1014-00004 · Hawthorne Vega & Cruz LLP · Damages Analysis

damages-theory-strategy-memo.docx DOCUMENT Litigation

31 / 168 ← → ✕

MEMORANDUM

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

TO: Alan Ngo, Responsible Partner, IP Litigation, Calderwood & Harkness LLP

FROM: Wendy Schultz, Lead Associate; Omar Siddiqui, Working Associate, Calderwood & Harkness LLP

DATE: April 2024

RE: Damages Theory Strategy — Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG (E.D. Tex.)

COPIES: Marcus Delgado, Billing Partner, Calderwood & Harkness LLP; Rebecca Tanaka, General Counsel, Optiwave Semiconductor Corp.

Right-click to update Table of Contents

I. EXECUTIVE SUMMARY

This memorandum sets forth the three-pronged damages strategy that forms the backbone of Optiwave Semiconductor Corp.'s ("OWS" or "Optiwave") affirmative case against Lumicore Technologies, Inc. ("Lumicore") in the above-captioned matter. The three prongs consist of: (1) lost profits under the Panduit framework; (2) a reasonable royalty under the Georgia-Pacific framework, applied to the subset of Lumicore's infringing sales that OWS cannot recapture through the lost-profits theory; and (3) enhanced damages for willful infringement pursuant to 35 U.S.C. § 284 and the Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016). Together, these three theories aggregate to the approximately $210 million demand figure pled in the complaint filed on April 22, 2024.

This memorandum will serve as the foundational roadmap for Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, located at 233 South Wacker Drive, Suite 4400, Chicago, Illinois 60606, who has been retained as OWS's damages expert. Dr. Keating's expert report is due on June 15, 2025, and the analyses outlined in this memorandum will guide the structure, methodology, and presentation of that report. All damages calculations contained herein are preliminary and will be refined as discovery progresses and additional financial data from Lumicore is obtained.

The $210 million demand is a rounded, blended figure that reflects OWS's integrated view of all three damages theories applied across the entire infringement period, running from the third quarter of 2022 (Q3 2022) through the projected trial date in February 2026. It is important to note that this figure is not a simple arithmetic sum of the individual theory maxima; rather, it represents a deliberately calibrated demand that is aggressive but defensible and credible in front of a jury in the Eastern District of Texas. The theoretical maximum recovery under full trebling could exceed $400 million, but the $210 million figure was selected to present a number that will be taken seriously by the Court, by the jury, and by Lumicore's litigation team in settlement discussions.

Several key variables drive the damages case and will be central to Dr. Keating's analysis:

(1) Projected Accused-Product Revenue Through Trial: Approximately $714.6 million, reflecting cumulative revenue from Q3 2022 through Q4 2025 across all three accused product families (LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR), based on Dr. Keating's preliminary analysis incorporating Lumicore's disclosed financials, segment reporting, and published Wall Street analyst estimates.

(2) OWS Market-Share Displacement Rate: 38.2%, representing the proportion of Lumicore's accused-product sales that OWS would have captured "but for" the infringement, based on head-to-head competition analysis at twelve of the top twenty hyperscale data-center operators where both OWS and Lumicore are approved vendors.

(3) OWS Gross Margin on Competing Products: 47.3%, as reflected in OWS's internal financial records for the OWS-400ZR and OWS-800XR product families, audited by Gresham & Whitfield LLP.

(4) Proposed Reasonable Royalty Rate: 8.5%, derived from analysis of comparable licenses in OWS's licensing portfolio and silicon-photonics industry benchmarks.

(5) Post-Notice Period for Willful Infringement Enhancement: Beginning January 15, 2023 (the date FairPoint Licensing Group, LLC sent the first licensing and notice letter to Lumicore's General Counsel) and extending through the projected trial date.

Finally, this memorandum should be understood in the context of OWS's ownership structure and the commercial expectations that inform the litigation strategy. Ridgeline Capital Partners, LP holds a 55% ownership stake in OWS, having acquired that position in 2019 for $780 million. Ridgeline's Managing Partner, Franklin Osei, also serves as Chair of the OWS Board of Directors. The OWS Board, acting through Board Resolution No. 2024-07, approved an $18.5 million litigation budget through trial for this matter. The $210 million damages demand is calibrated to the client's commercial expectations and the expected trial value of the case. A decision-tree analysis conducted in connection with the settlement authority memorandum (prepared under separate cover) places the probability-weighted expected value of the case at approximately $138 million. The relationship between the pled demand, the expected value, and the approved budget reflects a disciplined approach to high-stakes patent litigation that is consistent with Ridgeline's investment thesis for OWS.

II. BACKGROUND AND CASE OVERVIEW

A. The Parties

1. Plaintiff: Optiwave Semiconductor Corp. (OWS)

Optiwave Semiconductor Corp. is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS is a fabless semiconductor company specializing in the design, development, and commercialization of silicon photonics chipsets for data-center interconnects. The company was founded in 2011 and has grown to approximately 1,250 employees as of the date of this memorandum.

OWS reported fiscal year 2023 revenue of $487.3 million and fiscal year 2023 net income of $61.4 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. These figures position OWS as the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, trailing only two significantly larger diversified semiconductor companies whose photonics businesses are embedded within much larger product portfolios. OWS's focused positioning in silicon photonics, combined with its robust patent portfolio, gives it a distinctive competitive advantage in the market segment at issue.

OWS's patent portfolio comprises 142 issued U.S. patents and 58 pending patent applications, spanning key technologies in silicon photonics including waveguide design, coherent optical transceiver architecture, thermal management of photonic integrated circuits, and grating coupler design. This portfolio represents more than a decade of sustained research and development investment.

The OWS products that compete directly with the accused Lumicore products are the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families. These products practice the asserted patents and have been commercially successful, generating approximately $310 million in revenue in fiscal year 2023 alone.

Key OWS personnel relevant to this matter include: Dr. Priya Ramaswamy, Chief Executive Officer; Dr. Jian-Wei Huang, Chief Technology Officer; Rebecca Tanaka, General Counsel; and David Leitner, Chief Financial Officer. Ms. Tanaka has been the primary client contact for this litigation and has been instrumental in coordinating the flow of information between OWS's internal teams and the Calderwood & Harkness litigation team.

2. Defendant: Lumicore Technologies, Inc.

Lumicore Technologies, Inc. is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore is a fast-growing entrant in the silicon-photonics transceiver market, having been founded in 2015 and rapidly expanded to approximately 870 employees. Lumicore's estimated fiscal year 2023 revenue was approximately $312.6 million, a figure that reflects explosive growth since its founding and underscores the competitive threat that Lumicore poses to OWS in this market segment.

Lumicore completed an initial public offering on the Nasdaq Stock Market in March 2022 at $24 per share. As of the filing of the complaint in April 2024, Lumicore's shares were trading at approximately $37 per share, reflecting a market capitalization of approximately $3.4 billion based on 91.8 million shares outstanding. The company's publicly traded status is relevant to the damages analysis in several respects, including the availability of detailed financial disclosures, analyst coverage of Lumicore's product segments, and the injunction leverage analysis discussed in Section X below.

Key Lumicore personnel include: Thomas "Tom" Kessler, Chief Executive Officer; Dr. Sandra Michaud, Chief Technology Officer; Raymond Bautista, General Counsel; and Janet Moreno, Chief Financial Officer. Lumicore is represented in this litigation by Hawthorne Vega & Cruz LLP, with Catherine "Kate" Rourke serving as lead partner. Ms. Rourke is a seasoned patent litigator with extensive experience in Eastern District of Texas practice, and we anticipate vigorous advocacy on both liability and damages issues.

B. The Asserted Patents

OWS asserts four U.S. utility patents in this action, each directed to different aspects of silicon-photonics transceiver technology. The patents are summarized below:

U.S. Patent No. 10,234,847 (the "'847 Patent") — Titled "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. The original assignee is OWS. The '847 Patent claims a novel waveguide multiplexer architecture that achieves significantly lower insertion loss than prior art designs, enabling higher-bandwidth and more energy-efficient optical signal processing in silicon-photonics transceivers. This patent is in the same family as the '562 Patent, discussed below, sharing a continuation relationship.

U.S. Patent No. 10,891,193 (the "'193 Patent") — Titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate." The '193 Patent was filed on April 7, 2017, and issued on January 12, 2021. The original assignee is OWS. The '193 Patent shares Provisional Application No. 62/499,117 with the '015 Patent. This patent covers a coherent optical transceiver architecture that integrates multiple photonic and electronic functions on a single silicon substrate, achieving high bandwidth in a compact form factor that is critical for data-center applications.

U.S. Patent No. 9,678,562 (the "'562 Patent") — Titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks." The '562 Patent was filed on November 22, 2014, and issued on June 13, 2017. The original assignee was Solara Optics, Inc., a silicon-photonics startup that developed pioneering thermal management solutions for photonic integrated circuits. OWS acquired the '562 Patent, along with eleven other patents, from Solara Optics pursuant to an asset purchase agreement dated June 15, 2018, for $34.5 million. OWS's chain of title is clean, as confirmed by recorded assignments at the USPTO. The '562 Patent addresses one of the most significant challenges in high-density photonic integrated circuits — thermal management — through the use of embedded micro-channel heat sinks that dissipate heat without disrupting optical signal quality.

U.S. Patent No. 11,402,015 (the "'015 Patent") — Titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers." The '015 Patent was filed on August 30, 2019, and issued on August 2, 2022. The original assignee is OWS. This patent claims a polarization-diverse grating coupler design that enables efficient coupling of optical signals into silicon waveguides regardless of the input polarization state, a feature that is essential for coherent optical transceivers operating in real-world data-center environments where polarization conditions are unpredictable.

All four patents are utility patents. All maintenance fees are current. No inter partes review (IPR) petitions have been filed against any of the asserted patents as of the date of this memorandum, although we should anticipate the possibility that Lumicore may file IPR petitions as a litigation strategy, particularly with respect to the '562 and '847 Patents.

C. The Accused Products

The three accused Lumicore product families, their launch dates, estimated fiscal year 2023 revenues, and the patents asserted against each are set forth in the table below:

Total accused-product revenue for fiscal year 2023 is estimated at $264.9 million ($94.8M + $128.4M + $41.7M), based on Lumicore's segment disclosures in its SEC filings and public earnings reports. This figure represents approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million, underscoring the centrality of the accused products to Lumicore's business.

Dr. Keating's preliminary analysis estimates total accused-product revenue over the infringement period to date (Q3 2022 through Q1 2024) at approximately $378.2 million. Projecting forward through the anticipated trial date, incorporating Lumicore's growth trajectory, published analyst estimates from firms including Drayton Securities, Bramwell National Bank, and Drayton Financial, and the secular growth trends in the silicon-photonics transceiver market driven by hyperscale data-center buildout for AI/ML workloads, Dr. Keating estimates total accused-product revenue over the full infringement period (Q3 2022 through Q4 2025) at approximately $714.6 million. This figure serves as the revenue base for the damages calculations set forth in this memorandum.

It should be noted that Lumicore's revenue growth has been significant and consistent. The company's accused products have gained meaningful market share since launch, driven in substantial part by the very patented technologies at issue in this case. As discovery progresses and more granular financial data is obtained from Lumicore, the revenue projections will be refined. In particular, we anticipate that Lumicore's FY 2024 revenue data — which should be available in early 2025 — will provide a critical data point for updating the damages model.

D. Pre-Suit Licensing History

The pre-suit licensing history between OWS and Lumicore is a critical element of the damages case, as it informs: (a) the establishment of the hypothetical negotiation date for the Georgia-Pacific reasonable royalty analysis; (b) the evidence of willful infringement supporting enhanced damages; and (c) the computation of the post-notice damages period. The relevant chronology is as follows:

December 12, 2022: Benchmark Semiconductor Analysis, LLC, an independent semiconductor reverse-engineering firm, delivered a teardown report to OWS confirming infringement indicators in Lumicore's LumiLink 400G-ZR+ transceiver module. The teardown was conducted under the direction of Kevin Ng, Lead Engineer at Benchmark, and identified specific structural and functional features of the LumiLink 400G-ZR+ that correspond to claim elements of the '847, '193, and '562 Patents. This report provided OWS with the technical foundation to initiate licensing discussions with Lumicore.

January 15, 2023: FairPoint Licensing Group, LLC, acting as OWS's licensing agent under the direction of Managing Director Angela Reeves, sent the first licensing and notice letter to Lumicore's General Counsel, Raymond Bautista. The letter identified the '847, '193, and '562 Patents, described the infringement indicators found in the Benchmark teardown of the LumiLink 400G-ZR+, and invited Lumicore to engage in licensing discussions. This letter constitutes the first formal notice of infringement and is the anchor date for the post-notice willfulness period.

February 28, 2023: Lumicore responded to the FairPoint letter through outside counsel at Hawthorne Vega & Cruz LLP. Lumicore's response disputed infringement and questioned the validity of the identified patents, but did not engage substantively with the licensing proposal. The response was notably perfunctory, consisting of approximately two pages of boilerplate assertions without detailed claim-by-claim analysis.

April 20, 2023: An in-person licensing meeting was held in Austin, Texas. Representing OWS were Angela Reeves of FairPoint Licensing Group and Rebecca Tanaka, OWS's General Counsel. Representing Lumicore were Raymond Bautista and Kate Rourke of Hawthorne Vega & Cruz. According to the subsequent deposition testimony of Angela Reeves (taken on December 10, 2024), Lumicore's representatives showed "no interest in negotiating" and the meeting was unproductive. Ms. Reeves testified that she presented a detailed claim chart mapping the Benchmark teardown findings to the asserted patent claims, but Lumicore's team declined to engage with the substance of the analysis.

May 15, 2023: FairPoint sent a second licensing letter to Lumicore, this time adding the '015 Patent (which had issued on August 2, 2022) and expanding the scope of accused products to include the LumiLink 800G-DR8, which had launched in Q1 2023. The second letter reiterated OWS's licensing proposal and noted that Lumicore had expanded its infringement by launching a second product without addressing the issues raised in the first letter.

July 10, 2023: Lumicore formally declined to take a license, communicating through Hawthorne Vega & Cruz that it had obtained "competent legal opinions" concluding that its products do not infringe the asserted patents. Lumicore refused to produce or describe the substance of these opinions, and has continued to assert privilege over them in discovery. This declination letter is a significant piece of evidence in the willful infringement analysis, as discussed in Section V below.

Q4 2023: Despite having received two detailed licensing letters, attended an in-person licensing meeting, and been put on notice of infringement of four patents, Lumicore launched the LumiEdge 1600G-LR transceiver module in the fourth quarter of 2023. This launch expanded the scope of infringement to a third product line, implicating the '193 and '015 Patents. OWS identified additional infringement indicators in the LumiEdge 1600G-LR through a follow-up Benchmark teardown completed in January 2024.

The pre-suit licensing history demonstrates a consistent pattern of notice, refusal to engage, and expansion of infringing activity that strongly supports OWS's willful infringement theory and informs the damages analysis throughout this memorandum.

III. THEORY 1 — LOST PROFITS (PANDUIT ANALYSIS)

A. Legal Framework

Under 35 U.S.C. § 284, a patent holder is entitled to "damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The statute provides the floor (a reasonable royalty) but not the ceiling; where a patentee can demonstrate that it would have made the infringer's sales absent the infringement, lost profits are the preferred measure of damages because they more fully compensate the patentee for the harm suffered.

The leading framework for analyzing lost-profit entitlement in patent cases is the four-factor test articulated in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978), which has been widely adopted by the Federal Circuit. Under Panduit, a patentee may recover lost profits by establishing:

(1) Demand for the patented product;

(2) Absence of acceptable non-infringing substitutes;

(3) The patentee's manufacturing and marketing capability to exploit the demand; and

(4) The amount of profit the patentee would have made.

The Federal Circuit has consistently held that the Panduit test is not the exclusive means of establishing lost profits — a patentee may employ any reasonable method of proving "but for" causation. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc). However, the Panduit framework remains the most widely accepted and judicially recognized method, and we recommend that Dr. Keating structure his lost-profits analysis around it. The Panduit factors provide a clear, well-established framework that will resonate with the jury and withstand Daubert scrutiny.

It is also important to note that where the patentee cannot demonstrate that it would have captured all of the infringer's sales — for example, because some of the sales would have gone to non-infringing competitors — the patentee is entitled to lost profits on the share it would have captured and a reasonable royalty on the remainder. See State Industries, Inc. v. Mor-Flo Industries, Inc., 883 F.2d 1573, 1577 (Fed. Cir. 1989). This "market share" approach to allocating between lost profits and reasonable royalties is the methodology we adopt in this memorandum.

B. Application of Panduit Factors

Factor 1: Demand for the Patented Product

The first Panduit factor requires proof that there was demand for the patented product during the infringement period. This factor is easily satisfied here.

OWS reported fiscal year 2023 revenue of $487.3 million, of which approximately $310 million is attributable to products that practice the asserted patents — specifically, the OWS-400ZR and OWS-800XR transceiver module families. These products compete directly with Lumicore's accused products in the hyperscale data-center transceiver market. The substantial revenue generated by OWS's patent-practicing products is powerful evidence that there was — and continues to be — robust demand for products embodying the patented technology.

The demand evidence is further bolstered by the broader market context. The silicon-photonics transceiver market is experiencing rapid and sustained growth, driven by the hyperscale data-center buildout needed to support AI and machine learning workloads, enterprise cloud computing expansion, and the proliferation of bandwidth-intensive applications. Industry analysts project the silicon-photonics market to grow at a compound annual growth rate (CAGR) exceeding 25% through 2028. OWS is the third-largest U.S. supplier in this market, with established customer relationships at virtually all major hyperscale data-center operators, including those that also purchase from Lumicore.

Gregory Falk, OWS's retained industry expert and a former Vice President of Engineering at Solara Optics, Inc., will provide testimony regarding the strong and growing demand for silicon-photonics transceiver modules in the relevant market segments. Mr. Falk's testimony will establish that the features covered by the asserted patents — low-insertion-loss waveguide multiplexing, coherent optical transceiver integration, embedded micro-channel thermal management, and polarization-diverse grating coupling — are among the most important performance differentiators driving purchasing decisions in this market, which further supports the conclusion that demand for the patented product is strong.

Factor 2: Absence of Acceptable Non-Infringing Substitutes

The second Panduit factor — the absence of acceptable non-infringing substitutes — is typically the most contested factor in lost-profits analysis, and we expect it to be a primary battleground in this case. Under Federal Circuit precedent, a "substitute" is "acceptable" only if it is a product that would have been available to consumers during the infringement period and that consumers would have found to be a reasonable alternative to the infringing product. See Grain Processing Corp. v. American Maize-Products Co., 185 F.3d 1341, 1353 (Fed. Cir. 1999).

We have conducted a preliminary analysis of the four potential non-infringing alternatives that Lumicore is most likely to identify in the relevant market segment. These include transceiver modules offered by non-party competitors that compete in the 400G and 800G data-center interconnect markets. Our analysis, which will be refined and supported by expert testimony, indicates that each of these potential alternatives lacks one or more of the key patented features, including low-insertion-loss waveguide multiplexing (covered by the '847 Patent), embedded micro-channel thermal management (covered by the '562 Patent), and polarization-diverse grating coupling (covered by the '015 Patent). As a result, none of these products offers the same combination of performance, power efficiency, and thermal stability as the OWS and Lumicore products that practice the asserted patents.

Gregory Falk will provide expert opinion testimony that no commercially available substitute offers equivalent performance characteristics without utilizing the patented technologies at issue. Mr. Falk's analysis will be supported by comparative performance data, customer specifications and qualification requirements, and industry benchmarking studies.

We acknowledge, however, that this factor may face significant challenge from Lumicore's defense damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP. We anticipate that Dr. Volkov will argue that other transceiver modules available in the market — including products from non-party competitors — constitute acceptable non-infringing substitutes. We further anticipate that Dr. Volkov will attempt to characterize the market as having multiple competing products that offer substantially similar functionality, thereby undermining the second Panduit factor and shifting a greater proportion of damages to the reasonable royalty theory.

Our rebuttal strategy on this point is twofold. First, Dr. Ashford (technical expert) will testify to the technical uniqueness and superiority of the patented features, establishing that products lacking these features are not performance equivalents. Second, Gregory Falk will testify that the competing products identified by Lumicore do not compete in the same performance and price tier for 400G-ZR and 800G-DR applications in hyperscale data centers, where the patented features are essential to meeting stringent customer specifications for insertion loss, thermal management, and polarization handling.

Factor 3: Manufacturing and Marketing Capability

The third Panduit factor requires proof that the patentee had the manufacturing and marketing capability to exploit the demand represented by the infringer's sales. As a fabless semiconductor company, OWS does not operate its own fabrication facilities. However, OWS maintains substantial manufacturing capacity through long-term foundry partner agreements with leading semiconductor manufacturing organizations. These foundry agreements include provisions for incremental capacity allocation that would be sufficient to serve the additional demand represented by Lumicore's accused-product sales.

In addition, OWS maintains an established global sales force and distribution network covering all major hyperscale customers in North America, Europe, and Asia-Pacific. OWS's sales infrastructure includes direct sales representatives at all of the top twenty hyperscale data-center operators, as well as distribution partnerships with major semiconductor distributors. The existence of this sales infrastructure demonstrates that OWS had the marketing capability to compete for and serve the incremental demand that was diverted to Lumicore's infringing products.

Evidence to support this factor will include OWS capacity utilization data (showing available headroom at OWS's foundry partners), foundry partner agreements and capacity allocation letters, and documentation of OWS's global sales infrastructure. We will also obtain a declaration from Dr. Nikolai Petrov, OWS's Vice President of Engineering, confirming that OWS's foundry relationships provide sufficient scalable capacity to absorb the incremental volume represented by Lumicore's accused-product sales.

Factor 4: Amount of Profit

The fourth Panduit factor requires quantification of the profit that the patentee would have made on the sales diverted by the infringer. OWS's gross margin on the competing products (OWS-400ZR and OWS-800XR families) is 47.3%, as reflected in OWS's internal financial records audited by Gresham & Whitfield LLP. This gross margin figure accounts for the cost of goods sold, including foundry manufacturing costs, packaging and testing costs, and related direct production expenses. Incremental costs of serving additional demand — such as additional foundry wafer starts and increased testing throughput — are assumed to be captured within the gross margin calculation, which is a conservative approach. If a more granular incremental-cost analysis is warranted, Dr. Keating will prepare an alternative calculation using incremental rather than average margins; however, we expect the gross margin approach to be appropriate and defensible for this case.

C. Lost Profits Calculation

The lost-profits calculation proceeds as follows:

Revenue Base: The projected accused-product revenue over the full infringement period (Q3 2022 through Q4 2025) is approximately $714.6 million, as estimated by Dr. Keating based on Lumicore's financial disclosures, segment reporting, and published analyst estimates.

Market-Share Displacement Rate: 38.2%. This figure represents the proportion of Lumicore's accused-product sales that OWS would have captured "but for" the infringement. The displacement rate is derived from a head-to-head competition analysis conducted at twelve of the top twenty hyperscale data-center operators where both OWS and Lumicore are approved vendors and compete for the same purchase orders. At these twelve accounts, OWS and Lumicore are the primary competitors, and the displacement rate reflects OWS's expected share of the competitive opportunity absent Lumicore's infringing products. The rate has been adjusted downward from a raw competitive share figure to account for customers where OWS is not an approved vendor, does not actively compete, or where other factors would have prevented OWS from capturing the sale. This conservative adjustment strengthens the defensibility of the displacement rate.

OWS Gross Margin: 47.3%.

Calculation:

$714.6M × 38.2% × 47.3% = approximately $128.9 million in lost profits.

It is important to note that lost profits are available only on the 38.2% share of Lumicore's accused-product sales that OWS could have captured. The remaining 61.8% of Lumicore's accused-product revenue — representing sales that would have gone to other competitors or that OWS could not have captured for other reasons — is subject to the reasonable royalty theory discussed in Section IV below. This allocation between lost profits and reasonable royalties ensures that OWS is fully compensated for all infringing sales while avoiding any double recovery.

D. Sensitivity Analysis — Lost Profits

The table below presents a sensitivity analysis of the lost-profits calculation across the key input variables:

The sensitivity analysis demonstrates that even under conservative assumptions (lower revenue projection, lower displacement rate, lower gross margin), OWS's lost-profits claim is substantial. Conversely, under optimistic assumptions — which are entirely plausible given the growth trajectory of the silicon-photonics market and OWS's strong competitive position — the lost-profits figure could approach $180 million.

The key risk to the lost-profits calculation is Lumicore's expected challenge to the 38.2% displacement rate. Dr. Volkov will likely argue that the displacement rate is inflated and that a significant portion of Lumicore's sales would have gone to non-infringing competitors rather than to OWS. Dr. Volkov may also argue that certain non-infringing substitutes were available, which could reduce or eliminate the second Panduit factor and correspondingly reduce the lost-profits recovery.

To mitigate this risk, Dr. Keating should be prepared to defend the 38.2% displacement methodology with granular, customer-by-customer analysis based on Lumicore's customer data (to be obtained in discovery), OWS's win/loss records, and market-share data from independent industry sources. The customer-level analysis will demonstrate that at the twelve hyperscale accounts where OWS and Lumicore compete head-to-head, OWS is the primary competitive alternative to Lumicore, and the 38.2% displacement rate is well supported by the evidence.

IV. THEORY 2 — REASONABLE ROYALTY (GEORGIA-PACIFIC ANALYSIS)

A. Legal Framework

Where lost profits cannot be shown — either because the patentee cannot satisfy the Panduit factors or because a portion of the infringer's sales would not have been captured by the patentee — the patent statute provides that the patentee is entitled to "in no event less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. § 284. The reasonable royalty serves as the damages floor, ensuring that even where the patentee cannot demonstrate lost sales, it receives fair compensation for the unauthorized use of its patented technology.

The established methodology for determining a reasonable royalty is the hypothetical negotiation framework articulated in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). Under this framework, the Court and the jury are asked to determine the royalty rate that a willing licensor and a willing licensee would have agreed to in a hypothetical negotiation conducted on the eve of first infringement, assuming that both parties believed the patent to be valid and infringed, and that both parties were acting as rational economic actors seeking to maximize their respective positions.

The Georgia-Pacific decision identifies fifteen factors relevant to determining the reasonable royalty rate. These factors encompass a wide range of considerations including the royalties received by the patentee in prior licenses, the rates paid by the infringer for comparable licenses, the nature and scope of the license, the licensor's established policy of maintaining its patent monopoly versus granting licenses, the commercial relationship between the licensor and licensee, the profitability of the patented product, the utility and advantages of the patented technology over prior art, the nature and extent of use by the infringer, the portion of the profit customarily allowed in the particular business, the portion of the infringer's profit attributable to the invention, expert testimony, and the amount that a prudent businessman would have been willing to pay as a royalty.

In applying the Georgia-Pacific framework, two important doctrinal considerations merit discussion. The entire market value rule (EMVR) allows the royalty base to be the entire selling price of the infringing product where the patented feature drives the demand for the product as a whole. See Rite-Hite Corp., 56 F.3d at 1549. Conversely, the smallest salable patent-practicing unit (SSPPU) doctrine, which has gained significant emphasis in recent Federal Circuit jurisprudence, requires that the royalty base be limited to the smallest commercially available unit that practices the patented technology, unless the EMVR is applicable. See LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67–68 (Fed. Cir. 2012). The interplay between EMVR and SSPPU will be a critical issue in this case, and a separate apportionment analysis memorandum is being prepared for circulation in August 2024.

B. Hypothetical Negotiation Date

We propose establishing the hypothetical negotiation date as the second quarter of 2022 (Q2 2022), immediately before the launch of the first accused product, the LumiLink 400G-ZR+, which occurred in Q3 2022. This date is consistent with Federal Circuit precedent establishing that the hypothetical negotiation takes place on the eve of first infringement. See Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009).

As of Q2 2022, several relevant conditions obtained that will inform the hypothetical negotiation:

• OWS held all four asserted patents. The '015 Patent issued on August 2, 2022, meaning it was either issued or on the verge of issuance as of Q2 2022. The '847, '193, and '562 Patents had all been issued for at least one year.

• Lumicore was a newly-public company, having completed its IPO on Nasdaq in March 2022 at $24 per share. The company was in the process of launching its first major product line (LumiLink 400G-ZR+) and was seeking to establish itself as a significant competitor in the silicon-photonics transceiver market.

• The parties were not yet in a licensing relationship. No licensing correspondence had yet been exchanged; the first FairPoint letter was not sent until January 15, 2023.

• The silicon-photonics transceiver market was entering a period of rapid growth, with published industry forecasts projecting significant demand increases driven by hyperscale data-center expansion.

Under established hypothetical negotiation principles, all information available to a willing licensor and a willing licensee as of Q2 2022 informs the negotiation. Post-negotiation evidence of actual infringement and market performance may also be considered to the extent it reflects trends that were predictable as of the negotiation date. See Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed. Cir. 2014). This means that Lumicore's actual sales trajectory and the commercial success of the accused products can be used as evidence of what the parties would have expected during the hypothetical negotiation.

C. Revenue Base for Reasonable Royalty

The reasonable royalty theory applies to the portion of Lumicore's accused-product sales that OWS cannot claim as lost profits — that is, the remaining 61.8% of accused-product revenue that would not have been captured by OWS but for the infringement but which nevertheless constitutes unauthorized use of OWS's patented technology.

The royalty-eligible revenue base is calculated as follows:

$714.6M (total projected accused-product revenue) × 61.8% = approximately $441.6 million in royalty-eligible sales.

Entire Market Value Rule (EMVR) Application: We contend that the accused transceiver modules are sold as integrated units in which the patented features — the waveguide multiplexer, the thermal management system, and the grating coupler — are the primary drivers of customer demand. Each accused module is sold as a complete transceiver unit to data-center operators, and the patented features are not sold separately or priced as standalone components. The module-level selling price is therefore the appropriate royalty base under the EMVR.

Dr. Keating will opine that the patented technology constitutes the core differentiator and basis for customer demand for the accused products. This opinion will be supported by: (a) Dr. Ashford's technical testimony establishing that the patented features are integral to the performance characteristics that differentiate the accused products from competing non-infringing alternatives; (b) Gregory Falk's industry testimony establishing that customers select silicon-photonics transceiver modules based primarily on the performance attributes enabled by the patented technologies (insertion loss, bandwidth, thermal stability, polarization handling); and (c) Lumicore's own marketing materials and customer-facing documentation, which emphasize these features as key selling points.

SSPPU Alternative: If the Court rejects the EMVR application, the photonic integrated circuit (PIC) sub-component within each accused transceiver module could serve as the SSPPU. The PIC is the smallest commercially identifiable unit within the transceiver module that practices all of the asserted patent claims. However, pricing data at the PIC level is limited, as Lumicore (like OWS) does not sell PICs as standalone products; they are manufactured and integrated into finished transceiver modules. Obtaining PIC-level cost and pricing data from Lumicore will be a priority in discovery. To the extent we are compelled to use the SSPPU, the royalty rate would need to be adjusted upward to compensate for the smaller base, consistent with Federal Circuit guidance. See VirnetX, Inc. v. Sterling Reach Holdings, 767 F.3d 1308, 1326 (Fed. Cir. 2014).

D. Proposed Royalty Rate: 8.5%

The proposed reasonable royalty rate of 8.5% is derived from a comprehensive analysis of comparable licenses, including OWS's own licensing program and publicly available industry benchmarks. The comparable licenses considered include:

(a) OWS–Terralink Semiconductor License (2020): This license granted Terralink a non-exclusive license under a subset of OWS's silicon-photonics patent portfolio (including the '847 and '562 Patents) in exchange for a 6.5% running royalty. Licensed revenue under this agreement totaled approximately $45 million over the license term. The Terralink license is highly comparable because it involves the same licensor, overlapping patents, and the same technology field. The lower royalty rate (6.5% versus the proposed 8.5%) is explained by the fact that Terralink was not a direct competitor to OWS and the licensed product segment was narrower.

(b) OWS–NovaWave Corp. License (2021): This license granted NovaWave a non-exclusive license under a broader set of OWS patents, including all four asserted patents, in exchange for a 9.0% running royalty. Licensed revenue under this agreement totaled approximately $22 million. The higher rate reflects the broader scope of the license and the greater competitive overlap between OWS and NovaWave relative to Terralink.

(c) OWS–Helix Integrated Photonics License (2022): This license granted Helix a non-exclusive license under OWS's silicon-photonics portfolio in exchange for a 7.75% running royalty plus a $2.5 million upfront payment. Licensed revenue under this agreement totaled approximately $68 million. When the upfront payment is amortized across the licensed revenue, the effective royalty rate is approximately 11.4%. The 7.75% running royalty component, without the upfront payment, represents a conservative comparable.

(d) Industry Comparable — Stratos Photonics v. ArcLight Systems Settlement (2019): This publicly reported patent litigation settlement in the silicon-photonics industry resulted in a license at an 8.0% running royalty rate. While the specific patents and products differ from the instant case, the technology field and market segment are closely comparable.

(e) Industry Comparable — Coreline Technologies v. Prisma Semiconductor Cross-License (2021): This cross-license agreement in the photonics industry had an effective rate of 10.2% when the net royalty flow was computed based on the relative portfolio strengths. The higher effective rate reflects the breadth of the portfolio licensed and the competitive dynamics between the parties.

The range of comparable royalty rates in the silicon-photonics industry spans approximately 4.0% to 12.5%. The proposed 8.5% rate falls in the mid-to-upper portion of this range, which is appropriate and justified by several factors:

(i) The breadth and importance of the four-patent portfolio asserted in this case, covering multiple critical technologies (waveguide multiplexing, coherent transceiver architecture, thermal management, and grating coupling) that collectively address the most important performance challenges in high-bandwidth silicon-photonics transceivers;

(ii) The direct competitive relationship between OWS and Lumicore, which drives the royalty upward because a willing licensor in OWS's position would demand a premium to license technology to a direct competitor whose sales directly displace the licensor's own revenue;

(iii) OWS's established licensing program, which provides a well-documented track record of arms-length licensing transactions at rates of 6.5% to 9.0% (running royalty rates), lending credibility and support to the proposed 8.5% rate; and

(iv) Lumicore's strong gross margins on the accused products, ranging from 52.1% on the LumiLink 400G-ZR+ to 58.3% on the LumiEdge 1600G-LR (per discovery data produced by Lumicore and designated Highly Confidential — Attorneys' Eyes Only). These margins demonstrate that Lumicore could afford an 8.5% royalty while still maintaining healthy profitability on the accused products.

E. Georgia-Pacific Factor Summary

The following provides a narrative analysis of the most impactful Georgia-Pacific factors as applied to the facts of this case. While all fifteen factors will be addressed in Dr. Keating's expert report, the factors summarized below are the ones most likely to drive the royalty determination:

Factor 1 — Royalties Received by the Patentee for Licensing the Patent in Suit: OWS's three prior licenses (Terralink at 6.5%, NovaWave at 9.0%, and Helix at 7.75% running/11.4% effective) establish a well-documented baseline for the reasonable royalty rate. These licenses all involve the same licensor (OWS), the same or overlapping patents, and the same technology field. They provide the most reliable comparables available and strongly support a royalty rate of 8.5% or higher. Under Georgia-Pacific, "[t]he royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty," is the most probative factor.

Factor 2 — Rates Paid by the Licensee for the Use of Other Patents Comparable to the Patent in Suit: Lumicore's licensing history is not yet fully known and will be a key area of discovery. We anticipate seeking all license agreements involving Lumicore as either a licensor or licensee in the silicon-photonics or related semiconductor fields. Any licenses that Lumicore has taken at rates comparable to or above the proposed 8.5% rate will provide powerful corroboration.

Factor 5 — The Commercial Relationship Between the Licensor and Licensee: OWS and Lumicore are direct competitors in the silicon-photonics transceiver market. Under Georgia-Pacific Factor 5, the commercial relationship between the parties is a critical consideration, and a competitive relationship between the licensor and licensee tends to drive the royalty rate upward. A willing licensor in OWS's position would be reluctant to enable a direct competitor and would demand a premium to compensate for the competitive harm caused by the license. This factor strongly supports a rate at the upper end of the comparable range.

Factor 8 — The Established Profitability of the Product Made Under the Patent, Its Commercial Success, and Its Current Popularity: OWS products embodying the asserted patents generate 47.3% gross margins and produced approximately $310 million in revenue in FY 2023. This commercial success demonstrates the value of the patented technology and supports a robust royalty rate. From Lumicore's perspective, the accused products generated estimated FY 2023 revenue of $264.9 million with gross margins of 52.1% to 58.3%, confirming that the patented technology is commercially valuable to Lumicore as well.

Factor 9 — The Utility and Advantages of the Patent Property Over the Old Modes or Devices, if Any, That Had Been Used for Working Out Similar Results: The patented features enable low insertion loss, high bandwidth, thermal stability, and polarization diversity that are essential to high-performance transceivers. These represent substantial advantages over prior art approaches that used discrete optical components, conventional heat sinks, and polarization-maintaining fiber rather than polarization-diverse grating couplers. Dr. Ashford's technical testimony will detail these advantages. The significance of these improvements supports a higher royalty rate.

Factor 11 — The Extent to Which the Infringer Has Made Use of the Invention and Any Evidence Probative of the Value of That Use: Lumicore uses the patented technology across its entire accused product line, which generated $264.9 million in FY 2023 revenue and represents approximately 84.7% of Lumicore's total revenue. The pervasive use of the patented technology across substantially all of Lumicore's product portfolio underscores the high value of the patents to Lumicore and supports a meaningful royalty rate.

Factor 13 — The Portion of the Realizable Profit That Should Be Credited to the Invention as Distinguished from Non-Patented Elements, the Manufacturing Process, Business Risks, or Significant Features or Improvements Added by the Infringer: The patented features are core differentiators in the accused products, not peripheral enhancements or minor incremental improvements. The waveguide multiplexer architecture ('847), coherent transceiver integration ('193), thermal management system ('562), and grating coupler design ('015) collectively represent the technological foundation that makes Lumicore's products competitive in the market. While Lumicore has undoubtedly contributed its own design innovations and engineering efforts, the patented features are the primary drivers of customer demand and product performance. This factor supports attributing a significant portion of Lumicore's profit to the patented inventions.

Factor 15 — The Amount That a Licensor (Such as the Patentee) and a Licensee (Such as the Infringer) Would Have Agreed Upon, at the Time the Infringement Began, if Both Had Been Reasonably and Voluntarily Trying to Reach an Agreement: Synthesizing all of the foregoing factors, a willing licensor in OWS's position — holding a strong patent portfolio covering critical technologies, occupying the third-largest market position, maintaining an established licensing program with rates of 6.5% to 9.0%, and facing the prospect of licensing to a direct competitor — would demand at least 8.5%. A willing licensee in Lumicore's position — earning gross margins of 52.1% to 58.3% on the accused products, needing the patented technology to compete effectively, and facing the risk of an infringement finding — could afford to pay 8.5% and would still generate substantial profits on the accused products.

F. Reasonable Royalty Calculation

Applying the proposed 8.5% royalty rate to the royalty-eligible revenue base, the reasonable royalty damages are calculated as follows:

$441.6M × 8.5% = approximately $37.5 million in reasonable royalty damages.

This figure represents the royalty that OWS is owed on the 61.8% of Lumicore's accused-product revenue that cannot be recovered as lost profits. Combined with the lost-profits figure of approximately $128.9 million, the base compensatory damages (before any enhancement for willful infringement) total approximately $166.4 million.

G. Sensitivity Analysis — Reasonable Royalty

The table below presents a sensitivity analysis of the reasonable royalty calculation across the key input variables:

The sensitivity analysis illustrates the importance of defending both the revenue base (which depends on maintaining the EMVR application) and the royalty rate (which depends on the comparability of OWS's prior licenses and the weight given to the competitive relationship between the parties).

The key risk to the reasonable royalty calculation is Lumicore's expected argument that the royalty base should be disaggregated to the SSPPU level (the PIC sub-component) rather than the entire transceiver module, and that the royalty rate should be reduced to 3% to 5%, potentially citing non-comparable licenses from unrelated technology fields or licenses involving less important patents. Dr. Volkov may also argue that the OWS–Terralink license at 6.5% — the lowest of OWS's prior licenses — should be treated as the most relevant comparable, particularly because Terralink was not a direct competitor.

Our response to these anticipated arguments will be multi-pronged. First, we will demonstrate that the EMVR is applicable because the patented features drive the demand for the accused transceiver modules as a whole. Second, we will establish the comparability of OWS's licensing program by showing that the prior licenses involve the same technology, the same patents, and the same market segment. Third, we will distinguish any non-comparable licenses cited by Dr. Volkov by demonstrating material differences in the licensed technology, the market context, or the competitive relationship between the parties. Fourth, we will emphasize Lumicore's strong gross margins (52.1% to 58.3%) as evidence that an 8.5% royalty is economically reasonable and affordable for Lumicore.

V. THEORY 3 — ENHANCED DAMAGES FOR WILLFUL INFRINGEMENT

A. Legal Framework

Under 35 U.S.C. § 284, the Court "may increase the damages up to three times the amount found or assessed." Enhanced damages are a discretionary remedy available to the Court upon a finding of willful infringement, and they serve the dual purposes of compensating the patentee for litigation costs and deterring egregious infringement conduct.

In Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), the Supreme Court clarified the standard for enhanced damages, holding that the Federal Circuit's prior rigid, two-part test was inconsistent with Section 284's grant of discretion to district courts. Under Halo, enhanced damages require a showing that the infringer's conduct was "egregious" — specifically, that the infringer acted despite an objectively high likelihood of infringement of a valid patent, and that this objectively-defined risk was either known to the infringer or so obvious that it should have been known. The Supreme Court emphasized that enhanced damages are not intended to be "a penalty for garden-variety infringement" but rather should be reserved for cases involving "willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or combative" behavior. Halo, 579 U.S. at 103–04.

In determining whether to enhance damages and by how much, courts frequently apply the nine-factor test articulated in Read Corp. v. Portec, Inc., 970 F.2d 816, 826–27 (Fed. Cir. 1992). The Read factors are:

(1) Whether the infringer deliberately copied the ideas or design of the patentee;

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

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

(4) The infringer's size and financial condition;

(5) The closeness of the case;

(6) The duration of the infringer's misconduct;

(7) Remedial action taken by the infringer;

(8) The infringer's motivation for harm; and

(9) Whether the infringer attempted to conceal its misconduct.

The Read factors, while not binding after Halo, remain influential with district courts in the Eastern District of Texas and provide a useful framework for organizing the willfulness evidence.

B. Factual Basis for Willful Infringement

The factual record supports a strong willful infringement finding against Lumicore. The evidence, developed to date through pre-suit correspondence, depositions, and publicly available information, falls into several categories:

1. Pre-Suit Notice (FairPoint Letters): FairPoint Licensing Group, LLC, acting on behalf of OWS, sent the first licensing and notice letter to Lumicore's General Counsel, Raymond Bautista, on January 15, 2023. This letter identified the '847, '193, and '562 Patents, described specific infringement indicators identified in the Benchmark teardown of the LumiLink 400G-ZR+, and invited Lumicore to engage in licensing discussions. A supplemental letter dated May 15, 2023 added the '015 Patent and expanded the scope of accused products to include the LumiLink 800G-DR8, which had launched in Q1 2023. Lumicore acknowledged receipt of both letters through its General Counsel, Mr. Bautista. These letters unambiguously placed Lumicore on actual notice of the asserted patents and the alleged infringement, establishing the starting point for the post-notice willfulness period.

2. In-Person Licensing Meeting: On April 20, 2023, an in-person licensing meeting was held in Austin, Texas. Representing OWS were Angela Reeves of FairPoint Licensing Group and Rebecca Tanaka, OWS's General Counsel. Representing Lumicore were Raymond Bautista and Kate Rourke of Hawthorne Vega & Cruz. According to the deposition testimony of Angela Reeves, taken on December 10, 2024, Lumicore's representatives showed "no interest in negotiating" and declined to engage substantively with the claim charts and technical evidence presented by OWS. Ms. Reeves testified that the meeting lasted approximately ninety minutes, during which Lumicore's representatives maintained a posture of blanket denial without addressing the specific infringement allegations. This testimony is particularly significant because it demonstrates that Lumicore's refusal to engage was not based on any articulated technical or legal position but rather a strategic decision to ignore OWS's patent rights.

3. Continued Infringement After Notice: After receiving both FairPoint letters and attending the in-person licensing meeting, Lumicore launched the LumiEdge 1600G-LR transceiver module in Q4 2023. This launch occurred approximately six months after the in-person meeting and expanded the scope of infringement to a third product line, implicating the '193 and '015 Patents. The launch of a new infringing product after extensive notice is strong evidence of willfulness. See WCM Industries, Inc. v. IPS Corp., 721 F.3d 1366, 1374 (Fed. Cir. 2013) (finding willfulness supported by evidence that defendant continued infringing activity after receiving notice).

4. Design-Phase Awareness: We anticipate testimony from Melissa Chen, a former Lumicore engineer now employed at Veridian Photonics, Inc., that Lumicore's LumiLink 400G-ZR+ design team accessed and reviewed OWS's published patent application No. 2018/0123456 (which corresponds to the '193 Patent) during the product design phase in 2021–2022. This testimony has been confirmed in part by the deposition of Dr. Sandra Michaud, Lumicore's Chief Technology Officer, taken on November 19, 2024. In her deposition, Dr. Michaud admitted that she personally reviewed OWS's published patent applications during the LumiLink design phase, although she characterized her review as routine competitive intelligence. This admission is powerful evidence that Lumicore was aware of OWS's patent claims before it even launched the first accused product, suggesting that the infringement was not inadvertent but rather a conscious business decision.

5. Refusal to Produce Opinion-of-Counsel Letters: In Lumicore's July 10, 2023 declination letter, Lumicore stated that it had obtained "competent legal opinions" concluding that its products do not infringe the asserted patents. However, Lumicore has refused to produce these opinion letters in discovery, asserting attorney-client privilege and work product protection. Calderwood & Harkness filed a Motion to Compel production of these letters (Docket Entry No. 40, filed October 21, 2024), which remains pending before the Court. Raymond Bautista's deposition, taken on December 3, 2024, confirmed that he received and forwarded the FairPoint letters to Lumicore's legal team, but he refused to answer questions about the substance of any opinion-of-counsel analysis on privilege grounds. Notably, Mr. Bautista admitted that no formal design-around analysis was commissioned before the LumiEdge 1600G-LR launch. If Lumicore ultimately produces the opinion letters, they will need to be carefully analyzed for deficiencies — for example, flawed claim construction, incomplete analysis of all asserted patents, or failure to consider the Benchmark teardown evidence. If Lumicore continues to withhold the opinions, the jury may be instructed that it may draw an adverse inference from the non-production, depending on the Court's ruling on the Motion to Compel.

6. No Remedi

MEMORANDUM
ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL
TO: Alan Ngo, Responsible Partner, IP Litigation, Calderwood & Harkness LLP
FROM: Wendy Schultz, Lead Associate; Omar Siddiqui, Working Associate, Calderwood & Harkness LLP
DATE: April 2024
RE: Damages Theory Strategy — Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG (E.D. Tex.)
COPIES: Marcus Delgado, Billing Partner, Calderwood & Harkness LLP; Rebecca Tanaka, General Counsel, Optiwave Semiconductor Corp.
Right-click to update Table of Contents
I. EXECUTIVE SUMMARY
This memorandum sets forth the three-pronged damages strategy that forms the backbone of Optiwave Semiconductor Corp.'s ("OWS" or "Optiwave") affirmative case against Lumicore Technologies, Inc. ("Lumicore") in the above-captioned matter. The three prongs consist of: (1) lost profits under the Panduit framework; (2) a reasonable royalty under the Georgia-Pacific framework, applied to the subset of Lumicore's infringing sales that OWS cannot recapture through the lost-profits theory; and (3) enhanced damages for willful infringement pursuant to 35 U.S.C. § 284 and the Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016). Together, these three theories aggregate to the approximately $210 million demand figure pled in the complaint filed on April 22, 2024.
This memorandum will serve as the foundational roadmap for Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, located at 233 South Wacker Drive, Suite 4400, Chicago, Illinois 60606, who has been retained as OWS's damages expert. Dr. Keating's expert report is due on June 15, 2025, and the analyses outlined in this memorandum will guide the structure, methodology, and presentation of that report. All damages calculations contained herein are preliminary and will be refined as discovery progresses and additional financial data from Lumicore is obtained.
The $210 million demand is a rounded, blended figure that reflects OWS's integrated view of all three damages theories applied across the entire infringement period, running from the third quarter of 2022 (Q3 2022) through the projected trial date in February 2026. It is important to note that this figure is not a simple arithmetic sum of the individual theory maxima; rather, it represents a deliberately calibrated demand that is aggressive but defensible and credible in front of a jury in the Eastern District of Texas. The theoretical maximum recovery under full trebling could exceed $400 million, but the $210 million figure was selected to present a number that will be taken seriously by the Court, by the jury, and by Lumicore's litigation team in settlement discussions.
Several key variables drive the damages case and will be central to Dr. Keating's analysis:
(1) Projected Accused-Product Revenue Through Trial: Approximately $714.6 million, reflecting cumulative revenue from Q3 2022 through Q4 2025 across all three accused product families (LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR), based on Dr. Keating's preliminary analysis incorporating Lumicore's disclosed financials, segment reporting, and published Wall Street analyst estimates.
(2) OWS Market-Share Displacement Rate: 38.2%, representing the proportion of Lumicore's accused-product sales that OWS would have captured "but for" the infringement, based on head-to-head competition analysis at twelve of the top twenty hyperscale data-center operators where both OWS and Lumicore are approved vendors.
(3) OWS Gross Margin on Competing Products: 47.3%, as reflected in OWS's internal financial records for the OWS-400ZR and OWS-800XR product families, audited by Gresham & Whitfield LLP.
(4) Proposed Reasonable Royalty Rate: 8.5%, derived from analysis of comparable licenses in OWS's licensing portfolio and silicon-photonics industry benchmarks.
(5) Post-Notice Period for Willful Infringement Enhancement: Beginning January 15, 2023 (the date FairPoint Licensing Group, LLC sent the first licensing and notice letter to Lumicore's General Counsel) and extending through the projected trial date.
Finally, this memorandum should be understood in the context of OWS's ownership structure and the commercial expectations that inform the litigation strategy. Ridgeline Capital Partners, LP holds a 55% ownership stake in OWS, having acquired that position in 2019 for $780 million. Ridgeline's Managing Partner, Franklin Osei, also serves as Chair of the OWS Board of Directors. The OWS Board, acting through Board Resolution No. 2024-07, approved an $18.5 million litigation budget through trial for this matter. The $210 million damages demand is calibrated to the client's commercial expectations and the expected trial value of the case. A decision-tree analysis conducted in connection with the settlement authority memorandum (prepared under separate cover) places the probability-weighted expected value of the case at approximately $138 million. The relationship between the pled demand, the expected value, and the approved budget reflects a disciplined approach to high-stakes patent litigation that is consistent with Ridgeline's investment thesis for OWS.
II. BACKGROUND AND CASE OVERVIEW
A. The Parties
1. Plaintiff: Optiwave Semiconductor Corp. (OWS)
Optiwave Semiconductor Corp. is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS is a fabless semiconductor company specializing in the design, development, and commercialization of silicon photonics chipsets for data-center interconnects. The company was founded in 2011 and has grown to approximately 1,250 employees as of the date of this memorandum.
OWS reported fiscal year 2023 revenue of $487.3 million and fiscal year 2023 net income of $61.4 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. These figures position OWS as the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, trailing only two significantly larger diversified semiconductor companies whose photonics businesses are embedded within much larger product portfolios. OWS's focused positioning in silicon photonics, combined with its robust patent portfolio, gives it a distinctive competitive advantage in the market segment at issue.
OWS's patent portfolio comprises 142 issued U.S. patents and 58 pending patent applications, spanning key technologies in silicon photonics including waveguide design, coherent optical transceiver architecture, thermal management of photonic integrated circuits, and grating coupler design. This portfolio represents more than a decade of sustained research and development investment.
The OWS products that compete directly with the accused Lumicore products are the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families. These products practice the asserted patents and have been commercially successful, generating approximately $310 million in revenue in fiscal year 2023 alone.
Key OWS personnel relevant to this matter include: Dr. Priya Ramaswamy, Chief Executive Officer; Dr. Jian-Wei Huang, Chief Technology Officer; Rebecca Tanaka, General Counsel; and David Leitner, Chief Financial Officer. Ms. Tanaka has been the primary client contact for this litigation and has been instrumental in coordinating the flow of information between OWS's internal teams and the Calderwood & Harkness litigation team.
2. Defendant: Lumicore Technologies, Inc.
Lumicore Technologies, Inc. is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore is a fast-growing entrant in the silicon-photonics transceiver market, having been founded in 2015 and rapidly expanded to approximately 870 employees. Lumicore's estimated fiscal year 2023 revenue was approximately $312.6 million, a figure that reflects explosive growth since its founding and underscores the competitive threat that Lumicore poses to OWS in this market segment.
Lumicore completed an initial public offering on the Nasdaq Stock Market in March 2022 at $24 per share. As of the filing of the complaint in April 2024, Lumicore's shares were trading at approximately $37 per share, reflecting a market capitalization of approximately $3.4 billion based on 91.8 million shares outstanding. The company's publicly traded status is relevant to the damages analysis in several respects, including the availability of detailed financial disclosures, analyst coverage of Lumicore's product segments, and the injunction leverage analysis discussed in Section X below.
Key Lumicore personnel include: Thomas "Tom" Kessler, Chief Executive Officer; Dr. Sandra Michaud, Chief Technology Officer; Raymond Bautista, General Counsel; and Janet Moreno, Chief Financial Officer. Lumicore is represented in this litigation by Hawthorne Vega & Cruz LLP, with Catherine "Kate" Rourke serving as lead partner. Ms. Rourke is a seasoned patent litigator with extensive experience in Eastern District of Texas practice, and we anticipate vigorous advocacy on both liability and damages issues.
B. The Asserted Patents
OWS asserts four U.S. utility patents in this action, each directed to different aspects of silicon-photonics transceiver technology. The patents are summarized below:
U.S. Patent No. 10,234,847 (the "'847 Patent") — Titled "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. The original assignee is OWS. The '847 Patent claims a novel waveguide multiplexer architecture that achieves significantly lower insertion loss than prior art designs, enabling higher-bandwidth and more energy-efficient optical signal processing in silicon-photonics transceivers. This patent is in the same family as the '562 Patent, discussed below, sharing a continuation relationship.
U.S. Patent No. 10,891,193 (the "'193 Patent") — Titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate." The '193 Patent was filed on April 7, 2017, and issued on January 12, 2021. The original assignee is OWS. The '193 Patent shares Provisional Application No. 62/499,117 with the '015 Patent. This patent covers a coherent optical transceiver architecture that integrates multiple photonic and electronic functions on a single silicon substrate, achieving high bandwidth in a compact form factor that is critical for data-center applications.
U.S. Patent No. 9,678,562 (the "'562 Patent") — Titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks." The '562 Patent was filed on November 22, 2014, and issued on June 13, 2017. The original assignee was Solara Optics, Inc., a silicon-photonics startup that developed pioneering thermal management solutions for photonic integrated circuits. OWS acquired the '562 Patent, along with eleven other patents, from Solara Optics pursuant to an asset purchase agreement dated June 15, 2018, for $34.5 million. OWS's chain of title is clean, as confirmed by recorded assignments at the USPTO. The '562 Patent addresses one of the most significant challenges in high-density photonic integrated circuits — thermal management — through the use of embedded micro-channel heat sinks that dissipate heat without disrupting optical signal quality.
U.S. Patent No. 11,402,015 (the "'015 Patent") — Titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers." The '015 Patent was filed on August 30, 2019, and issued on August 2, 2022. The original assignee is OWS. This patent claims a polarization-diverse grating coupler design that enables efficient coupling of optical signals into silicon waveguides regardless of the input polarization state, a feature that is essential for coherent optical transceivers operating in real-world data-center environments where polarization conditions are unpredictable.
All four patents are utility patents. All maintenance fees are current. No inter partes review (IPR) petitions have been filed against any of the asserted patents as of the date of this memorandum, although we should anticipate the possibility that Lumicore may file IPR petitions as a litigation strategy, particularly with respect to the '562 and '847 Patents.
C. The Accused Products
The three accused Lumicore product families, their launch dates, estimated fiscal year 2023 revenues, and the patents asserted against each are set forth in the table below:
Total accused-product revenue for fiscal year 2023 is estimated at $264.9 million ($94.8M + $128.4M + $41.7M), based on Lumicore's segment disclosures in its SEC filings and public earnings reports. This figure represents approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million, underscoring the centrality of the accused products to Lumicore's business.
Dr. Keating's preliminary analysis estimates total accused-product revenue over the infringement period to date (Q3 2022 through Q1 2024) at approximately $378.2 million. Projecting forward through the anticipated trial date, incorporating Lumicore's growth trajectory, published analyst estimates from firms including Drayton Securities, Bramwell National Bank, and Drayton Financial, and the secular growth trends in the silicon-photonics transceiver market driven by hyperscale data-center buildout for AI/ML workloads, Dr. Keating estimates total accused-product revenue over the full infringement period (Q3 2022 through Q4 2025) at approximately $714.6 million. This figure serves as the revenue base for the damages calculations set forth in this memorandum.
It should be noted that Lumicore's revenue growth has been significant and consistent. The company's accused products have gained meaningful market share since launch, driven in substantial part by the very patented technologies at issue in this case. As discovery progresses and more granular financial data is obtained from Lumicore, the revenue projections will be refined. In particular, we anticipate that Lumicore's FY 2024 revenue data — which should be available in early 2025 — will provide a critical data point for updating the damages model.
D. Pre-Suit Licensing History
The pre-suit licensing history between OWS and Lumicore is a critical element of the damages case, as it informs: (a) the establishment of the hypothetical negotiation date for the Georgia-Pacific reasonable royalty analysis; (b) the evidence of willful infringement supporting enhanced damages; and (c) the computation of the post-notice damages period. The relevant chronology is as follows:
December 12, 2022: Benchmark Semiconductor Analysis, LLC, an independent semiconductor reverse-engineering firm, delivered a teardown report to OWS confirming infringement indicators in Lumicore's LumiLink 400G-ZR+ transceiver module. The teardown was conducted under the direction of Kevin Ng, Lead Engineer at Benchmark, and identified specific structural and functional features of the LumiLink 400G-ZR+ that correspond to claim elements of the '847, '193, and '562 Patents. This report provided OWS with the technical foundation to initiate licensing discussions with Lumicore.
January 15, 2023: FairPoint Licensing Group, LLC, acting as OWS's licensing agent under the direction of Managing Director Angela Reeves, sent the first licensing and notice letter to Lumicore's General Counsel, Raymond Bautista. The letter identified the '847, '193, and '562 Patents, described the infringement indicators found in the Benchmark teardown of the LumiLink 400G-ZR+, and invited Lumicore to engage in licensing discussions. This letter constitutes the first formal notice of infringement and is the anchor date for the post-notice willfulness period.
February 28, 2023: Lumicore responded to the FairPoint letter through outside counsel at Hawthorne Vega & Cruz LLP. Lumicore's response disputed infringement and questioned the validity of the identified patents, but did not engage substantively with the licensing proposal. The response was notably perfunctory, consisting of approximately two pages of boilerplate assertions without detailed claim-by-claim analysis.
April 20, 2023: An in-person licensing meeting was held in Austin, Texas. Representing OWS were Angela Reeves of FairPoint Licensing Group and Rebecca Tanaka, OWS's General Counsel. Representing Lumicore were Raymond Bautista and Kate Rourke of Hawthorne Vega & Cruz. According to the subsequent deposition testimony of Angela Reeves (taken on December 10, 2024), Lumicore's representatives showed "no interest in negotiating" and the meeting was unproductive. Ms. Reeves testified that she presented a detailed claim chart mapping the Benchmark teardown findings to the asserted patent claims, but Lumicore's team declined to engage with the substance of the analysis.
May 15, 2023: FairPoint sent a second licensing letter to Lumicore, this time adding the '015 Patent (which had issued on August 2, 2022) and expanding the scope of accused products to include the LumiLink 800G-DR8, which had launched in Q1 2023. The second letter reiterated OWS's licensing proposal and noted that Lumicore had expanded its infringement by launching a second product without addressing the issues raised in the first letter.
July 10, 2023: Lumicore formally declined to take a license, communicating through Hawthorne Vega & Cruz that it had obtained "competent legal opinions" concluding that its products do not infringe the asserted patents. Lumicore refused to produce or describe the substance of these opinions, and has continued to assert privilege over them in discovery. This declination letter is a significant piece of evidence in the willful infringement analysis, as discussed in Section V below.
Q4 2023: Despite having received two detailed licensing letters, attended an in-person licensing meeting, and been put on notice of infringement of four patents, Lumicore launched the LumiEdge 1600G-LR transceiver module in the fourth quarter of 2023. This launch expanded the scope of infringement to a third product line, implicating the '193 and '015 Patents. OWS identified additional infringement indicators in the LumiEdge 1600G-LR through a follow-up Benchmark teardown completed in January 2024.
The pre-suit licensing history demonstrates a consistent pattern of notice, refusal to engage, and expansion of infringing activity that strongly supports OWS's willful infringement theory and informs the damages analysis throughout this memorandum.
III. THEORY 1 — LOST PROFITS (PANDUIT ANALYSIS)
A. Legal Framework
Under 35 U.S.C. § 284, a patent holder is entitled to "damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The statute provides the floor (a reasonable royalty) but not the ceiling; where a patentee can demonstrate that it would have made the infringer's sales absent the infringement, lost profits are the preferred measure of damages because they more fully compensate the patentee for the harm suffered.
The leading framework for analyzing lost-profit entitlement in patent cases is the four-factor test articulated in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978), which has been widely adopted by the Federal Circuit. Under Panduit, a patentee may recover lost profits by establishing:
(1) Demand for the patented product;
(2) Absence of acceptable non-infringing substitutes;
(3) The patentee's manufacturing and marketing capability to exploit the demand; and
(4) The amount of profit the patentee would have made.
The Federal Circuit has consistently held that the Panduit test is not the exclusive means of establishing lost profits — a patentee may employ any reasonable method of proving "but for" causation. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc). However, the Panduit framework remains the most widely accepted and judicially recognized method, and we recommend that Dr. Keating structure his lost-profits analysis around it. The Panduit factors provide a clear, well-established framework that will resonate with the jury and withstand Daubert scrutiny.
It is also important to note that where the patentee cannot demonstrate that it would have captured all of the infringer's sales — for example, because some of the sales would have gone to non-infringing competitors — the patentee is entitled to lost profits on the share it would have captured and a reasonable royalty on the remainder. See State Industries, Inc. v. Mor-Flo Industries, Inc., 883 F.2d 1573, 1577 (Fed. Cir. 1989). This "market share" approach to allocating between lost profits and reasonable royalties is the methodology we adopt in this memorandum.
B. Application of Panduit Factors
Factor 1: Demand for the Patented Product
The first Panduit factor requires proof that there was demand for the patented product during the infringement period. This factor is easily satisfied here.
OWS reported fiscal year 2023 revenue of $487.3 million, of which approximately $310 million is attributable to products that practice the asserted patents — specifically, the OWS-400ZR and OWS-800XR transceiver module families. These products compete directly with Lumicore's accused products in the hyperscale data-center transceiver market. The substantial revenue generated by OWS's patent-practicing products is powerful evidence that there was — and continues to be — robust demand for products embodying the patented technology.
The demand evidence is further bolstered by the broader market context. The silicon-photonics transceiver market is experiencing rapid and sustained growth, driven by the hyperscale data-center buildout needed to support AI and machine learning workloads, enterprise cloud computing expansion, and the proliferation of bandwidth-intensive applications. Industry analysts project the silicon-photonics market to grow at a compound annual growth rate (CAGR) exceeding 25% through 2028. OWS is the third-largest U.S. supplier in this market, with established customer relationships at virtually all major hyperscale data-center operators, including those that also purchase from Lumicore.
Gregory Falk, OWS's retained industry expert and a former Vice President of Engineering at Solara Optics, Inc., will provide testimony regarding the strong and growing demand for silicon-photonics transceiver modules in the relevant market segments. Mr. Falk's testimony will establish that the features covered by the asserted patents — low-insertion-loss waveguide multiplexing, coherent optical transceiver integration, embedded micro-channel thermal management, and polarization-diverse grating coupling — are among the most important performance differentiators driving purchasing decisions in this market, which further supports the conclusion that demand for the patented product is strong.
Factor 2: Absence of Acceptable Non-Infringing Substitutes
The second Panduit factor — the absence of acceptable non-infringing substitutes — is typically the most contested factor in lost-profits analysis, and we expect it to be a primary battleground in this case. Under Federal Circuit precedent, a "substitute" is "acceptable" only if it is a product that would have been available to consumers during the infringement period and that consumers would have found to be a reasonable alternative to the infringing product. See Grain Processing Corp. v. American Maize-Products Co., 185 F.3d 1341, 1353 (Fed. Cir. 1999).
We have conducted a preliminary analysis of the four potential non-infringing alternatives that Lumicore is most likely to identify in the relevant market segment. These include transceiver modules offered by non-party competitors that compete in the 400G and 800G data-center interconnect markets. Our analysis, which will be refined and supported by expert testimony, indicates that each of these potential alternatives lacks one or more of the key patented features, including low-insertion-loss waveguide multiplexing (covered by the '847 Patent), embedded micro-channel thermal management (covered by the '562 Patent), and polarization-diverse grating coupling (covered by the '015 Patent). As a result, none of these products offers the same combination of performance, power efficiency, and thermal stability as the OWS and Lumicore products that practice the asserted patents.
Gregory Falk will provide expert opinion testimony that no commercially available substitute offers equivalent performance characteristics without utilizing the patented technologies at issue. Mr. Falk's analysis will be supported by comparative performance data, customer specifications and qualification requirements, and industry benchmarking studies.
We acknowledge, however, that this factor may face significant challenge from Lumicore's defense damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP. We anticipate that Dr. Volkov will argue that other transceiver modules available in the market — including products from non-party competitors — constitute acceptable non-infringing substitutes. We further anticipate that Dr. Volkov will attempt to characterize the market as having multiple competing products that offer substantially similar functionality, thereby undermining the second Panduit factor and shifting a greater proportion of damages to the reasonable royalty theory.
Our rebuttal strategy on this point is twofold. First, Dr. Ashford (technical expert) will testify to the technical uniqueness and superiority of the patented features, establishing that products lacking these features are not performance equivalents. Second, Gregory Falk will testify that the competing products identified by Lumicore do not compete in the same performance and price tier for 400G-ZR and 800G-DR applications in hyperscale data centers, where the patented features are essential to meeting stringent customer specifications for insertion loss, thermal management, and polarization handling.
Factor 3: Manufacturing and Marketing Capability
The third Panduit factor requires proof that the patentee had the manufacturing and marketing capability to exploit the demand represented by the infringer's sales. As a fabless semiconductor company, OWS does not operate its own fabrication facilities. However, OWS maintains substantial manufacturing capacity through long-term foundry partner agreements with leading semiconductor manufacturing organizations. These foundry agreements include provisions for incremental capacity allocation that would be sufficient to serve the additional demand represented by Lumicore's accused-product sales.
In addition, OWS maintains an established global sales force and distribution network covering all major hyperscale customers in North America, Europe, and Asia-Pacific. OWS's sales infrastructure includes direct sales representatives at all of the top twenty hyperscale data-center operators, as well as distribution partnerships with major semiconductor distributors. The existence of this sales infrastructure demonstrates that OWS had the marketing capability to compete for and serve the incremental demand that was diverted to Lumicore's infringing products.
Evidence to support this factor will include OWS capacity utilization data (showing available headroom at OWS's foundry partners), foundry partner agreements and capacity allocation letters, and documentation of OWS's global sales infrastructure. We will also obtain a declaration from Dr. Nikolai Petrov, OWS's Vice President of Engineering, confirming that OWS's foundry relationships provide sufficient scalable capacity to absorb the incremental volume represented by Lumicore's accused-product sales.
Factor 4: Amount of Profit
The fourth Panduit factor requires quantification of the profit that the patentee would have made on the sales diverted by the infringer. OWS's gross margin on the competing products (OWS-400ZR and OWS-800XR families) is 47.3%, as reflected in OWS's internal financial records audited by Gresham & Whitfield LLP. This gross margin figure accounts for the cost of goods sold, including foundry manufacturing costs, packaging and testing costs, and related direct production expenses. Incremental costs of serving additional demand — such as additional foundry wafer starts and increased testing throughput — are assumed to be captured within the gross margin calculation, which is a conservative approach. If a more granular incremental-cost analysis is warranted, Dr. Keating will prepare an alternative calculation using incremental rather than average margins; however, we expect the gross margin approach to be appropriate and defensible for this case.
C. Lost Profits Calculation
The lost-profits calculation proceeds as follows:
Revenue Base: The projected accused-product revenue over the full infringement period (Q3 2022 through Q4 2025) is approximately $714.6 million, as estimated by Dr. Keating based on Lumicore's financial disclosures, segment reporting, and published analyst estimates.
Market-Share Displacement Rate: 38.2%. This figure represents the proportion of Lumicore's accused-product sales that OWS would have captured "but for" the infringement. The displacement rate is derived from a head-to-head competition analysis conducted at twelve of the top twenty hyperscale data-center operators where both OWS and Lumicore are approved vendors and compete for the same purchase orders. At these twelve accounts, OWS and Lumicore are the primary competitors, and the displacement rate reflects OWS's expected share of the competitive opportunity absent Lumicore's infringing products. The rate has been adjusted downward from a raw competitive share figure to account for customers where OWS is not an approved vendor, does not actively compete, or where other factors would have prevented OWS from capturing the sale. This conservative adjustment strengthens the defensibility of the displacement rate.
OWS Gross Margin: 47.3%.
Calculation:
$714.6M × 38.2% × 47.3% = approximately $128.9 million in lost profits.
It is important to note that lost profits are available only on the 38.2% share of Lumicore's accused-product sales that OWS could have captured. The remaining 61.8% of Lumicore's accused-product revenue — representing sales that would have gone to other competitors or that OWS could not have captured for other reasons — is subject to the reasonable royalty theory discussed in Section IV below. This allocation between lost profits and reasonable royalties ensures that OWS is fully compensated for all infringing sales while avoiding any double recovery.
D. Sensitivity Analysis — Lost Profits
The table below presents a sensitivity analysis of the lost-profits calculation across the key input variables:
The sensitivity analysis demonstrates that even under conservative assumptions (lower revenue projection, lower displacement rate, lower gross margin), OWS's lost-profits claim is substantial. Conversely, under optimistic assumptions — which are entirely plausible given the growth trajectory of the silicon-photonics market and OWS's strong competitive position — the lost-profits figure could approach $180 million.
The key risk to the lost-profits calculation is Lumicore's expected challenge to the 38.2% displacement rate. Dr. Volkov will likely argue that the displacement rate is inflated and that a significant portion of Lumicore's sales would have gone to non-infringing competitors rather than to OWS. Dr. Volkov may also argue that certain non-infringing substitutes were available, which could reduce or eliminate the second Panduit factor and correspondingly reduce the lost-profits recovery.
To mitigate this risk, Dr. Keating should be prepared to defend the 38.2% displacement methodology with granular, customer-by-customer analysis based on Lumicore's customer data (to be obtained in discovery), OWS's win/loss records, and market-share data from independent industry sources. The customer-level analysis will demonstrate that at the twelve hyperscale accounts where OWS and Lumicore compete head-to-head, OWS is the primary competitive alternative to Lumicore, and the 38.2% displacement rate is well supported by the evidence.
IV. THEORY 2 — REASONABLE ROYALTY (GEORGIA-PACIFIC ANALYSIS)
A. Legal Framework
Where lost profits cannot be shown — either because the patentee cannot satisfy the Panduit factors or because a portion of the infringer's sales would not have been captured by the patentee — the patent statute provides that the patentee is entitled to "in no event less than a reasonable royalty for the use made of the invention by the infringer." 35 U.S.C. § 284. The reasonable royalty serves as the damages floor, ensuring that even where the patentee cannot demonstrate lost sales, it receives fair compensation for the unauthorized use of its patented technology.
The established methodology for determining a reasonable royalty is the hypothetical negotiation framework articulated in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). Under this framework, the Court and the jury are asked to determine the royalty rate that a willing licensor and a willing licensee would have agreed to in a hypothetical negotiation conducted on the eve of first infringement, assuming that both parties believed the patent to be valid and infringed, and that both parties were acting as rational economic actors seeking to maximize their respective positions.
The Georgia-Pacific decision identifies fifteen factors relevant to determining the reasonable royalty rate. These factors encompass a wide range of considerations including the royalties received by the patentee in prior licenses, the rates paid by the infringer for comparable licenses, the nature and scope of the license, the licensor's established policy of maintaining its patent monopoly versus granting licenses, the commercial relationship between the licensor and licensee, the profitability of the patented product, the utility and advantages of the patented technology over prior art, the nature and extent of use by the infringer, the portion of the profit customarily allowed in the particular business, the portion of the infringer's profit attributable to the invention, expert testimony, and the amount that a prudent businessman would have been willing to pay as a royalty.
In applying the Georgia-Pacific framework, two important doctrinal considerations merit discussion. The entire market value rule (EMVR) allows the royalty base to be the entire selling price of the infringing product where the patented feature drives the demand for the product as a whole. See Rite-Hite Corp., 56 F.3d at 1549. Conversely, the smallest salable patent-practicing unit (SSPPU) doctrine, which has gained significant emphasis in recent Federal Circuit jurisprudence, requires that the royalty base be limited to the smallest commercially available unit that practices the patented technology, unless the EMVR is applicable. See LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67–68 (Fed. Cir. 2012). The interplay between EMVR and SSPPU will be a critical issue in this case, and a separate apportionment analysis memorandum is being prepared for circulation in August 2024.
B. Hypothetical Negotiation Date
We propose establishing the hypothetical negotiation date as the second quarter of 2022 (Q2 2022), immediately before the launch of the first accused product, the LumiLink 400G-ZR+, which occurred in Q3 2022. This date is consistent with Federal Circuit precedent establishing that the hypothetical negotiation takes place on the eve of first infringement. See Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1325 (Fed. Cir. 2009).
As of Q2 2022, several relevant conditions obtained that will inform the hypothetical negotiation:
• OWS held all four asserted patents. The '015 Patent issued on August 2, 2022, meaning it was either issued or on the verge of issuance as of Q2 2022. The '847, '193, and '562 Patents had all been issued for at least one year.
• Lumicore was a newly-public company, having completed its IPO on Nasdaq in March 2022 at $24 per share. The company was in the process of launching its first major product line (LumiLink 400G-ZR+) and was seeking to establish itself as a significant competitor in the silicon-photonics transceiver market.
• The parties were not yet in a licensing relationship. No licensing correspondence had yet been exchanged; the first FairPoint letter was not sent until January 15, 2023.
• The silicon-photonics transceiver market was entering a period of rapid growth, with published industry forecasts projecting significant demand increases driven by hyperscale data-center expansion.
Under established hypothetical negotiation principles, all information available to a willing licensor and a willing licensee as of Q2 2022 informs the negotiation. Post-negotiation evidence of actual infringement and market performance may also be considered to the extent it reflects trends that were predictable as of the negotiation date. See Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed. Cir. 2014). This means that Lumicore's actual sales trajectory and the commercial success of the accused products can be used as evidence of what the parties would have expected during the hypothetical negotiation.
C. Revenue Base for Reasonable Royalty
The reasonable royalty theory applies to the portion of Lumicore's accused-product sales that OWS cannot claim as lost profits — that is, the remaining 61.8% of accused-product revenue that would not have been captured by OWS but for the infringement but which nevertheless constitutes unauthorized use of OWS's patented technology.
The royalty-eligible revenue base is calculated as follows:
$714.6M (total projected accused-product revenue) × 61.8% = approximately $441.6 million in royalty-eligible sales.
Entire Market Value Rule (EMVR) Application: We contend that the accused transceiver modules are sold as integrated units in which the patented features — the waveguide multiplexer, the thermal management system, and the grating coupler — are the primary drivers of customer demand. Each accused module is sold as a complete transceiver unit to data-center operators, and the patented features are not sold separately or priced as standalone components. The module-level selling price is therefore the appropriate royalty base under the EMVR.
Dr. Keating will opine that the patented technology constitutes the core differentiator and basis for customer demand for the accused products. This opinion will be supported by: (a) Dr. Ashford's technical testimony establishing that the patented features are integral to the performance characteristics that differentiate the accused products from competing non-infringing alternatives; (b) Gregory Falk's industry testimony establishing that customers select silicon-photonics transceiver modules based primarily on the performance attributes enabled by the patented technologies (insertion loss, bandwidth, thermal stability, polarization handling); and (c) Lumicore's own marketing materials and customer-facing documentation, which emphasize these features as key selling points.
SSPPU Alternative: If the Court rejects the EMVR application, the photonic integrated circuit (PIC) sub-component within each accused transceiver module could serve as the SSPPU. The PIC is the smallest commercially identifiable unit within the transceiver module that practices all of the asserted patent claims. However, pricing data at the PIC level is limited, as Lumicore (like OWS) does not sell PICs as standalone products; they are manufactured and integrated into finished transceiver modules. Obtaining PIC-level cost and pricing data from Lumicore will be a priority in discovery. To the extent we are compelled to use the SSPPU, the royalty rate would need to be adjusted upward to compensate for the smaller base, consistent with Federal Circuit guidance. See VirnetX, Inc. v. Sterling Reach Holdings, 767 F.3d 1308, 1326 (Fed. Cir. 2014).
D. Proposed Royalty Rate: 8.5%
The proposed reasonable royalty rate of 8.5% is derived from a comprehensive analysis of comparable licenses, including OWS's own licensing program and publicly available industry benchmarks. The comparable licenses considered include:
(a) OWS–Terralink Semiconductor License (2020): This license granted Terralink a non-exclusive license under a subset of OWS's silicon-photonics patent portfolio (including the '847 and '562 Patents) in exchange for a 6.5% running royalty. Licensed revenue under this agreement totaled approximately $45 million over the license term. The Terralink license is highly comparable because it involves the same licensor, overlapping patents, and the same technology field. The lower royalty rate (6.5% versus the proposed 8.5%) is explained by the fact that Terralink was not a direct competitor to OWS and the licensed product segment was narrower.
(b) OWS–NovaWave Corp. License (2021): This license granted NovaWave a non-exclusive license under a broader set of OWS patents, including all four asserted patents, in exchange for a 9.0% running royalty. Licensed revenue under this agreement totaled approximately $22 million. The higher rate reflects the broader scope of the license and the greater competitive overlap between OWS and NovaWave relative to Terralink.
(c) OWS–Helix Integrated Photonics License (2022): This license granted Helix a non-exclusive license under OWS's silicon-photonics portfolio in exchange for a 7.75% running royalty plus a $2.5 million upfront payment. Licensed revenue under this agreement totaled approximately $68 million. When the upfront payment is amortized across the licensed revenue, the effective royalty rate is approximately 11.4%. The 7.75% running royalty component, without the upfront payment, represents a conservative comparable.
(d) Industry Comparable — Stratos Photonics v. ArcLight Systems Settlement (2019): This publicly reported patent litigation settlement in the silicon-photonics industry resulted in a license at an 8.0% running royalty rate. While the specific patents and products differ from the instant case, the technology field and market segment are closely comparable.
(e) Industry Comparable — Coreline Technologies v. Prisma Semiconductor Cross-License (2021): This cross-license agreement in the photonics industry had an effective rate of 10.2% when the net royalty flow was computed based on the relative portfolio strengths. The higher effective rate reflects the breadth of the portfolio licensed and the competitive dynamics between the parties.
The range of comparable royalty rates in the silicon-photonics industry spans approximately 4.0% to 12.5%. The proposed 8.5% rate falls in the mid-to-upper portion of this range, which is appropriate and justified by several factors:
(i) The breadth and importance of the four-patent portfolio asserted in this case, covering multiple critical technologies (waveguide multiplexing, coherent transceiver architecture, thermal management, and grating coupling) that collectively address the most important performance challenges in high-bandwidth silicon-photonics transceivers;
(ii) The direct competitive relationship between OWS and Lumicore, which drives the royalty upward because a willing licensor in OWS's position would demand a premium to license technology to a direct competitor whose sales directly displace the licensor's own revenue;
(iii) OWS's established licensing program, which provides a well-documented track record of arms-length licensing transactions at rates of 6.5% to 9.0% (running royalty rates), lending credibility and support to the proposed 8.5% rate; and
(iv) Lumicore's strong gross margins on the accused products, ranging from 52.1% on the LumiLink 400G-ZR+ to 58.3% on the LumiEdge 1600G-LR (per discovery data produced by Lumicore and designated Highly Confidential — Attorneys' Eyes Only). These margins demonstrate that Lumicore could afford an 8.5% royalty while still maintaining healthy profitability on the accused products.
E. Georgia-Pacific Factor Summary
The following provides a narrative analysis of the most impactful Georgia-Pacific factors as applied to the facts of this case. While all fifteen factors will be addressed in Dr. Keating's expert report, the factors summarized below are the ones most likely to drive the royalty determination:
Factor 1 — Royalties Received by the Patentee for Licensing the Patent in Suit: OWS's three prior licenses (Terralink at 6.5%, NovaWave at 9.0%, and Helix at 7.75% running/11.4% effective) establish a well-documented baseline for the reasonable royalty rate. These licenses all involve the same licensor (OWS), the same or overlapping patents, and the same technology field. They provide the most reliable comparables available and strongly support a royalty rate of 8.5% or higher. Under Georgia-Pacific, "[t]he royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty," is the most probative factor.
Factor 2 — Rates Paid by the Licensee for the Use of Other Patents Comparable to the Patent in Suit: Lumicore's licensing history is not yet fully known and will be a key area of discovery. We anticipate seeking all license agreements involving Lumicore as either a licensor or licensee in the silicon-photonics or related semiconductor fields. Any licenses that Lumicore has taken at rates comparable to or above the proposed 8.5% rate will provide powerful corroboration.
Factor 5 — The Commercial Relationship Between the Licensor and Licensee: OWS and Lumicore are direct competitors in the silicon-photonics transceiver market. Under Georgia-Pacific Factor 5, the commercial relationship between the parties is a critical consideration, and a competitive relationship between the licensor and licensee tends to drive the royalty rate upward. A willing licensor in OWS's position would be reluctant to enable a direct competitor and would demand a premium to compensate for the competitive harm caused by the license. This factor strongly supports a rate at the upper end of the comparable range.
Factor 8 — The Established Profitability of the Product Made Under the Patent, Its Commercial Success, and Its Current Popularity: OWS products embodying the asserted patents generate 47.3% gross margins and produced approximately $310 million in revenue in FY 2023. This commercial success demonstrates the value of the patented technology and supports a robust royalty rate. From Lumicore's perspective, the accused products generated estimated FY 2023 revenue of $264.9 million with gross margins of 52.1% to 58.3%, confirming that the patented technology is commercially valuable to Lumicore as well.
Factor 9 — The Utility and Advantages of the Patent Property Over the Old Modes or Devices, if Any, That Had Been Used for Working Out Similar Results: The patented features enable low insertion loss, high bandwidth, thermal stability, and polarization diversity that are essential to high-performance transceivers. These represent substantial advantages over prior art approaches that used discrete optical components, conventional heat sinks, and polarization-maintaining fiber rather than polarization-diverse grating couplers. Dr. Ashford's technical testimony will detail these advantages. The significance of these improvements supports a higher royalty rate.
Factor 11 — The Extent to Which the Infringer Has Made Use of the Invention and Any Evidence Probative of the Value of That Use: Lumicore uses the patented technology across its entire accused product line, which generated $264.9 million in FY 2023 revenue and represents approximately 84.7% of Lumicore's total revenue. The pervasive use of the patented technology across substantially all of Lumicore's product portfolio underscores the high value of the patents to Lumicore and supports a meaningful royalty rate.
Factor 13 — The Portion of the Realizable Profit That Should Be Credited to the Invention as Distinguished from Non-Patented Elements, the Manufacturing Process, Business Risks, or Significant Features or Improvements Added by the Infringer: The patented features are core differentiators in the accused products, not peripheral enhancements or minor incremental improvements. The waveguide multiplexer architecture ('847), coherent transceiver integration ('193), thermal management system ('562), and grating coupler design ('015) collectively represent the technological foundation that makes Lumicore's products competitive in the market. While Lumicore has undoubtedly contributed its own design innovations and engineering efforts, the patented features are the primary drivers of customer demand and product performance. This factor supports attributing a significant portion of Lumicore's profit to the patented inventions.
Factor 15 — The Amount That a Licensor (Such as the Patentee) and a Licensee (Such as the Infringer) Would Have Agreed Upon, at the Time the Infringement Began, if Both Had Been Reasonably and Voluntarily Trying to Reach an Agreement: Synthesizing all of the foregoing factors, a willing licensor in OWS's position — holding a strong patent portfolio covering critical technologies, occupying the third-largest market position, maintaining an established licensing program with rates of 6.5% to 9.0%, and facing the prospect of licensing to a direct competitor — would demand at least 8.5%. A willing licensee in Lumicore's position — earning gross margins of 52.1% to 58.3% on the accused products, needing the patented technology to compete effectively, and facing the risk of an infringement finding — could afford to pay 8.5% and would still generate substantial profits on the accused products.
F. Reasonable Royalty Calculation
Applying the proposed 8.5% royalty rate to the royalty-eligible revenue base, the reasonable royalty damages are calculated as follows:
$441.6M × 8.5% = approximately $37.5 million in reasonable royalty damages.
This figure represents the royalty that OWS is owed on the 61.8% of Lumicore's accused-product revenue that cannot be recovered as lost profits. Combined with the lost-profits figure of approximately $128.9 million, the base compensatory damages (before any enhancement for willful infringement) total approximately $166.4 million.
G. Sensitivity Analysis — Reasonable Royalty
The table below presents a sensitivity analysis of the reasonable royalty calculation across the key input variables:
The sensitivity analysis illustrates the importance of defending both the revenue base (which depends on maintaining the EMVR application) and the royalty rate (which depends on the comparability of OWS's prior licenses and the weight given to the competitive relationship between the parties).
The key risk to the reasonable royalty calculation is Lumicore's expected argument that the royalty base should be disaggregated to the SSPPU level (the PIC sub-component) rather than the entire transceiver module, and that the royalty rate should be reduced to 3% to 5%, potentially citing non-comparable licenses from unrelated technology fields or licenses involving less important patents. Dr. Volkov may also argue that the OWS–Terralink license at 6.5% — the lowest of OWS's prior licenses — should be treated as the most relevant comparable, particularly because Terralink was not a direct competitor.
Our response to these anticipated arguments will be multi-pronged. First, we will demonstrate that the EMVR is applicable because the patented features drive the demand for the accused transceiver modules as a whole. Second, we will establish the comparability of OWS's licensing program by showing that the prior licenses involve the same technology, the same patents, and the same market segment. Third, we will distinguish any non-comparable licenses cited by Dr. Volkov by demonstrating material differences in the licensed technology, the market context, or the competitive relationship between the parties. Fourth, we will emphasize Lumicore's strong gross margins (52.1% to 58.3%) as evidence that an 8.5% royalty is economically reasonable and affordable for Lumicore.
V. THEORY 3 — ENHANCED DAMAGES FOR WILLFUL INFRINGEMENT
A. Legal Framework
Under 35 U.S.C. § 284, the Court "may increase the damages up to three times the amount found or assessed." Enhanced damages are a discretionary remedy available to the Court upon a finding of willful infringement, and they serve the dual purposes of compensating the patentee for litigation costs and deterring egregious infringement conduct.
In Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), the Supreme Court clarified the standard for enhanced damages, holding that the Federal Circuit's prior rigid, two-part test was inconsistent with Section 284's grant of discretion to district courts. Under Halo, enhanced damages require a showing that the infringer's conduct was "egregious" — specifically, that the infringer acted despite an objectively high likelihood of infringement of a valid patent, and that this objectively-defined risk was either known to the infringer or so obvious that it should have been known. The Supreme Court emphasized that enhanced damages are not intended to be "a penalty for garden-variety infringement" but rather should be reserved for cases involving "willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or combative" behavior. Halo, 579 U.S. at 103–04.
In determining whether to enhance damages and by how much, courts frequently apply the nine-factor test articulated in Read Corp. v. Portec, Inc., 970 F.2d 816, 826–27 (Fed. Cir. 1992). The Read factors are:
(1) Whether the infringer deliberately copied the ideas or design of the patentee;
(2) Whether the infringer, when it knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that the patent was invalid or that it was not infringed;
(3) The infringer's behavior as a party to the litigation;
(4) The infringer's size and financial condition;
(5) The closeness of the case;
(6) The duration of the infringer's misconduct;
(7) Remedial action taken by the infringer;
(8) The infringer's motivation for harm; and
(9) Whether the infringer attempted to conceal its misconduct.
The Read factors, while not binding after Halo, remain influential with district courts in the Eastern District of Texas and provide a useful framework for organizing the willfulness evidence.
B. Factual Basis for Willful Infringement
The factual record supports a strong willful infringement finding against Lumicore. The evidence, developed to date through pre-suit correspondence, depositions, and publicly available information, falls into several categories:
1. Pre-Suit Notice (FairPoint Letters): FairPoint Licensing Group, LLC, acting on behalf of OWS, sent the first licensing and notice letter to Lumicore's General Counsel, Raymond Bautista, on January 15, 2023. This letter identified the '847, '193, and '562 Patents, described specific infringement indicators identified in the Benchmark teardown of the LumiLink 400G-ZR+, and invited Lumicore to engage in licensing discussions. A supplemental letter dated May 15, 2023 added the '015 Patent and expanded the scope of accused products to include the LumiLink 800G-DR8, which had launched in Q1 2023. Lumicore acknowledged receipt of both letters through its General Counsel, Mr. Bautista. These letters unambiguously placed Lumicore on actual notice of the asserted patents and the alleged infringement, establishing the starting point for the post-notice willfulness period.
2. In-Person Licensing Meeting: On April 20, 2023, an in-person licensing meeting was held in Austin, Texas. Representing OWS were Angela Reeves of FairPoint Licensing Group and Rebecca Tanaka, OWS's General Counsel. Representing Lumicore were Raymond Bautista and Kate Rourke of Hawthorne Vega & Cruz. According to the deposition testimony of Angela Reeves, taken on December 10, 2024, Lumicore's representatives showed "no interest in negotiating" and declined to engage substantively with the claim charts and technical evidence presented by OWS. Ms. Reeves testified that the meeting lasted approximately ninety minutes, during which Lumicore's representatives maintained a posture of blanket denial without addressing the specific infringement allegations. This testimony is particularly significant because it demonstrates that Lumicore's refusal to engage was not based on any articulated technical or legal position but rather a strategic decision to ignore OWS's patent rights.
3. Continued Infringement After Notice: After receiving both FairPoint letters and attending the in-person licensing meeting, Lumicore launched the LumiEdge 1600G-LR transceiver module in Q4 2023. This launch occurred approximately six months after the in-person meeting and expanded the scope of infringement to a third product line, implicating the '193 and '015 Patents. The launch of a new infringing product after extensive notice is strong evidence of willfulness. See WCM Industries, Inc. v. IPS Corp., 721 F.3d 1366, 1374 (Fed. Cir. 2013) (finding willfulness supported by evidence that defendant continued infringing activity after receiving notice).
4. Design-Phase Awareness: We anticipate testimony from Melissa Chen, a former Lumicore engineer now employed at Veridian Photonics, Inc., that Lumicore's LumiLink 400G-ZR+ design team accessed and reviewed OWS's published patent application No. 2018/0123456 (which corresponds to the '193 Patent) during the product design phase in 2021–2022. This testimony has been confirmed in part by the deposition of Dr. Sandra Michaud, Lumicore's Chief Technology Officer, taken on November 19, 2024. In her deposition, Dr. Michaud admitted that she personally reviewed OWS's published patent applications during the LumiLink design phase, although she characterized her review as routine competitive intelligence. This admission is powerful evidence that Lumicore was aware of OWS's patent claims before it even launched the first accused product, suggesting that the infringement was not inadvertent but rather a conscious business decision.
5. Refusal to Produce Opinion-of-Counsel Letters: In Lumicore's July 10, 2023 declination letter, Lumicore stated that it had obtained "competent legal opinions" concluding that its products do not infringe the asserted patents. However, Lumicore has refused to produce these opinion letters in discovery, asserting attorney-client privilege and work product protection. Calderwood & Harkness filed a Motion to Compel production of these letters (Docket Entry No. 40, filed October 21, 2024), which remains pending before the Court. Raymond Bautista's deposition, taken on December 3, 2024, confirmed that he received and forwarded the FairPoint letters to Lumicore's legal team, but he refused to answer questions about the substance of any opinion-of-counsel analysis on privilege grounds. Notably, Mr. Bautista admitted that no formal design-around analysis was commissioned before the LumiEdge 1600G-LR launch. If Lumicore ultimately produces the opinion letters, they will need to be carefully analyzed for deficiencies — for example, flawed claim construction, incomplete analysis of all asserted patents, or failure to consider the Benchmark teardown evidence. If Lumicore continues to withhold the opinions, the jury may be instructed that it may draw an adverse inference from the non-production, depending on the Court's ruling on the Motion to Compel.
6. No Remedi

MEMORANDUM

I. EXECUTIVE SUMMARY

II. BACKGROUND AND CASE OVERVIEW

Record

Parties

Dates

Amounts