Contract analysis

I. INTRODUCTION AND NATURE OF THE ACTION This is a patent infringement action filed on April 22, 2024, by Plaintiff Optiwave Semiconductor Corp. ("OWS" or "Plaintiff") against Defendant Lumicore Technologies, Inc. ("Lumicore" or "Defendant"), alleging infringement of four United States utility patents covering silicon photonics technologies used in optical transceiver and waveguide multiplexing systems for data-cente

II. PARTIES A. Plaintiff — Optiwave Semiconductor Corp. Plaintiff Optiwave Semiconductor Corp. ("OWS") is a corporation duly organized and existing under the laws of the State of Delaware. OWS's principal place of business and corporate headquarters is located at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS's registered agent in the State of Delaware is Capitol Statutory Services, In

III. JURISDICTION AND VENUE Subject-Matter Jurisdiction. This Court has original subject-matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1338(a). The action arises under the patent laws of the United States, specifically 35 U.S.C. §§ 271 et seq., as OWS alleges that Lumicore has infringed and continues to infringe the Asserted Patents. Personal Jurisdiction. Lumicore is subject to personal juri

1. Pinnacle Data Systems, LLC, located at 1800 Judson Road, Longview, Texas 75601;

2. Frontier Cloud Services, Inc., located at 400 East Houston Street, marshall, Texas 75670; and

3. CrossPoint Networking Corp., located at 7500 Dallas Parkway, Suite 200, Plano, Texas 75024 (transferred to the Tyler Division for case management purposes). Lumicore filed a motion to transfer venue to the Western District of Texas, Austin Division, which this Court denied by Order dated August 5, 2024 (D.E. 25). The Court found that Lumicore's Tyler facility constitutes a regular and established place of business

IV. STATEMENT OF CLAIMS AND CAUSES OF ACTION A. Overview of Asserted Patents OWS asserts four United States utility patents in this action. Each patent covers a distinct but complementary aspect of silicon-photonics technology used in optical transceiver modules for data-center interconnect applications. The following table summarizes the Asserted Patents: The '562 Patent and the '847 Patent are in the same patent fa

V. STATEMENT OF DEFENSES AND COUNTERCLAIMS A. Lumicore's Affirmative Defenses Lumicore has asserted the following affirmative defenses in its Answer and Amended Answer: Non-Infringement. Lumicore denies that the accused products infringe any asserted claim of any Asserted Patent, either literally or under the doctrine of equivalents. Lumicore contends that its accused products do not practice one or more limitations

1. Declaratory judgment of non-infringement of all four Asserted Patents;

2. Declaratory judgment of invalidity of all four Asserted Patents; and

3. Declaratory judgment of unenforceability of the '193 Patent based on inequitable conduct. C. OWS's Response to Counterclaims OWS filed its Reply to Defendant's Counterclaims on July 22, 2024 (D.E. 22), denying all of Lumicore's counterclaims in their entirety. OWS asserted affirmative defenses to the inequitable-conduct counterclaim, including that the allegedly undisclosed prior-art reference was cumulative of pr

VI. STIPULATED FACTS The parties have stipulated to the following facts, which are to be included in the Joint Pre-Trial Order and which the parties agree may be read to the jury or otherwise presented at trial without the need for further proof:

1. Optiwave Semiconductor Corp. is the owner by assignment of all right, title, and interest in the '847 Patent (U.S. 10,234,847), the '193 Patent (U.S. 10,891,193), and the '015 Patent (U.S. 11,402,015), and has been at all relevant times.

2. Optiwave Semiconductor Corp. acquired the '562 Patent (U.S. 9,678,562) from Solara Optics, Inc. via an Asset Purchase Agreement dated June 15, 2018, and is the current owner of all right, title, and interest therein.

3. All four Asserted Patents are utility patents duly issued by the United States Patent and Trademark Office and remain in force. All maintenance fees for each Asserted Patent are current and have been timely paid.

4. The '562 Patent and the '847 Patent are in the same patent family and share a continuation relationship.

5. The '193 Patent and the '015 Patent share common Provisional Application No. 62/499,117, filed April 7, 2017.

6. Lumicore Technologies, Inc. makes, uses, sells, offers to sell, and imports into the United States the LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR transceiver modules.

7. The LumiLink 400G-ZR+ was first commercially launched in Q3 2022; the LumiLink 800G-DR8 was first commercially launched in Q1 2023; and the LumiEdge 1600G-LR was first commercially launched in Q4 2023.

8. FairPoint Licensing Group, LLC, acting on behalf of OWS, sent a licensing and notice letter to Lumicore's General Counsel, Raymond Bautista, dated January 15, 2023, identifying the '847, '193, and '562 Patents and providing infringement allegations with respect to those patents.

9. Lumicore responded to the January 15, 2023 letter on February 28, 2023, through its outside counsel, Hawthorne Vega & Cruz LLP, disputing infringement and questioning the validity of the identified patents.

10. An in-person licensing meeting took place in Austin, Texas on April 20, 2023, between representatives of FairPoint Licensing Group/OWS and representatives of Lumicore/Hawthorne Vega & Cruz LLP. No resolution was reached at that meeting.

11. FairPoint Licensing Group, LLC sent a second licensing letter to Lumicore on May 15, 2023, adding the '015 Patent to the infringement allegations and expanding the list of accused products to include the LumiLink 800G-DR8.

12. Lumicore declined to take a license on July 10, 2023, in a letter from Hawthorne Vega & Cruz LLP to FairPoint Licensing Group, LLC, stating that Lumicore had obtained "competent legal opinions" that its products do not infringe the identified patents.

13. Lumicore maintains a sales office and technical support center at 2700 Earl Campbell Parkway, Suite 150, Tyler, Texas 75701.

14. The authenticity of the Asserted Patents and their complete prosecution histories is not in dispute.

VII. CONTESTED ISSUES OF FACT The following issues of fact remain contested and will be submitted to the jury for determination at trial: A. Infringement

1. Whether the LumiLink 400G-ZR+ transceiver module literally infringes Claims 1, 3, 5, 9, and 14 of the '847 Patent.

2. Whether the LumiLink 800G-DR8 transceiver module literally infringes Claims 1, 3, 5, 9, and 14 of the '847 Patent.

3. Whether each of the three accused products — the LumiLink 400G-ZR+, the LumiLink 800G-DR8, and the LumiEdge 1600G-LR — literally infringes Claims 1, 3, 7, 10, 15, and 18 of the '193 Patent.

4. Whether each of the accused products infringes Claims 3 and 7 of the '193 Patent under the doctrine of equivalents, specifically with respect to the "coherent detection module" limitation.

5. Whether the LumiLink 400G-ZR+ and the LumiLink 800G-DR8 literally infringe Claims 1, 4, 6, and 11 of the '562 Patent.

6. Whether the LumiLink 800G-DR8 and the LumiEdge 1600G-LR literally infringe Claims 1, 5, 8, 12, and 16 of the '015 Patent.

7. Whether the LumiLink 800G-DR8 and the LumiEdge 1600G-LR infringe Claim 12 of the '015 Patent under the doctrine of equivalents, specifically with respect to the "two-dimensional sub-wavelength grating" limitation.

8. Whether Lumicore actively induces infringement of the Asserted Patents by its customers through the provision of technical documentation, integration guides, and direct technical support.

9. Whether Lumicore contributorily infringes the Asserted Patents by selling, offering to sell, and importing products that have no substantial non-infringing use and that constitute material components of patented transceiver systems. B. Willfulness

10. Whether Lumicore's infringement of the Asserted Patents was willful and deliberate, considering the totality of the circumstances, including but not limited to: pre-suit notice from FairPoint Licensing Group, LLC; Lumicore's design-phase awareness of OWS's published patent applications; continued product launches and sales after receipt of actual notice; and the adequacy and good faith of any opinion-of-counsel i

11. Whether Lumicore's refusal to produce its opinion-of-counsel letters — referenced in its July 10, 2023 declination letter — gives rise to an adverse inference regarding the willfulness of its infringement. C. Validity

12. Whether any asserted claim of the '847 Patent is anticipated by Takahashi et al., "Dense WDM Silicon Photonic MUX," IEEE Photonics Technology Letters (March 2014), or rendered obvious by Takahashi in combination with Simonsen (PCT/EP2015/071234, September 17, 2015).

13. Whether any asserted claim of the '562 Patent is anticipated by Dr. Li Wei, "Thermal Solutions for PICs," OFC 2013 Conference Paper (March 2013), or rendered obvious by U.S. Patent No. 8,412,007 (Bergmann), issued April 2, 2013, alone or in combination with other prior-art references.

14. Whether any asserted claim of the '193 Patent is invalid as anticipated or obvious over any of the eight prior-art references cited by Lumicore in its invalidity contentions for that patent.

15. Whether any asserted claim of the '015 Patent is invalid based on Lumicore's prior-conception defense relying on internal design documents dated 2016–2017, and whether such defense is adequately corroborated under the applicable legal standard.

16. Whether secondary considerations of non-obviousness — including commercial success, long-felt but unresolved need, failure of others, and evidence of copying — weigh in favor of the validity of the Asserted Patents. D. Unenforceability / Inequitable Conduct

17. Whether Dr. Jian-Wei Huang failed to disclose a material prior-art reference during prosecution of the '193 Patent before the United States Patent and Trademark Office.

18. Whether any such failure to disclose was accompanied by the specific intent to deceive the USPTO, as required under Brightmoor & Co., Inc. v. Becton, Dickinson and Company, 649 F.3d 1276 (Fed. Cir. 2011) (en banc). E. Damages

19. The appropriate amount of lost-profits damages to be awarded to OWS under the Panduit analysis, including whether each of the four Panduit factors is satisfied — demand for the patented product, absence of acceptable non-infringing substitutes, manufacturing and marketing capability to exploit the demand, and the amount of profit attributable to the lost sales.

20. The appropriate market-share displacement percentage to be applied in calculating lost profits. OWS contends that a displacement percentage of 38.2% is supported by the evidence of head-to-head competition at twelve of the top twenty hyperscale data-center operators.

21. The appropriate reasonable-royalty rate and royalty base for sales of accused products for which lost profits cannot be established. OWS proposes a reasonable-royalty rate of 8.5% of net sales of the accused products, applied to the non-lost-profit portion of accused-product revenue.

22. Whether the entire-market-value rule ("EMVR") properly applies to the accused transceiver modules such that the royalty base encompasses the entire price of each accused module, or whether apportionment to the smallest salable patent-practicing unit ("SSPPU") is required.

23. Whether enhanced damages are warranted in light of Lumicore's willful infringement and, if so, the appropriate enhancement multiplier under 35 U.S.C. § 284. F. Injunctive Relief

24. Whether OWS is entitled to a permanent injunction under the four-factor test set forth in Northgate Group v. MercExchange, L.L.C., 547 U.S. 388 (2006), including whether OWS has demonstrated irreparable harm, the inadequacy of legal remedies at law, that the balance of hardships tips in OWS's favor, and that the public interest would not be disserved by a permanent injunction.

VIII. CONTESTED ISSUES OF LAW The following issues of law remain contested between the parties and may require resolution by the Court either before or during trial:

1. Claim Construction. The proper construction of the twelve remaining disputed claim terms, as determined at the Markman hearing held on March 14, 2025, and as reflected in the Court's Claim Construction Order. The disputed terms include, but are not limited to, "waveguide multiplexer" ('847 Patent), "integrated on a silicon substrate" ('193 Patent), "micro-channel heat sink" ('562 Patent), and "polarization-diverse

2. Prosecution History Estoppel. Whether prosecution history estoppel under Festo Corp. v. Fenmore & Co., 535 U.S. 722 (2002), bars OWS's doctrine-of-equivalents theories for Claims 3 and 7 of the '193 Patent, based on a narrowing amendment to the "coherent detection module" limitation made in response to a § 102 rejection over Takahashi et al. during prosecution, and for Claim 12 of the '015 Patent, based on a narro

3. Means-Plus-Function Limitations. Whether Claim 9 of the '847 Patent and Claim 15 of the '193 Patent contain means-plus-function limitations under 35 U.S.C. § 112(f), and if so, the corresponding structure disclosed in the patent specifications that defines the scope of those limitations.

4. Willful Infringement Standard. The proper legal standard for willful infringement under Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), including whether the evidence is sufficient to support a finding that Lumicore's conduct constituted the type of "egregious" behavior warranting enhanced damages.

5. Enhanced Damages — Read Factors. The proper application of the Read factors for determining enhanced damages under 35 U.S.C. § 284, including whether any enhancement should be applied and, if so, the appropriate multiplier.

6. Induced and Contributory Infringement. The proper legal standard for induced infringement under 35 U.S.C. § 271(b) and contributory infringement under 35 U.S.C. § 271(c), including the knowledge and intent requirements applicable to each theory.

7. Waiver of Attorney-Client Privilege. Whether Lumicore waived the attorney-client privilege as to its opinion-of-counsel letters by referencing them in its July 10, 2023 declination letter and by asserting an advice-of-counsel defense to willful infringement. OWS's Motion to Compel production of the opinion-of-counsel letters (D.E. 40) is pending, or has been resolved as reflected in the Court's order thereon.

8. Entire Market Value Rule vs. Apportionment. Whether the entire-market-value rule may properly be applied to the accused transceiver modules, such that the full module price serves as the royalty base, or whether apportionment to a smaller royalty base reflecting the smallest salable patent-practicing unit is required under VirnetX, Inc. v. Sterling Reach Holdings, 767 F.3d 1308 (Fed. Cir. 2014), and its progeny.