Contract analysis

Section 1.1 — Introduction of Optiwave Semiconductor Corp. Good morning, ladies and gentlemen. My name is Alan Ngo. I'm a partner at the law firm Calderwood & Harkness, and I have the privilege of representing Optiwave Semiconductor Corp. in this case. Before I begin, I'd like to introduce you to some of the people sitting at our counsel table. You will see them here every day of this trial. First, Rebecca Tanaka, wh

Section 1.2 — Who Is Optiwave Semiconductor? Optiwave Semiconductor Corp. — we'll call it "OWS" throughout this trial — was founded in 2011 in Santa Clara, California. It is a Delaware corporation, headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS is what the semiconductor industry calls a "fabless" company. That means OWS designs and engineers its own semiconductor chips

Section 1.3 — The Technology: Why Silicon Photonics Matters Let me take a moment to explain why the technology at the center of this case matters — not just to OWS and Lumicore, but to all of us. Think about every email you've ever sent. Every video you've ever streamed. Every photo you've uploaded to the cloud. Every Severin Industries search, every Calderon Software call, every bank transaction processed online. Al

Section 1.4 — The Four Patents at Issue Ladies and gentlemen, this case involves four United States utility patents. These are the specific inventions that OWS developed, that the United States Patent and Trademark Office examined and issued, and that Lumicore Technologies infringes. Let me introduce each one to you briefly. The '847 Patent — U.S. Patent No. 10,234,847. The first patent is U.S. Patent No. 10,234,847

Section 1.5 — Years of R&D Investment Ladies and gentlemen, the four patents I've just described did not appear out of thin air. They are the product of years — in some cases, more than a decade — of sustained research and development investment by OWS and its engineers. You will hear testimony from Dr. Nikolai Petrov, OWS's Vice President of Engineering for the Photonics Division. Dr. Petrov will describe the engine

Section 2.1 — Who Is Lumicore Technologies? Now let me tell you about the defendant in this case, Lumicore Technologies, Inc. Lumicore is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. It was founded in 2015 and has grown rapidly. As of the most recent public filings, Lumicore has approximately 870 employees. Lumicore's CEO is Thomas Kessler — he goes by "Tom." Its C

Section 2.2 — The Accused Products Let me now tell you about the specific Lumicore products that infringe OWS's patents. There are three of them, and they are at the very core of Lumicore's business. The first accused product is the LumiLink 400G-ZR+. Lumicore launched this product in the third quarter of 2022. In fiscal year 2023, this product generated $94.8 million in revenue for Lumicore. OWS contends that the Lu

Section 2.3 — Evidence of Copying So how do we know that Lumicore copied OWS's patented technology? The evidence will come from multiple independent sources. First, you will hear from Melissa Chen. Ms. Chen is a former Lumicore engineer who worked on the LumiLink 400G-ZR+ design team from 2020 to 2024. She has since left Lumicore and is now employed at Veridian Photonics, Inc. Ms. Chen is expected to testify — either

Section 2.4 — Lumicore Knew About OWS's Patents But Lumicore didn't just stumble into copying OWS's technology. They knew about these patents — and they did it anyway. That fact — that Lumicore knew — is what makes this case about more than mere infringement. It is what makes this case about willful infringement. And it is what entitles OWS to enhanced damages under the law. Let me walk you through the timeline. ACT

Section 3.1 — The Licensing Outreach The story of how OWS discovered Lumicore's infringement begins in October 2022. OWS's internal engineering team, led by Dr. Nikolai Petrov, Vice President of Engineering for the Photonics Division, identified what they believed to be potential infringement by the LumiLink 400G-ZR+ product. Dr. Petrov referred the matter to Rebecca Tanaka, OWS's General Counsel. Ms. Tanaka and her

Section 3.2 — Continued Infringement After Notice So let me sum up where we stand in the timeline. By mid-2023, Lumicore had: • Received two detailed licensing and notice letters identifying all four patents; • Attended an in-person licensing meeting; • Formally declined to take a license; and • Claimed to have legal opinions supporting its position — but refused to share them. What did Lumicore do next? Did it stop

Section 3.3 — Willful Infringement Under the law, willful infringement means more than just infringing someone's patent. It means the infringer knew about the patent, knew that its conduct was infringing — or was reckless about that risk — and continued to infringe anyway. Willful infringement is a finding that the jury will be asked to make, and it has significant consequences: it can result in enhanced damages, up

1. FairPoint's January 15, 2023 letter put Lumicore on actual, written notice of the '847, '193, and '562 Patents — complete with claim charts identifying the specific claims and the specific accused product structures believed to infringe.

2. The May 15, 2023 supplemental letter added the '015 Patent and expanded the list of accused products.

3. Lumicore continued to sell the existing accused products without interruption after receiving both letters.

4. Lumicore launched a brand-new infringing product — the LumiEdge 1600G-LR — after receiving both letters and after declining to take a license.

5. Lumicore has refused to produce the "competent legal opinions" referenced in its July 10, 2023 declination letter, raising the inference that those opinions do not support Lumicore's position.

6. Melissa Chen's testimony will establish that Lumicore's engineering team reviewed OWS's published patent applications during the LumiLink 400G-ZR+ design phase — meaning Lumicore was aware of OWS's technology before the first accused product even launched.

7. Dr. Sandra Michaud, Lumicore's CTO, admitted under oath that she personally reviewed OWS's published patent application during the design phase. This is not a close question. Lumicore knew. Lumicore copied. Lumicore refused to stop. The jury will be instructed that a finding of willful infringement can result in enhanced damages — up to three times the compensatory amount. OWS will ask for that enhancement, becaus

Section 4.1 — Setting the Stage for the Technical Evidence Now let me take a few minutes to explain the technology at issue in this case. This is a patent case, and patents are about specific inventions — specific solutions to specific engineering problems. I want to show you what OWS invented, and how Lumicore took it. I want to assure you of something at the outset: you do not need to be engineers to understand thi

Section 4.2 — Waveguide Multiplexing (The '847 Patent) The first technology is covered by the '847 Patent — the waveguide multiplexer. Remember the highway analogy? Multiple lanes of traffic, each carrying different data, merging into a single tunnel without anyone slowing down. That is what a waveguide multiplexer does, but with light. More specifically, the '847 Patent covers an optical device that combines multipl

Section 4.3 — Coherent Optical Transceiver (The '193 Patent) The second technology is covered by the '193 Patent — the coherent optical transceiver. Remember the radio-station analogy? Building an entire radio station — the transmitter and the receiver — on a chip the size of a fingernail. That is what the '193 Patent achieves, but for optical communications. The '193 Patent covers a complete coherent optical transce

Section 4.4 — Thermal Management (The '562 Patent) The third technology is covered by the '562 Patent — the thermal management method. Remember the miniature plumbing analogy? Tiny channels etched directly into the silicon chip, through which coolant flows to carry heat away. That is the invention of the '562 Patent. When photonic integrated circuits operate at high data rates, they generate significant heat. Heat is

Section 4.5 — Polarization-Diverse Grating Coupler (The '015 Patent) The fourth and final technology is covered by the '015 Patent — the polarization-diverse grating coupler. Remember the antenna analogy? An antenna that catches signals no matter which direction the waves are vibrating. That is the '015 Patent invention. In real-world optical fiber communications, the polarization state of a light signal — the direct

Section 4.6 — The Expert Witnesses During this trial, you will hear from several expert witnesses who will help you understand the evidence. Let me preview the three key experts on the OWS side. Dr. Caroline Ashford is a Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology in Evanston, Illinois. She is one of the country's foremost academic experts on silicon-photonic integrated

Section 4.7 — Anticipating and Defusing Defense Arguments Now, I have told you OWS's story. But in a moment, Lumicore's attorneys will stand before you and tell you a different story. That is their job, and I respect it. But let me briefly preview some of the things you are likely to hear from the defense, so that when you hear them, you can evaluate them with the full picture in mind. Lumicore will argue its product

Section 5.1 — Direct Competition and Lost Sales Let me now turn to what all of this means in terms of harm — the real-world economic damage that Lumicore's infringement has caused to OWS. OWS and Lumicore are direct competitors. They compete head-to-head in the silicon-photonics transceiver market for hyperscale data centers. They sell to the same customers. They compete in the same product categories. They participa

1. Demand for the patented products — proven by OWS's $487.3 million in fiscal year 2023 revenue and its position as the third-largest U.S. supplier of silicon-photonics transceiver modules.

2. Absence of acceptable non-infringing substitutes — Dr. Keating analyzed four potential alternative products in the market; each lacks one or more of the key patented features, making them inadequate substitutes for the accused products.

3. Manufacturing and marketing capability — OWS has the capacity to have made the additional sales through its foundry partners and existing sales infrastructure.

4. Amount of profit OWS would have made — calculated using OWS's 47.3% gross margin on competing products. Based on this analysis, Dr. Keating has calculated OWS's lost profits at approximately $128.9 million. That figure is derived from $714.6 million in projected accused-product revenue over the infringement period, multiplied by the 38.2% displacement rate, multiplied by OWS's 47.3% gross margin.

Section 5.2 — Price Erosion But lost unit sales are not the only harm OWS has suffered. Lumicore's entry into the market with infringing products — products built on technology that Lumicore did not have to pay to develop — has driven down prices across the entire market. The average selling price of 400G-ZR transceivers declined 18.7% from the third quarter of 2022 to the fourth quarter of 2023. This decline is attr

Section 5.3 — Reasonable Royalty For sales where OWS cannot prove that it would have made the sale itself — for example, sales to customers that OWS could not have served, or in geographies where OWS did not have a presence — the law provides a different measure of damages called a reasonable royalty. A reasonable royalty is the amount that a willing licensor (OWS) and a willing licensee (Lumicore) would have agreed

Section 5.4 — Enhanced Damages for Willful Infringement Because Lumicore's infringement was willful, the law permits the Court to enhance damages up to three times the amount found by the jury. This authority is granted by 35 U.S.C. § 284, which provides that "the court may increase the damages up to three times the amount found or assessed." The post-notice infringement period — the period beginning on January 15, 2

Section 5.5 — The $210 Million Damages Demand Let me put the numbers together for you. OWS's aggregate damages demand in this case is approximately $210 million. This is a blended, conservative figure that incorporates three components: • Lost profits: approximately $128.9 million • Reasonable royalty: approximately $37.5 million • Enhanced/willful damages component: approximately $43.6 million This is not a windfall

Section 5.6 — Permanent Injunction In additio