a method for managing therma

4. The '015 Patent (U.S. Patent No. 11,402,015) Title: "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers" Filing Date: August 30, 2019 Issue Date: August 2, 2022 Original Assignee: Optiwave Semiconductor Corp. Priority: Claims priority to Provisional Application No. 62/499,117, filed April 7, 2017 The '015 Patent claims a polarization-diverse grating coupler structure that efficiently couples bo

5. Patent Prosecution and Family Relationships All four asserted patents were prosecuted by Cascade IP Advisors, LLC, located at 1550 Crystal Drive, Suite 600, Arlington, Virginia 22202. The lead prosecution attorney was Dr. Martin Chu. The '562 Patent and the '847 Patent are in the same patent family (continuation relationship), sharing common specification elements and a related priority date chain. The '193 Patent

1. OWS License Agreements (Licensor-Side Comparables) Three existing OWS license agreements are relevant as comparable transactions for purposes of the Georgia-Pacific analysis: OWS–Terralink Semiconductor License (2020): Effective Date: June 2020. Terralink Semiconductor, Inc. ("Terralink") is a mid-size semiconductor company that manufactures optical components for telecom and enterprise networking applications. Te

2. Industry-Comparable License Agreements Two additional license agreements from the silicon-photonics industry are available as comparables: Stratos Photonics v. ArcLight Systems Settlement (2019): This agreement was reached in settlement of patent infringement litigation between Stratos Photonics, Inc. and ArcLight Systems, Inc. concerning silicon-photonics transceiver patents. The settlement included a running roy

3. Summary of Comparable Royalty Rates The overall range of comparable royalty rates in silicon-photonics industry transactions, based on the five comparable agreements identified above and supplemented by industry survey data (discussed in Appendix D), is 4.0% to 12.5%, with a median of approximately 8.0% and a mean of approximately 8.3%. OWS's own license agreements yield a weighted average royalty rate of approxim

III. GEORGIA-PACIFIC FACTOR-BY-FACTOR ANALYSIS This section analyzes each of the fifteen Georgia-Pacific factors as applied to the hypothetical negotiation between OWS and Lumicore. For each factor, the analysis identifies the relevant evidence, assesses the directional impact on the royalty rate (upward, neutral, or downward), and explains how the factor would influence the parties' positions in the negotiation. The