Contract analysis

I. INTRODUCTION Defendant Lumicore Technologies, Inc. ("Lumicore") is anticipated to move for partial summary judgment seeking to exclude the damages analysis of Plaintiff Optiwave Semiconductor Corp.'s ("OWS") expert, Dr. Lawrence Keating, to the extent that Dr. Keating applies a royalty rate to the entire price of Lumicore's accused transceiver modules. Lumicore's anticipated argument rests on a fundamental misappl

II. STATEMENT OF FACTS A. Optiwave Semiconductor Corp. and Its Patented Technologies Optiwave Semiconductor Corp. is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. Ex. 3 (Falk Decl.) ¶ 5. Founded in 2011, OWS has grown to approximately 1,250 employees and is the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data

III. LEGAL STANDARD A. Summary Judgment Standard Under Federal Rule of Civil Procedure 56 Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liber

IV. ARGUMENT A. The Transceiver Module Is the Smallest Salable Patent-Practicing Unit

1. The Module Is a Single Integrated Product, Not an Assembly of Separable Sub-Components. The fundamental predicate of Lumicore's anticipated motion — that Dr. Keating should have applied his royalty rate to some sub-component of the transceiver module rather than to the module itself — fails at the threshold because no such sub-component exists as a separately salable product. Each accused transceiver module is sol

2. Lumicore's Own Sales and Accounting Practices Confirm the Module Is the Relevant Unit. Lumicore's own business records confirm that the transceiver module is the unit of commerce. Lumicore sells transceiver modules as complete, finished products. Ex. 8 (Lumicore Financial Data Excerpts). Its revenue reporting, pricing, cost-of-goods-sold accounting, and margin analysis are all conducted at the module level. Id. Lu

3. There Is No Smaller Salable Unit to Which Apportionment Could Be Applied. If the SSPPU is the transceiver module — and the undisputed evidence shows that it is — then the EMVR limitation is inapplicable. The EMVR concern arises when a patentee seeks to apply a royalty to a product that is larger than the SSPPU, thereby capturing value attributable to unpatented features. See LaserDynamics, 694 F.3d at 67. That con

1. The Patented Technologies Define the Core Performance Characteristics. The four asserted patents, taken individually and collectively, cover the fundamental optoelectronic capabilities that make the accused transceiver modules commercially valuable. The '847 Patent (waveguide multiplexer). This patent covers a multi-channel silicon photonic waveguide multiplexer with low insertion loss. Ex. 2 (Ashford Decl.) ¶¶ 13

2. Lumicore's Marketing Materials Confirm the Patented Features Drive Demand. If there were any doubt that the patented features drive customer demand, Lumicore's own marketing materials resolve it. Lumicore does not bury the capabilities enabled by OWS's patents in appendices or technical footnotes. Instead, Lumicore places them front and center in its advertising, using them as the primary competitive differentiato

3. Customer Purchasing Decisions Are Driven by the Patented Features. Beyond Lumicore's self-serving marketing representations, the objective evidence of customer purchasing behavior confirms that the patented features are the basis for demand. Gregory Falk's competitive analysis identifies seven major hyperscale customers that purchase transceiver modules from both OWS and Lumicore, and confirms that OWS and Lumicor

4. Lumicore's CTO Testimony Confirms the Centrality of the Patented Features. Lumicore's own Chief Technology Officer has effectively conceded that the patented features are central to the accused products' design and commercial viability. At her deposition on November 19, 2024, Dr. Sandra Michaud testified that the LumiLink 400G-ZR+ was "designed around the need for a low-loss silicon waveguide multiplexer and a the

5. Industry Licensing Practice Supports a Module-Level Royalty Base. The EMVR analysis does not occur in an economic vacuum. The way the industry actually licenses silicon-photonics patent rights provides powerful evidence of the appropriate royalty base. Here, industry practice overwhelmingly confirms that the transceiver module is the economically relevant unit for patent licensing purposes. All five comparable lic

1. Lumicore Cannot Manufacture a Sub-Module Royalty Base That Does Not Exist in Commerce. Lumicore is expected to argue — through its damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP, Houston, Texas — that the royalty should be applied to a disaggregated "value" of the specific patented sub-components rather than to the module price. This approach fundamentally misapplies the SSPPU doctrine and c

2. Lumicore's Expert's Methodology Is the Subject of a Separate Daubert Challenge. OWS has separately prepared a motion pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), challenging the reliability and admissibility of Dr. Volkov's damages opinions. Without previewing the full scope of that motion, OWS notes that its Daubert challenge targets, among other

3. Dr. Keating's Methodology Is Reliable and Consistent with Federal Circuit Precedent. Dr. Keating's damages methodology is rigorous, well-supported, and fully consistent with Federal Circuit precedent. His approach proceeds in three analytically distinct steps, each grounded in established law: First, Dr. Keating identifies the transceiver module as the SSPPU based on the undisputed facts that (a) the patented feat