Contract analysis

I. EXECUTIVE SUMMARY This memorandum analyzes the strength and viability of Optiwave Semiconductor Corp.'s ("OWS" or "Optiwave") willful infringement claim against Lumicore Technologies, Inc. ("Lumicore") under the framework established by Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), and its progeny in the United States Court of Appeals for the Federal Circuit and the Eastern District of Tex

II. LEGAL FRAMEWORK A. The *Halo* Standard The Supreme Court's 2016 decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), fundamentally altered the legal landscape for willful patent infringement and enhanced damages. Halo abrogated the Federal Circuit's prior rigid two-part test established in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), which had required a p

Section 284 of Title 35 provides that "the court may increase the damages up to three times the amount found or assessed." 35 U.S.C. § 284. The statute confers broad discretion on the trial court to determine both whether to enhance damages and by what multiplier to do so, up to the treble-damages cap. The decision to enhance damages is discretionary and is assessed by the court, not the jury. Halo, 579 U.S. at 106.

1. Whether the infringer deliberately copied the ideas or design of another;

2. Whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed;

3. The infringer's behavior as a party to the litigation;

4. The defendant's size and financial condition;

5. The closeness of the case;

6. The duration of the defendant's misconduct;

7. Remedial action by the defendant;

8. The defendant's motivation for harm; and

9. Whether the defendant attempted to conceal its misconduct. A separate, comprehensive Read Factor Analysis memorandum will be prepared closer to the dispositive-motion stage, targeted for May 2025. That memorandum will apply each factor in detail to the record as developed through discovery. For present purposes, it is sufficient to note that the preliminary assessment of the Read factors is favorable to OWS on mul

III. FACTUAL BASIS FOR WILLFUL INFRINGEMENT A. The Asserted Patents OWS asserts four United States utility patents against Lumicore in this action: U.S. Patent No. 10,234,847 (the "'847 Patent"): Entitled "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss." The '847 Patent was filed on September 14, 2016, and issued on March 19, 2019. Optiwave Semiconductor Corp. is both the original and cu

1. Pre-Notice Period (Q3 2022 – January 14, 2023) Q3 2022 — Lumicore launches the LumiLink 400G-ZR+. Lumicore commercially launched its LumiLink 400G-ZR+ transceiver module in Q3 2022. The product was marketed at OFC 2022 and subsequently through Lumicore's direct sales channels and distributor network. At the time of launch, OWS did not have notice that the LumiLink 400G-ZR+ incorporated technology covered by OWS's

2. First Licensing Notice (January 15, 2023) On January 15, 2023, FairPoint Licensing Group, LLC ("FairPoint"), acting as OWS's exclusive licensing agent, transmitted the first formal licensing and notice letter to Lumicore's General Counsel, Raymond Bautista. FairPoint's Managing Director, Angela Reeves, signed the letter. FairPoint's offices are located at 500 Sansome Street, Suite 1400, San Francisco, California 9

3. Lumicore's Initial Response (February 28, 2023) Lumicore responded to the FairPoint letter on February 28, 2023, through its retained outside counsel, Hawthorne Vega & Cruz LLP ("HVC"). The response was authored by Catherine "Kate" Rourke, a partner at HVC's Austin, Texas office, located at 600 Congress Avenue, Suite 2400, Austin, Texas 78701. The HVC response letter was four pages in length and adopted a posture

4. LumiLink 800G-DR8 Launch (Q1 2023) During the pendency of the licensing negotiations — and within approximately six weeks of receiving the first FairPoint notice letter — Lumicore commercially launched its second accused product, the LumiLink 800G-DR8, in Q1 2023. The LumiLink 800G-DR8 is an 800-gigabit transceiver module that incorporates the same or substantially similar accused waveguide multiplexer structures,

5. In-Person Licensing Meeting (April 20, 2023) On April 20, 2023, an in-person licensing meeting was held in Austin, Texas, attended by the following individuals: • For OWS: Angela Reeves (FairPoint, Managing Director); Rebecca Tanaka (OWS, General Counsel). • For Lumicore: Raymond Bautista (Lumicore, General Counsel); Catherine "Kate" Rourke (HVC, outside counsel). During the meeting, OWS (through FairPoint) presen

6. Second Licensing Notice (May 15, 2023) On May 15, 2023, FairPoint transmitted a second formal licensing letter to Raymond Bautista. This letter accomplished two important objectives: • Addition of the '015 Patent. The letter added U.S. Patent No. 11,402,015 (the '015 Patent) to the list of asserted patents, expanding the total to four. The '015 Patent had issued on August 2, 2022, and its claims had been evaluated

7. Lumicore Declines License (July 10, 2023) On July 10, 2023, Lumicore — through HVC — formally declined to take a license to the asserted OWS patents. The declination letter, addressed to FairPoint, stated that Lumicore had obtained "competent legal opinions" concluding that its products did not infringe the asserted patents. However, the letter did not disclose the substance of these opinions, identify the counsel

8. LumiEdge 1600G-LR Launch (Q4 2023) In Q4 2023, Lumicore launched its third accused product, the LumiEdge 1600G-LR. At the time of this launch, the following circumstances obtained: • Lumicore had been on actual notice of the '847, '193, and '562 Patents for approximately nine months (since January 15, 2023). • Lumicore had been on actual notice of the '015 Patent for approximately five months (since May 15, 2023).

9. Litigation Filed (April 22, 2024) OWS filed its complaint in the Eastern District of Texas on April 22, 2024, initiating Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG, before Judge James R. Gilstrap. The complaint includes seven counts: Counts I through IV assert infringement of the '847, '193, '562, and '015 Patents, respectively; Counts V and VI assert induced and contri

IV. STRENGTH-OF-EVIDENCE ASSESSMENT A. Evidence Strongly Supporting Willfulness Based on the factual record as developed to date, the following evidence strongly supports a willful infringement finding:

1. Pre-design awareness of OWS's patent portfolio. Melissa Chen's anticipated testimony and Dr. Sandra Michaud's deposition admission establish that Lumicore engineers — including Lumicore's CTO — reviewed OWS Published Application No. 2018/0123456 (corresponding to the '193 Patent) during the LumiLink 400G-ZR+ design phase in 2021–2022. This evidence demonstrates that Lumicore was aware of OWS's patented technology

2. Formal actual notice via two FairPoint licensing letters. The two FairPoint licensing letters — dated January 15, 2023 and May 15, 2023 — provided detailed, patent-by-patent, claim-by-claim notice of all four asserted patents, accompanied by claim charts and annotated teardown photographs. Receipt was confirmed by Bautista. These letters are paradigmatic examples of the type of formal, substantive notice that cour

3. Continued infringement after notice. After receiving the first FairPoint letter on January 15, 2023, Lumicore continued manufacturing and selling the LumiLink 400G-ZR+ and (beginning Q1 2023) the LumiLink 800G-DR8 without interruption. There is no evidence that Lumicore paused sales, suspended shipments, or took any other remedial action in response to the notice. The continued sale of accused products after actua

4. Launch of new infringing products after notice. Lumicore launched the LumiEdge 1600G-LR in Q4 2023 — more than nine months after receiving the first FairPoint letter, approximately five months after formally declining a license, and six months after the failed in-person licensing meeting. The LumiEdge 1600G-LR was a new product that did not exist at the time the licensing letters were sent; its launch was an affir

5. Refusal to negotiate in good faith. At the April 20, 2023 in-person meeting in Austin, Texas, Lumicore showed "no interest in negotiating" (per Angela Reeves's deposition testimony). Lumicore did not engage with the claim charts, did not present any technical counter-analysis, and did not make a counter-proposal. The refusal to engage in good-faith licensing negotiations after receiving detailed infringement conte

6. Refusal to produce opinion-of-counsel letters. Lumicore affirmatively referenced "competent legal opinions" in its July 10, 2023 declination letter but has asserted attorney-client privilege and refused to disclose the opinions. Under Halo and the totality-of-the-circumstances framework, while there is no duty to obtain counsel's opinion, asserting reliance on undisclosed opinions invites judicial scrutiny and pot

7. Absence of design-around efforts. Bautista's deposition admission that no formal design-around analysis was conducted before launching the LumiEdge 1600G-LR directly undercuts any argument that Lumicore acted in good faith to avoid infringement. A company that is on actual notice of patents covering specific technical features and that launches a new product incorporating those same features — without even evaluat

8. Scale and duration of infringement. The projected accused-product revenue of approximately $714.6 million through trial demonstrates that Lumicore's infringement was commercially significant, sustained over a multi-year period, and integral to Lumicore's business. This is not a case of inadvertent, marginal infringement; the accused products represent a substantial portion of Lumicore's total revenue and market po

1. Pre-notice period argument. Lumicore will argue that the period before January 15, 2023 (i.e., Q3 2022 through January 14, 2023) should not support a willfulness finding because Lumicore had no formal notice of the issued patents during that period. Lumicore will characterize its review of OWS's published application as routine competitive intelligence activity that does not establish knowledge of issued patents o

2. Advice-of-counsel defense. Lumicore may eventually waive privilege and produce the opinion letters referenced in its July 10, 2023 declination letter. If the opinions are competently prepared and contain non-frivolous non-infringement positions, they could provide some defensive value on the willfulness question. Counter: Even competent opinions of non-infringement do not preclude a willfulness finding under Halo

3. Good-faith invalidity challenge. Lumicore has asserted invalidity of the asserted patents under 35 U.S.C. §§ 102 and 103, citing twenty-three prior-art references in its preliminary invalidity contentions. Lumicore may argue that a good-faith belief in invalidity negates willfulness — i.e., that it continued manufacturing the accused products because it believed the patents were invalid, not because it chose to in

4. Inequitable conduct defense. Lumicore has counterclaimed for unenforceability of the '193 Patent based on alleged inequitable conduct during prosecution. Specifically, Lumicore alleges that Dr. Jian-Wei Huang, a named inventor on the '193 Patent, failed to disclose a prior publication (a conference paper by Yamamoto et al., presented at ECOC 2015) to the USPTO during prosecution. If this defense were credited, it

5. Independent development. Lumicore's invalidity contentions include an assertion of prior conception based on internal design documents dated 2016–2017, which Lumicore contends predate the effective filing date of the '015 Patent. Lumicore may argue that it independently developed its technology and therefore did not copy or willfully infringe OWS's patents. Counter: These documents are uncorroborated by independen

V. ENHANCED DAMAGES CALCULATION — PRELIMINARY FRAMEWORK A. Statutory Framework Under 35 U.S.C. § 284, the court "may increase the damages up to three times the amount found or assessed." The statute confers unfettered discretion on the trial court to determine both whether to enhance damages and by what multiplier to enhance them, subject only to the treble-damages cap and the requirement that the enhancement be just