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MEMORANDUM
Date: October 28, 2022
To: Sandra Ellison, General Counsel, Optiwave Semiconductor Corp. Rebecca Torres, Operating Partner (Semiconductor Sector), Vantage Point Capital Partners Fund IV, LP
From: Alan Ngo, Responsible Partner, Calderwood & Harkness LLP
Re: Matter Status Report — Optiwave Semiconductor Corp. v. Lumos Photonics, Inc., Case No. 5:22-cv-03417-EJD (N.D. Cal.)
Matter No.: 1014-00003
Reporting Period: June 3, 2022 – October 28, 2022
I. Executive Summary
This memorandum provides a comprehensive status report on the above-captioned patent infringement action brought by Optiwave Semiconductor Corp. ("OWS" or "Plaintiff") against Lumos Photonics, Inc. ("Lumos" or "Defendant") in the United States District Court for the Northern District of California, San Jose Division, before the Honorable Edward J. Torvelis. The reporting period covers all activity from the filing of the Complaint on June 3, 2022 through the date of this memorandum, October 28, 2022.
OWS filed its Complaint on June 3, 2022, asserting infringement of four United States utility patents: U.S. Patent No. 10,234,567 (the "'567 Patent"), U.S. Patent No. 10,891,234 (the "'234 Patent"), U.S. Patent No. 11,045,678 (the "'678 Patent"), and U.S. Patent No. 11,312,890 (the "'890 Patent"). The accused products are the LumosBridge™ 800G Optical Engine and the LumosEdge™ 400ZR+ Pluggable Transceiver, both commercially marketed and sold by Lumos (Nasdaq: LMPH). The Complaint seeks damages believed to exceed $75 million on a reasonable royalty theory, together with enhanced damages for willful infringement, permanent injunctive relief, and attorneys' fees.
Lumos filed its Answer and Counterclaims on July 29, 2022, denying all allegations of infringement and asserting counterclaims for declaratory judgment of non-infringement and invalidity under 35 U.S.C. §§ 102, 103, and 112. Lumos is represented by Brannick Howell & Stein LLP, with lead partner Victoria Ashworth of the San Francisco office serving as lead trial counsel. OWS filed its Answer to Defendant's Counterclaims in August 2022, denying all material allegations and asserting affirmative defenses.
The case is currently in the claim construction phase. The parties exchanged Preliminary and Responsive Claim Construction Contentions in September and October 2022, respectively. The Joint Claim Construction and Prehearing Statement was filed on October 14, 2022, identifying eleven (11) disputed claim terms across the four patents-in-suit. Claim construction discovery is currently underway, with depositions of named inventors proceeding through the close of claim construction discovery on October 31, 2022. The Markman hearing is scheduled for January 30, 2023.
Fact discovery requests have not yet been served, but are expected to commence in November 2022. The litigation hold was circulated on June 1, 2022, initial disclosures were exchanged on August 22, 2022, and ESI protocols have been finalized internally.
The case is proceeding on schedule and within the Board-approved litigation budget of $4.2 million. No material issues or deviations from the litigation plan have arisen. The sections that follow provide a detailed account of all significant litigation activity, the current posture of the claim construction phase, key risk factors, expert engagement, financial matters, and upcoming deadlines and action items.
II. Litigation Activity Summary
A. Complaint Filing and Service (June 2022)
The Complaint in this action was filed on June 3, 2022 in the United States District Court for the Northern District of California, San Jose Division, and the matter was opened at Calderwood & Harkness LLP under matter number 1014-00003. The case was assigned to the Honorable Edward J. Torvelis and designated Case No. 5:22-cv-03417-EJD.
The Complaint asserts infringement of four OWS-owned United States utility patents, each of which relates to key aspects of silicon photonic integrated circuit ("PIC") technology:
1. U.S. Patent No. 10,234,567 (the "'567 Patent") — entitled "Integrated Waveguide Coupler with Tapered Mode Converter for Low-Loss Fiber-to-Chip Optical Coupling," issued to OWS on March 19, 2019. This patent covers the design of an adiabatically coupled waveguide structure employing a tapered mode converter to achieve efficient optical coupling between single-mode fiber and on-chip waveguides.
2. U.S. Patent No. 10,891,234 (the "'234 Patent") — entitled "Germanium-on-Silicon Photodetector with Graded Buffer Layer for High-Bandwidth Optical Reception," issued to OWS on January 12, 2021. This patent covers a photodetector architecture utilizing a graded buffer layer with a continuously varying germanium concentration to reduce threading dislocation density and improve responsivity.
3. U.S. Patent No. 11,045,678 (the "'678 Patent") — entitled "Multi-Channel Optical Transceiver with Integrated Wavelength-Division Multiplexing on a Single Silicon Die," issued to OWS on June 29, 2021. This patent covers a transceiver architecture in which a wavelength-division multiplexing (WDM) element is monolithically formed on a single silicon die, enabling compact multi-channel operation.
4. U.S. Patent No. 11,312,890 (the "'890 Patent") — entitled "Driver Circuit Architecture for High-Speed Silicon Photonic Mach-Zehnder Modulator with Integrated Pre-Emphasis Equalization," issued to OWS on April 26, 2022. This patent covers a driver circuit topology in which a pre-emphasis equalization stage is electrically co-integrated with a Mach-Zehnder modulator on a common substrate.
The Complaint identifies the following accused products: (i) the LumosBridge™ 800G Optical Engine, a high-bandwidth co-packaged optics module commercially marketed by Lumos for data center switch ASIC applications; and (ii) the LumosEdge™ 400ZR+ Pluggable Transceiver, a QSFP-DD form factor coherent transceiver targeting metro and edge network deployments. Both products are manufactured and sold by Lumos Photonics, Inc., a publicly traded company (Nasdaq: LMPH) headquartered in Santa Clara, California.
The Complaint seeks the following relief: (a) compensatory damages believed to exceed $75 million, based on a reasonable royalty theory applying an estimated 7.5% royalty rate to approximately $148.6 million in accused product revenue through the date of filing; (b) enhanced damages of up to three times the compensatory damages amount for willful infringement pursuant to 35 U.S.C. § 284; (c) permanent injunctive relief enjoining Lumos from further infringement of the patents-in-suit; and (d) an award of attorneys' fees and costs pursuant to 35 U.S.C. § 285.
Lumos was served with the Summons and Complaint on June 28, 2022 via its registered agent, Ashgrove Services Inc., at 818 West 7th Street, Suite 930, Los Angeles, California 90017. Proof of service was filed with the Court on June 30, 2022.
In connection with the filing, OWS filed its Corporate Disclosure Statement pursuant to Federal Rule of Civil Procedure 7.1 in June 2022, disclosing that Vantage Point Capital Partners Fund IV, LP holds approximately 62% of OWS's outstanding equity. No other non-party corporate entity was identified as having a financial interest in the outcome of this litigation that required disclosure under the Local Rules.
B. Lumos's Answer and Counterclaims (July 29, 2022)
On July 29, 2022, Lumos filed its Answer and Counterclaims, represented by Brannick Howell & Stein LLP ("BHS"). Victoria Ashworth, a partner in the San Francisco office of BHS, serves as lead trial counsel for Lumos, with Daniel Kowalski (Senior Associate, PhD in Optics, University of Rochester) serving as associate team lead. BHS is a well-resourced national IP litigation firm with significant experience in semiconductor and photonics patent matters.
In its Answer, Lumos denied all allegations of infringement as to each of the four asserted patents and each of the accused products. Lumos asserted numerous affirmative defenses, including non-infringement, invalidity, patent exhaustion, implied license, laches, and equitable estoppel.
Lumos simultaneously filed Counterclaims seeking the following declaratory relief:
• Counterclaim I: Declaratory judgment of non-infringement of U.S. Patent Nos. 10,234,567; 10,891,234; 11,045,678; and 11,312,890.
• Counterclaim II: Declaratory judgment of invalidity of U.S. Patent Nos. 10,234,567; 10,891,234; 11,045,678; and 11,312,890 under 35 U.S.C. § 102 (lack of novelty), 35 U.S.C. § 103 (obviousness), and 35 U.S.C. § 112 (indefiniteness and lack of written description).
The Answer and Counterclaims identify several prior art references that Lumos intends to rely upon in support of its invalidity defenses. The key prior art references identified to date include:
• U.S. Patent No. 9,456,012 (Tanaka et al.), issued September 6, 2016, entitled "Adiabatic Mode Converter for Silicon Photonic Waveguide." This reference is cited against the '567 Patent under both § 102 and § 103. Notably, this prior art patent was co-invented by Hideo Tanaka, who subsequently joined OWS and is a named inventor on the asserted '567 Patent. The implications of this fact are addressed in greater detail in Section VII.B below.
• Chen & Liu, "Segmented Taper Coupler Design for Low-Loss Fiber-to-Chip Coupling," published in the Journal of Photonic Integration, Vol. 14, No. 3, pp. 287–301 (2016). This reference is cited against the '567 Patent under § 103, in combination with the Tanaka patent. The Chen & Liu paper discloses a segmented taper design with discrete coupling sections, which Lumos contends renders the '567 Patent claims obvious.
• EP 3,234,567 A1 (Nordlicht Photonische GmbH), published August 2, 2017, entitled "Germanium Photodetector with Compositionally Graded Buffer on Silicon Substrate." This European patent application is cited against the '234 Patent and poses a potential § 102(a)(2) anticipation risk. The Nordlicht application discloses a graded SiGe buffer layer architecture with claimed performance characteristics overlapping those of the '234 Patent.
• Iyer & Patel, "Co-Design of Modulator Drivers and Silicon Photonic Mach-Zehnder Structures," published in IEEE Transactions on Circuits and Systems, Vol. 65, No. 8, pp. 2614–2627 (2018). This reference is cited against the '890 Patent under § 103. The paper discusses driver circuit co-integration strategies for silicon photonic Mach-Zehnder modulators, including pre-emphasis equalization techniques.
OWS filed its Answer to Defendant's Counterclaims on August 12, 2022, denying all material allegations contained in the Counterclaims and asserting affirmative defenses including the validity and enforceability of each of the four asserted patents.
We note for your attention that the Tanaka prior art patent (U.S. 9,456,012) presents a particularly sensitive factual issue. Hideo Tanaka co-invented the '012 patent prior to joining OWS and subsequently became a named inventor on the asserted '567 Patent. The prosecution history of the '567 Patent reflects that the claims were narrowed during prosecution specifically to add the "adiabatically coupled" limitation in order to overcome the Tanaka '012 reference. This fact requires careful handling in claim construction briefing and will likely be a focal point of Lumos's prosecution history estoppel arguments. We are managing this issue through coordination with Mr. Tanaka and strategic positioning in our claim construction briefing, as discussed further in Section III below.
C. Initial Case Management Conference (August 15, 2022)
A Joint Case Management Statement was prepared and filed in advance of the Initial Case Management Conference. The parties conferred in good faith regarding the anticipated scope and duration of the litigation, discovery needs, claim construction procedures, and a proposed schedule through trial.
The Initial Case Management Conference was held on August 15, 2022 before the Honorable Edward J. Torvelis. At the conference, the Court addressed the following matters:
• The Court set the Markman hearing for January 30, 2023, consistent with the parties' joint proposal. The Court indicated that it anticipates a full-day hearing with argument on all disputed claim terms.
• The Court directed the parties to submit a proposed Case Management Order setting forth deadlines for claim construction briefing, fact discovery, expert discovery, dispositive motions, and trial. The proposed order was submitted by the parties and adopted by the Court with minor modifications.
• The Court addressed ESI discovery protocols and encouraged the parties to meet and confer regarding search terms, custodians, and date ranges prior to the commencement of fact discovery.
• The parties discussed the potential need for a Special Master for discovery disputes. The Court indicated that it would address this issue if and when disputes arise but noted its preference for resolving discovery matters through the regular motion practice under the Local Rules.
A Stipulated Protective Order governing the treatment of Confidential and Highly Confidential — Attorneys' Eyes Only ("AEO") materials was negotiated between the parties and submitted to the Court. The Stipulated Protective Order was entered by the Court on September 2, 2022. The Protective Order establishes two tiers of confidentiality designation and governs the handling, storage, and use of designated materials throughout the litigation, including provisions for the treatment of source code, financial data, and technical design documents.
D. Initial Disclosures (August 22, 2022)
The parties exchanged their initial disclosures pursuant to Federal Rule of Civil Procedure 26(a)(1) on August 22, 2022. OWS identified the following key witnesses likely to have discoverable information relevant to the claims and defenses in this action:
• Dr. Priya Ramanathan — Chief Executive Officer, OWS. Knowledge regarding OWS's business operations, competitive landscape, accused product awareness, licensing history, and damages-related matters.
• Dr. Kevin Fong — Chief Technology Officer, OWS; named inventor on the '567, '234, and '890 Patents. Knowledge regarding the conception, development, and reduction to practice of the patented inventions; technical operation of the claimed features; state of the art in silicon photonics; and prosecution history.
• Dr. Amara Osei — Principal Engineer, Photonics Design Group, OWS; named inventor on the '234 and '678 Patents. Knowledge regarding the design and development of the photodetector and transceiver technologies claimed in the '234 and '678 Patents; understanding of key claim terms.
• Ted Marchetti — Vice President of intellectual Property, OWS. Knowledge regarding OWS's patent prosecution strategy, patent portfolio management, licensing history, and prior art awareness.
• Hideo Tanaka — Former Senior Engineer, OWS (currently employed by Cascade Semiconductor, Portland, Oregon); named inventor on the '567 Patent; co-inventor of prior art U.S. Patent No. 9,456,012. Knowledge regarding the '567 Patent invention, prosecution history, and the relationship between the '567 Patent and the Tanaka prior art patent.
• Liwei Zhang — Senior Design Engineer, OWS. Knowledge regarding the technical design and fabrication of OWS's silicon photonic products; testing and characterization of waveguide coupler, photodetector, and modulator designs.
• Rajesh Iyer — Director of Product Engineering, OWS. Knowledge regarding OWS's product development roadmap, product specifications, competitive intelligence regarding Lumos's accused products, and customer relationships.
Lumos's initial disclosures identified, among others, the following key witnesses:
• Dr. Mei-Lin Chen — Chief Technology Officer, Lumos Photonics, Inc. Knowledge regarding the design and development of the LumosBridge™ and LumosEdge™ products, including the accused features; Lumos's technology roadmap; and state of the art in silicon photonics.
• Dr. Nikolai Petrov — Vice President of Engineering, Photonics Division, Lumos Photonics, Inc. Knowledge regarding the engineering specifications and manufacturing processes of the accused products; Lumos's waveguide coupling, photodetector, WDM integration, and driver circuit architectures.
• Jim Harrelson — Chief Executive Officer, Lumos Photonics, Inc. Knowledge regarding Lumos's business operations, revenue, sales channels, competitive positioning, and awareness of OWS's patent portfolio.
The initial disclosures also identified categories of documents and ESI relevant to the parties' claims and defenses, and computed damages information was disclosed as required under Rule 26(a)(1)(A)(iii).
E. Lender Notification
On June 6, 2022, Sandra Ellison, General Counsel of OWS, sent a letter to First Pacific Commerce Bank, N.A. ("FPCB"), at 345 Montgomery Street, San Francisco, California 94104, notifying FPCB of the filing of the above-captioned action. This notification was required under the financial covenants of OWS's $40 million revolving credit facility with FPCB, given that FPCB holds a security interest in OWS's intellectual property assets, including the four patents asserted in this litigation. The notification letter described the nature of the action, the identity of the defendant, and the patents at issue, and confirmed that OWS believes in good faith that the prosecution of this action will not materially impair the value of the collateral. FPCB acknowledged receipt of the notification by letter dated June 14, 2022 and did not raise any objections or concerns at that time. We will continue to monitor any developments that may trigger additional notification obligations under the credit facility.
III. Claim Construction Phase — Current Status
The case is currently in the claim construction phase, which represents the most significant pre-trial milestone. The following subsections provide a detailed summary of all claim construction activity to date and the current status of preparation for the Markman hearing.
A. Exchange of Claim Construction Contentions
Pursuant to Patent Local Rule 4-1 of the Northern District of California, OWS served its Preliminary Claim Construction Contentions on September 12, 2022. In those contentions, OWS identified the claim terms it contends require construction and proposed constructions supported by intrinsic evidence, including the patent specifications, figures, and prosecution histories of the four asserted patents. OWS's proposed constructions are designed to give full effect to the plain and ordinary meaning of the claim language as understood by a person of ordinary skill in the art ("POSITA"), consistent with the specifications and the prosecution histories. Where specific constructions were warranted to resolve disputes, OWS advanced constructions that faithfully reflect the scope of the claimed inventions without improperly narrowing the claims beyond the intrinsic record.
Lumos served its own Preliminary Claim Construction Contentions on the same date, September 12, 2022. Lumos's proposed constructions systematically seek to narrow the scope of the key claim terms in a manner that would exclude its own accused product designs. As detailed in Section III.B below, Lumos's constructions import limitations from preferred embodiments, add requirements not found in the claim language, and attempt to use prosecution history arguments to limit the scope of the claims beyond what the record supports.
Responsive Claim Construction Contentions were exchanged on October 3, 2022 pursuant to Patent Local Rule 4-2. In its Responsive Contentions, OWS rebutted each of Lumos's proposed narrow constructions, demonstrating that Lumos's proposals are inconsistent with the intrinsic evidence, improperly import limitations from the specifications, and conflict with established Federal Circuit claim construction principles. OWS identified specific portions of the patent specifications, prosecution histories, and relevant extrinsic evidence supporting its positions.
B. Joint Claim Construction and Prehearing Statement (Filed October 14, 2022)
The Joint Claim Construction and Prehearing Statement ("JCCPS") was filed on October 14, 2022 pursuant to Patent Local Rule 4-3. The JCCPS identifies a total of eleven (11) disputed claim terms across the four patents-in-suit. For each disputed term, the JCCPS sets forth each party's proposed construction, the identity of any intrinsic and extrinsic evidence upon which each party intends to rely, and a brief statement of each party's basis for its proposed construction.
The four most significant disputed terms — which we anticipate will be the primary focus of the Markman hearing and which have the greatest impact on the infringement and invalidity analyses — are summarized below:
Disputed Term No. 1: "adiabatically coupled" ('567 Patent, Claims 1, 4, 7, 12)
OWS's Proposed Construction: "coupled such that optical mode transitions occur without significant power loss"
Lumos's Proposed Construction: "coupled through a gradual, continuous taper that prevents excitation of higher-order modes throughout the entire transition region"
Significance and Analysis: This is arguably the most critical disputed term in the case. OWS's construction captures the functional meaning of "adiabatic coupling" as understood in the art — namely, that the coupling is achieved in a manner that avoids significant power loss during the optical mode transition. This construction is consistent with the plain and ordinary meaning of the term and is supported by the specification, which describes adiabatic coupling in terms of its functional result (low-loss mode transition) rather than mandating a specific structural implementation.
Lumos's proposed construction attempts to impose two additional structural requirements that are not found in the claim language: (i) that the taper be "continuous" (as opposed to segmented or discrete), and (ii) that higher-order modes must be prevented "throughout the entire transition region." If the Court were to adopt Lumos's narrow construction, it could exclude Lumos's LumosBridge™ design, which employs a segmented (non-continuous) taper with discrete coupling sections. In effect, Lumos is seeking a construction under which its own product would not literally infringe, not because the claim language compels such a construction, but because Lumos's design happens to use a segmented rather than continuous taper.
OWS's position is supported by the specification, which describes multiple embodiments of adiabatic coupling, including both continuous and segmented taper designs. The prosecution history supports OWS's broader construction, although we note the estoppel risk arising from the addition of the "adiabatically coupled" limitation during prosecution to overcome the Tanaka '012 prior art, as discussed further in Section III.C below.
Disputed Term No. 2: "graded buffer layer having a continuously varying germanium concentration" ('234 Patent, Claims 1, 3, 8)
OWS's Proposed Construction: "a buffer layer in which the germanium concentration changes across the layer thickness"
Lumos's Proposed Construction: "a buffer layer in which the germanium atomic fraction increases monotonically and without step changes from the silicon substrate interface to the absorber layer"
Significance and Analysis: The dispute centers on whether "continuously varying" requires a truly smooth, monotonic gradient (Lumos's position) or whether it more broadly encompasses any buffer layer in which the germanium concentration changes across the layer, including step-graded profiles (OWS's position). Lumos's photodetector uses a step-graded SiGe buffer with four discrete composition steps at germanium atomic fractions of 0.25, 0.50, 0.75, and 1.0. If the Court adopts Lumos's narrow construction requiring a monotonic increase "without step changes," Lumos's step-graded design would fall outside the literal scope of the claims.
OWS's construction is supported by the specification, which explicitly describes both "continuously graded" and "step-graded" buffer layer embodiments as alternatives for achieving the claimed structure. The use of the phrase "continuously varying" in the claims, in the context of a specification that discloses step-graded embodiments, supports OWS's broader reading. Additionally, OWS will present extrinsic evidence, including Dr. Whitfield's declaration, demonstrating that a POSITA would understand "continuously varying" to encompass step-graded profiles, which are a well-known approximation of a continuous gradient in semiconductor fabrication. However, the claim language itself uses the word "continuously," which presents a textual argument in favor of Lumos's construction. This term presents moderate-to-elevated risk.
Disputed Term No. 3: "integrated wavelength-division multiplexing element monolithically formed on a single silicon die" ('678 Patent, Claims 1, 5, 9, 14)
OWS's Proposed Construction: "a WDM component fabricated as part of the same semiconductor fabrication process on a single die"
Lumos's Proposed Construction: "a WDM component formed during front-end-of-line processing within the same silicon substrate, excluding hybrid integration, flip-chip bonding, or any heterogeneous integration technique"
Significance and Analysis: The parties dispute whether "monolithically formed on a single silicon die" requires that all components be fabricated exclusively through front-end-of-line (FEOL) silicon processing, or whether it more broadly encompasses components that are fabricated as part of the same overall fabrication process on a single die, potentially including heterogeneous integration techniques such as micro-transfer printing.
Lumos's 800G LumosBridge™ platform uses micro-transfer-printed III-V compound semiconductor gain elements that are bonded to the silicon photonic integrated circuit (PIC) die. Lumos contends that any integration technique involving bonding of separately fabricated elements — including flip-chip bonding, hybrid integration, or heterogeneous integration — is excluded from the scope of "monolithically formed." If the Court adopts Lumos's construction, this would eliminate OWS's infringement theory for the '678 Patent as applied to the LumosBridge™ product.
OWS's construction is based on the understanding that "monolithically formed" refers to the fabrication of the WDM element as part of the same process flow on a single die, which is consistent with the specification's disclosure and the plain meaning of "monolithic" in the semiconductor art. However, the prosecution history of the '678 Patent presents an elevated estoppel risk: the "monolithically formed" limitation was added by amendment during prosecution to overcome prior art disclosing hybrid integration approaches, and the applicant's prosecution remarks expressly distinguished "heterogeneous integration approaches." Lumos will argue that these prosecution remarks estop OWS from asserting a construction broad enough to encompass heterogeneous integration. This is a significant risk that we are actively managing through claim construction briefing strategy.
Disputed Term No. 4: "pre-emphasis equalization stage electrically co-integrated with the modulator on a common substrate" ('890 Patent, Claims 1, 6, 10)
OWS's Proposed Construction: "an equalization circuit located on the same substrate as the modulator"
Lumos's Proposed Construction: "an equalization circuit fabricated in the same semiconductor process as the modulator, sharing the same doping profiles and process layers, and electrically connected without bond wires, interposers, or package-level routing"
Significance and Analysis: The dispute concerns whether "electrically co-integrated" and "common substrate" require that the equalization circuit and the modulator be fabricated in the same semiconductor process (sharing doping profiles and process layers), or whether it is sufficient that they are located on the same substrate, which could include a multi-die assembly on a common silicon interposer or a flip-chip bonded die pair.
Lumos's LumosBridge™ and LumosEdge™ products use a separate CMOS driver die that is flip-chip bonded to the silicon photonic modulator die via copper pillar micro-bumps. Lumos contends that this architecture does not constitute "co-integration" on a "common substrate" because the driver and modulator are fabricated in different semiconductor processes and are connected through package-level bonding rather than monolithic integration.
OWS's construction is supported by the specification, which describes the "common substrate" as encompassing both monolithic integration and multi-die configurations on a shared interposer substrate. However, as with the '678 Patent, the prosecution history presents an estoppel risk: the "co-integrated" limitation was added during prosecution to distinguish prior art disclosing separately fabricated and bonded driver circuits. Lumos will argue that OWS cannot now assert a construction that would encompass the very type of separately fabricated and bonded architecture that was distinguished during prosecution.
In addition to the four primary disputed terms summarized above, the JCCPS identifies seven additional disputed terms across the four patents-in-suit, for a total of eleven disputed terms. These additional terms relate to subsidiary structural and functional limitations in the asserted claims. While these additional terms are significant and will be briefed fully, the four terms discussed above are expected to be the primary battleground at the Markman hearing, as the outcome on these terms will most directly determine whether OWS's infringement theories can proceed and, conversely, whether Lumos's accused designs fall within the scope of the asserted claims.
Each party's principal supporting evidence — both intrinsic (patent specifications, prosecution histories, and file wrappers) and extrinsic (technical dictionaries, treatises, prior art publications, and expert declarations) — is identified in the Prehearing Statement for each disputed term.
C. Claim Construction discovery
The claim construction discovery period, as established by the Case Management Order, runs through October 31, 2022. Claim construction discovery has been focused on depositions of named inventors and review of the prosecution histories of the four asserted patents. The following depositions have been scheduled and are in process:
1. Dr. Kevin Fong (Chief Technology Officer, OWS; named inventor on the '567, '234, and '890 Patents)
Dr. Fong's deposition was noticed by Lumos and taken on October 18, 2022, at the offices of Calderwood & Harkness LLP. Lumos's examination focused on Dr. Fong's understanding of the claimed inventions, the meaning of key claim terms (including "adiabatically coupled," "continuously varying germanium concentration," and "co-integrated"), the prosecution history of each of the three patents on which he is a named inventor, and the state of the art in silicon photonics at the time of each invention. Dr. Fong testified consistently with OWS's proposed claim constructions and provided clear, well-supported explanations of the technical meaning of the disputed terms as understood by a POSITA. Preparation sessions with Dr. Fong were conducted on October 14 and 16, 2022.
2. Hideo Tanaka (former Senior Engineer, OWS; named inventor on the '567 Patent; co-inventor of prior art U.S. Patent No. 9,456,012)
Mr. Tanaka's deposition was noticed by Lumos and is scheduled for October 29, 2022, at the offices of Brannick Howell & Stein LLP. Mr. Tanaka's testimony is expected to cover his contributions to the '567 invention, his understanding of the term "adiabatically coupled," and — critically — his earlier prior art patent (U.S. 9,456,012), including the technical relationship between the '012 patent's disclosure and the '567 Patent's claims. Lumos is expected to explore prosecution history estoppel implications arising from the narrowing of the '567 Patent's claims to add the "adiabatically coupled" limitation specifically to overcome the Tanaka '012 reference. Mr. Tanaka's preparation session was conducted on October 25, 2022, at which we reviewed the prosecution histories of both the '567 Patent and the '012 patent, the technical distinctions between the inventions, and anticipated lines of questioning. Mr. Tanaka is no longer employed by OWS (he is currently at Cascade Semiconductor in Portland, Oregon), and he has been cooperative in preparing for this testimony.
3. Dr. Amara Osei (Principal Engineer, Photonics Design Group, OWS; named inventor on the '234 and '678 Patents)
Dr. Osei's deposition was noticed by Lumos and taken on October 21, 2022, at the offices of Calderwood & Harkness LLP. Lumos's examination focused on Dr. Osei's understanding of the terms "continuously varying germanium concentration" (specifically, whether a step-graded buffer would be understood by a POSITA to constitute a "continuously varying" concentration) and "monolithically formed on a single silicon die" (specifically, whether heterogeneous integration techniques would be encompassed by the term "monolithically formed"). Dr. Osei provided testimony consistent with OWS's proposed constructions and explained the technical basis for interpreting these terms broadly in the context of silicon photonic fabrication. Preparation sessions were conducted on October 17 and 19, 2022.
In addition to the inventor depositions, we have completed a comprehensive review of the prosecution histories of all four asserted patents. The key prosecution history highlights relevant to claim construction are as follows:
• '567 Patent: The '567 Patent was the subject of two Office Action rejections during prosecution. In the first Office Action, the examiner rejected the original claims as anticipated by the Tanaka '012 patent (U.S. 9,456,012). In response, the applicant amended the claims to add the "adiabatically coupled" limitation, arguing that the Tanaka reference did not disclose adiabatic coupling as claimed. The examiner issued a second Office Action raising a § 103 obviousness rejection combining Tanaka with the Chen & Liu (2016) reference. The applicant overcame this rejection through further amendment and argument distinguishing the segmented taper design of Chen & Liu from the claimed adiabatic coupling. The prosecution history creates a prosecution history estoppel risk, as Lumos will argue that OWS is estopped from asserting a construction of "adiabatically coupled" broad enough to encompass the segmented taper designs disclosed in the prior art that the applicant distinguished during prosecution. This is an important risk factor that we are managing through strategic claim construction briefing.
• '234 Patent: The '234 Patent was allowed on the first Office Action following an examiner interview conducted on May 7, 2020. No amendments were made to the claims during prosecution. The specification describes both "continuously graded" and "step-graded" buffer layer embodiments, but the claims use only the "continuously varying" language. The absence of prosecution history amendments is favorable to OWS, as there is no estoppel argument to contend with. However, Lumos will argue that the use of "continuously" in the claims, combined with the specification's separate description of "step-graded" embodiments, indicates that the patentee deliberately chose the narrower "continuously varying" formulation and excluded step-graded designs.
• '678 Patent: The '678 Patent was the subject of three Office Action rejections during prosecution, making it the most heavily prosecuted of the four asserted patents. The "monolithically formed" limitation was added by amendment during the second Office Action response to overcome prior art disclosing hybrid integration approaches. In the applicant's remarks accompanying the amendment, the applicant expressly distinguished "heterogeneous integration approaches" from the claimed monolithic formation. Lumos will rely on these prosecution remarks to argue prosecution history estoppel. This is an elevated estoppel risk for the '678 Patent.
• '890 Patent: The '890 Patent was the subject of two Office Action rejections during prosecution. The "co-integrated" limitation was added by amendment to distinguish prior art disclosing separately fabricated and bonded driver circuits. The applicant's remarks emphasized that "co-integration" requires the equalization stage and the modulator to share a common substrate, in contrast to designs where a separately fabricated driver die is bonded to the modulator die. Lumos will rely on these remarks to argue that OWS cannot assert a construction of "co-integrated" that encompasses flip-chip bonded multi-die architectures.
D. Expert Engagement for Claim Construction
Calderwood & Harkness LLP, on behalf of OWS, has retained Dr. Harold Whitfield of Whitfield Technical Consulting Group, Inc. (Palo Alto, California) as the technical expert for claim construction. The retention agreement was executed in August 2022, and Dr. Whitfield has been actively engaged in reviewing the patents-in-suit, the prosecution histories, the accused products, and the parties' claim construction contentions.
Dr. Whitfield's qualifications are as follows:
• PhD in Electrical Engineering (Photonics), University of California, Berkeley (1987)
• Professor Emeritus, Department of Electrical and Computer Engineering, University of California, Santa Barbara
• Over 200 peer-reviewed publications in integrated photonics, silicon photonics, waveguide design, and optical interconnects
• Former Director of the UCSB Photonics Integration Laboratory
• Named inventor on 12 U.S. patents related to integrated photonic devices
• Recognized as one of the leading academic authorities on silicon photonic integration technology
Dr. Whitfield is currently preparing a declaration in support of OWS's claim construction positions. The declaration will opine on the understanding of a POSITA regarding each of the 11 disputed claim terms, drawing upon the intrinsic evidence, the state of the art, and Dr. Whitfield's extensive expertise in the field. Dr. Whitfield's declaration will be submitted with OWS's Opening Claim Construction Brief on December 5, 2022.
Dr. Whitfield will also serve as OWS's technical tutorial witness at the Markman hearing on January 30, 2023. In this capacity, Dr. Whitfield will present a technology tutorial to the Court, explaining the relevant technical background in silicon photonics and the meaning of the disputed claim terms as understood by a POSITA. The technical tutorial presentation and demonstratives will be prepared in January 2023.
We note that Lumos has engaged Dr. Raymond Ng as its technical tutorial witness for the Markman hearing. Dr. Ng is a former professor of photonics at the University of Colorado Boulder and currently serves as of counsel and technical consultant to Brannick Howell & Stein LLP. Dr. Ng has published extensively in the areas of waveguide coupling and photonic device design. We are familiar with Dr. Ng's prior testimony in other matters and will prepare accordingly.
E. Upcoming Claim Construction Briefing Schedule
The claim construction briefing schedule established by the Case Management Order is as follows:
Drafting of OWS's Opening Claim Construction Brief is underway and is being led by Omar Siddiqui (Lead Associate), with significant contributions from Christy Bauer (Working Associate), under the supervision of Alan Ngo and Marcus Delgado. The brief will address all 11 disputed terms, with primary emphasis on the four key terms discussed in Section III.B above.
Markman hearing presentation materials and demonstratives will be prepared in January 2023 following the completion of briefing. Dr. Whitfield's technical tutorial presentation will be finalized in coordination with the hearing preparation. We anticipate conducting at least one moot court session in late January 2023 to prepare the argument and Dr. Whitfield's presentation.
IV. Fact discovery — Upcoming
Fact discovery has not yet formally commenced beyond the exchange of initial disclosures on August 22, 2022 and the limited claim construction discovery described in Section III.C above. The Case Management Order establishes a fact discovery period that will extend through mid-2023 (specific deadline to be confirmed following the Markman hearing). The following fact discovery activities are anticipated in the near term:
Lumos's Document Requests: We anticipate that Lumos will serve its First Set of Requests for Production on or about November 7, 2022. Based on informal discussions with Lumos's counsel during the meet-and-confer process, we expect that Lumos's requests will encompass approximately 98 individual document requests covering the following categories: (i) documents relating to the conception, development, and reduction to practice of the patented inventions; (ii) prosecution histories and patent office communications; (iii) prior art known to OWS; (iv) licensing and monetization history of the asserted patents and the broader OWS patent portfolio; (v) financial and business records relating to damages; (vi) communications regarding the accused products; and (vii) documents supporting OWS's willfulness allegations. We will review and respond to these requests within the time frames established by the Federal Rules and any applicable stipulations.
OWS's discovery Requests: OWS plans to serve its First Set of Requests for Production (approximately 112 requests) and its First Set of Interrogatories (25 interrogatories) to Lumos, targeted for service on or about November 21, 2022. OWS's document requests will focus on: (i) the design, development, and manufacture of the accused LumosBridge™ and LumosEdge™ products; (ii) Lumos's knowledge of OWS's patents; (iii) revenue and cost data for the accused products; (iv) Lumos's invalidity contentions and supporting prior art; (v) Lumos's internal analyses of the accused products' technical features; and (vi) communications with customers, suppliers, and partners regarding the accused products. OWS's interrogatories will seek contentions-based information regarding Lumos's non-infringement and invalidity positions.
ESI Protocol: An internal ESI Search Terms and Custodian List memorandum was finalized in September 2022. The following key custodians have been identified for ESI collection and review:
• Dr. Priya Ramanathan (CEO, OWS)
• Dr. Kevin Fong (CTO, OWS)
• Dr. Amara Osei (Principal Engineer, OWS)
• Ted Marchetti (VP of intellectual Property, OWS)
• Sandra Ellison (General Counsel, OWS)
• Rajesh Iyer (Director of Product Engineering, OWS)
• Liwei Zhang (Senior Design Engineer, OWS)
• Hideo Tanaka (former Senior Engineer, OWS)
ESI collection has been completed from OWS's email servers, shared network drives, and relevant document management systems for all identified custodians. The collected data is being hosted on a Relativity review platform maintained by Calderwood & Harkness's litigation support team.
Document Review Protocol: A document review protocol has been established for OWS's production, incorporating the following components: (i) a privilege review workflow with first-level review by contract attorneys and second-level review by Calderwood & Harkness associates, with all privilege calls escalated to Omar Siddiqui or Marcus Delgado; (ii) responsiveness coding categories aligned with the anticipated document request topics; and (iii) confidentiality designation guidelines under the Stipulated Protective Order, including criteria for designating materials as Confidential or Highly Confidential — Attorneys' Eyes Only.
Litigation Hold: A litigation hold notice was circulated to all key custodians and relevant IT personnel on June 1, 2022, two days prior to the filing of the Complaint. Compliance with the litigation hold was confirmed through acknowledgment forms received from each custodian and through verification with OWS's IT department that automated deletion policies were suspended for the identified custodians and data sources.
V. Expert Engagement — Damages
In addition to the claim construction technical expert (Dr. Whitfield) discussed in Section III.D above, Calderwood & Harkness has engaged a damages expert on behalf of OWS.
Dr. Lawrence Kessler of Apex Claim Analytics LLC (150 North Michigan Avenue, Suite 2400, Chicago, Illinois 60601) has been retained as OWS's damages expert for this matter. The retention agreement was executed in October 2022. Dr. Kessler's qualifications are as follows:
• PhD in Economics, Northwestern University (2001)
• Specializes in patent damages analysis, reasonable royalty computation, and lost profits modeling in technology and semiconductor patent cases
• Has been retained as a damages expert in over 75 patent infringement matters in federal courts and before the International Trade Commission
• Author of numerous publications on patent damages methodology, including articles in The Journal of the Patent and Trademark Office Society and IP Litigator
• Qualified and testified as an expert witness in federal courts across 14 jurisdictions
A preliminary damages framework memorandum is being prepared for Dr. Kessler's review. The memorandum outlines OWS's reasonable royalty damages theory under 35 U.S.C. § 284, utilizing the well-established Georgia-Pacific fifteen-factor analysis. The key parameters of OWS's preliminary damages model are as follows:
The 7.5% royalty rate is a preliminary estimate based on comparable license agreements in the silicon photonics and semiconductor IP licensing markets, the value of the patented technology to the accused products, and the relative contribution of the patented features to the overall value of the LumosBridge™ and LumosEdge™ platforms. Dr. Kessler will refine this estimate through his full Georgia-Pacific analysis once fact discovery produces Lumos's financial data and comparable license agreements.
We note that Lumos has retained Compass Forensic Accounting LLP (Dallas, Texas) as its damages expert, with Dr. Patricia Moreno, CPA, ABV serving as the designated expert. Dr. Moreno is a recognized damages expert who frequently testifies on behalf of patent defendants. We anticipate that Dr. Moreno will advance a significantly lower royalty rate and challenge the apportionment of value attributable to the patented features.
Substantive damages work will accelerate following the Markman ruling, which will clarify the scope of the asserted claims and thereby define the universe of accused functionality for purposes of the damages analysis. Until the Court's claim constructions are known, the damages framework remains preliminary.
VI. Pre-Litigation Patent Portfolio Valuation
Prior to the filing of this action, OWS engaged Clearpath IP Valuation Services, Inc. (100 Summer Street, Suite 1500, Boston, Massachusetts 02110) to conduct a comprehensive valuation of OWS's patent portfolio. The valuation was led by Jennifer Armitage, CFA, CLP, a principal at Clearpath with extensive experience in semiconductor IP valuation.
The key findings of the Clearpath valuation are as follows:
• Portfolio-Level Valuation: $215 million. This valuation encompasses OWS's entire patent portfolio, consisting of 87 issued U.S. utility patents and 14 pending U.S. patent applications, covering silicon photonic device architectures, fabrication methods, and system-level integration technologies.
• Asserted Patent Valuation: The four patents asserted in this action were individually valued at a collective total of $42.8 million, representing approximately 19.9% of the total portfolio value. This disproportionate share reflects the commercial significance of the waveguide coupler, photodetector, WDM transceiver, and modulator driver technologies covered by these patents, which are core to OWS's competitive position in the silicon photonics market.
The Clearpath valuation utilized an income-based approach supplemented by market comparables, incorporating revenue projections for OWS's products embodying the patented technologies, comparable licensing transactions in the silicon photonics space, and the remaining useful life of the patents. The valuation report was delivered to OWS management and the Vantage Point deal team in May 2022.
The Clearpath valuation will be relevant to Dr. Kessler's damages analysis in several respects, including Georgia-Pacific factors relating to the profitability of the patented invention, the commercial success and utility of the patented technology, and the portion of the realizable profit attributable to the patented features as distinguished from non-patented elements. The Clearpath valuation also supports OWS's position on the reasonableness of the claimed royalty rate by providing an independent benchmark for the value of the patented technology.
VII. Key Risk Factors and Assessment
A. Claim Construction Risk
The Markman hearing, scheduled for January 30, 2023, represents the most critical near-term event in this case. The outcome of claim construction will largely determine the trajectory of the litigation, including whether OWS's infringement theories are viable as to each of the accused products and whether Lumos's invalidity defenses gain traction.
The principal claim construction risk is that the Court may adopt Lumos's narrow proposed constructions for one or more of the key disputed terms. The risk profile for each of the four primary terms is as follows:
• "Adiabatically coupled" ('567 Patent): Moderate-to-elevated risk. Prosecution history estoppel is a legitimate concern given the narrowing amendment during prosecution. However, OWS has strong arguments based on the specification's disclosure of multiple coupling embodiments and the plain meaning of "adiabatic" in the art.
• "Continuously varying germanium concentration" ('234 Patent): Moderate risk. The textual argument based on the word "continuously" is Lumos's strongest point, but the specification's disclosure of step-graded embodiments and the absence of prosecution history amendments favor OWS.
• "Monolithically formed on a single silicon die" ('678 Patent): Elevated risk. The prosecution history estoppel argument is the most pronounced for this term, given the express distinction of "heterogeneous integration approaches" in the prosecution remarks.
• "Co-integrated ... on a common substrate" ('890 Patent): Moderate-to-elevated risk. Similar to the '678 Patent, the prosecution history amendment and accompanying remarks present a legitimate estoppel argument.
We note that Lumos's lead counsel, Victoria Ashworth of Brannick Howell & Stein LLP, is known for highly effective and aggressive Markman briefing. Her associate team lead, Daniel Kowalski, holds a PhD in Optics from the University of Rochester and brings significant technical credibility to the claim construction process. We are preparing our claim construction briefing with full awareness of the caliber of the opposing team and are allocating resources accordingly.
If the Court were to adopt Lumos's narrow constructions on all four primary terms, OWS's infringement theories could be substantially narrowed or eliminated as to one or more of the accused products. However, the likelihood of Lumos prevailing on all four terms is assessed as low, given the strength of OWS's positions on the intrinsic evidence for the '567 and '234 Patents in particular. A mixed outcome — where the Court adopts some constructions favorable to OWS and some favorable to Lumos — is the most likely result. We are preparing our briefing to maximize OWS's chances of prevailing on the most critical terms while positioning for a favorable outcome even in a mixed-result scenario.
B. Prior Art / Invalidity Risk
Lumos's invalidity defenses, while not yet the primary focus of the case at this stage, present identifiable risks that must be monitored and managed:
• Tanaka Prior Art (U.S. 9,456,012) vs. '567 Patent: This is the most notable invalidity risk. The fact that Hideo Tanaka co-invented both the prior art patent and the asserted '567 Patent creates an unusual factual dynamic. Lumos will argue that the Tanaka '012 patent anticipates or renders obvious the '567 Patent claims. OWS's defense rests on the narrowing amendment adding the "adiabatically coupled" limitation, which the examiner accepted as distinguishing over Tanaka. However, this same narrowing amendment is the basis for Lumos's prosecution history estoppel argument in the claim construction context. The interplay between the invalidity and claim construction issues requires careful coordination.
• Nordlicht EP Application (EP 3,234,567 A1) vs. '234 Patent: The Nordlicht European patent application, published August 2, 2017, poses a § 102(a)(2) anticipation risk to the '234 Patent, which has a priority date of October 15, 2018. The Nordlicht application discloses a germanium photodetector with a compositionally graded buffer on a silicon substrate with significant overlap to the '234 Patent's claimed structure. We are analyzing the Nordlicht application in detail to identify distinguishing features.
• Iyer & Patel (2018 IEEE) vs. '890 Patent: The Iyer & Patel publication, published in 2018, poses a § 103 obviousness risk to the '890 Patent. The paper discusses co-design strategies for modulator drivers and silicon photonic Mach-Zehnder structures, including pre-emphasis equalization. OWS's defense will focus on distinguishing the specific claimed architecture from the more general co-design principles discussed in the paper.
A comprehensive validity risk assessment memorandum was completed in May 2022, prior to the filing of the Complaint. The risks identified in that assessment are being actively managed through our claim construction strategy, which is designed to secure claim constructions that are broad enough to capture Lumos's accused products while maintaining defensibility against the identified prior art. We will continue to refine our invalidity defense strategy as fact discovery produces additional information regarding Lumos's prior art contentions.
C. Litigation Funding Decision
During the pre-filing planning phase, OWS and Vantage Point evaluated a proposal from Resolute Litigation Finance, LP (New York, New York) for partial third-party funding of this litigation. Resolute provided a term sheet offering to fund up to 60% of the anticipated litigation costs in exchange for a priority return and a percentage of the litigation proceeds.
After careful analysis of the term sheet, including evaluation of the economics, the impact on litigation control and strategy, and the sufficiency of OWS's and Vantage Point's available resources, OWS and Vantage Point elected to decline the Resolute term sheet and to self-fund the litigation. This decision was based on the following considerations:
• Vantage Point Capital Partners Fund IV, LP has total committed capital of $2.1 billion, with $74.5 million invested in OWS through the Series C and Series D financing rounds. The Fund's capitalization is more than sufficient to support the litigation budget without the need for third-party funding.
• Self-funding preserves full control over litigation strategy and settlement decisions without the complications that can arise from third-party funder involvement, including potential waiver of privilege issues and conflicts of interest.
• The Board-approved litigation budget of $4.2 million through trial provides adequate funding for the case based on Calderwood & Harkness's detailed budget projections.
The litigation funding decision is documented in the Board minutes from the May 2022 Board meeting and is not subject to further review at this time.
VIII. Financial Summary — Fees, Costs, and Budget
A. Fee and Cost Summary (Through October 28, 2022)
The following table summarizes the attorney fees billed by timekeeper for the reporting period of June 3, 2022 through October 28, 2022. All rates reflect the 10% volume discount negotiated under the OWS / Calderwood & Harkness engagement agreement:
The following table summarizes costs and disbursements incurred to date:
Expert fees incurred to date are as follows:
Note: Dr. Kessler was retained in October 2022, and his fees to date reflect only the initial engagement and preliminary review. The substantial majority of expert fees to date are attributable to Dr. Whitfield's claim construction work.
Total Fees, Costs, and Expert Fees to Date:
B. Retainer Status
The retainer account status is as follows:
The Q4 2022 retainer replenishment of $100,000.00 is due in accordance with the engagement agreement and is expected to be received in November 2022. Given the anticipated acceleration of activity during the claim construction briefing phase in December 2022 and January 2023, we recommend maintaining the evergreen retainer at or above the $100,000 threshold to ensure adequate coverage of anticipated invoices.
C. Budget Tracking