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

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CALDERWOOD & HARKNESS LLP ATTORNEYS AT LAW

ROYALTY RATE NEGOTIATION — HYPOTHETICAL NEGOTIATION SCENARIO

INTERNAL ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

Date: May 2024

THIS MEMORANDUM IS PROTECTED BY THE ATTORNEY WORK PRODUCT DOCTRINE AND THE ATTORNEY-CLIENT PRIVILEGE. IT HAS BEEN PREPARED IN ANTICIPATION OF LITIGATION AND REFLECTS THE MENTAL IMPRESSIONS, CONCLUSIONS, OPINIONS, AND LEGAL THEORIES OF COUNSEL. THIS DOCUMENT IS NOT INTENDED FOR PRODUCTION TO ANY OPPOSING PARTY, THIRD PARTY, OR TRIBUNAL AND SHOULD NOT BE DISCLOSED OUTSIDE OF THE ATTORNEY-CLIENT RELATIONSHIP WITHOUT THE EXPRESS WRITTEN CONSENT OF CALDERWOOD & HARKNESS LLP.

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I. INTRODUCTION AND PURPOSE

A. Objective of This Memorandum

This memorandum constructs a detailed narrative of the hypothetical negotiation that would have taken place between Optiwave Semiconductor Corp. ("OWS") and Lumicore Technologies, Inc. ("Lumicore"), consistent with the framework established in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), to arrive at a reasonable royalty rate for a license under the four asserted patents in this litigation:

(1) U.S. Patent No. 10,234,847 (the "'847 Patent");

(2) U.S. Patent No. 10,891,193 (the "'193 Patent");

(3) U.S. Patent No. 9,678,562 (the "'562 Patent"); and

(4) U.S. Patent No. 11,402,015 (the "'015 Patent").

The memorandum is intended to serve as the primary analytical foundation for Dr. Lawrence Keating of the Meridian Economic Consulting Group, LLC, who has been retained as OWS's damages expert. The memorandum provides Dr. Keating with a structured walkthrough of each of the fifteen Georgia-Pacific factors, identifies the specific factual inputs informing each factor, and sets forth the reasoning supporting a proposed reasonable royalty rate of 8.5% of accused-product net sales. Dr. Keating will incorporate this analysis, together with his independent economic analysis, into his expert report, which is due June 15, 2025.

This memorandum is also designed to facilitate preparation for Dr. Keating's deposition and trial testimony by anticipating the defense's likely challenges to the hypothetical negotiation framework and the proposed royalty rate. Sections of this memorandum specifically address anticipated counter-arguments from Lumicore's damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP, and provide the factual and analytical bases for rebuttal.

B. The Hypothetical Negotiation Framework

Under the seminal decision in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), a reasonable royalty is determined by constructing a hypothetical negotiation between a willing licensor and a willing licensee at the time infringement began. This legal construct has been uniformly adopted by the Federal Circuit and is the standard methodology for calculating reasonable-royalty damages under 35 U.S.C. § 284. See, e.g., Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324–25 (Fed. Cir. 2009); Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292, 1312 (Fed. Cir. 2011); VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014).

The hypothetical negotiation framework rests on several foundational assumptions:

(a) Both parties are assumed to be willing participants in the negotiation — the licensor is willing to license and the licensee is willing to take a license;

(b) Both parties are assumed to be reasonably informed and to have knowledge of the relevant facts bearing on the value of the patent rights, the competitive landscape, the financial circumstances of both parties, and the state of the technology;

(d) The patents-in-suit are assumed to be valid and infringed for purposes of the negotiation — the hypothetical negotiation does not incorporate a discount for the probability of invalidation or a finding of non-infringement; and

(e) The negotiation is not a real-world exercise and does not attempt to recreate any actual negotiation that did or did not occur between the parties. Rather, it is a legal construct — a thought experiment — designed to estimate the royalty rate the parties would have agreed upon had they engaged in a good-faith, arm's-length negotiation at the relevant date.

The Federal Circuit has cautioned that the hypothetical negotiation must be grounded in the economic realities of the parties' positions at the time of the negotiation and must not be based on hindsight or post-infringement developments. See Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 772 (Fed. Cir. 2014); LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 76 (Fed. Cir. 2012). However, "the trier of fact may look to events subsequent to the hypothetical negotiation date to inform the damages calculation." Lucent, 580 F.3d at 1333. This memorandum draws on both pre-negotiation and post-negotiation facts, clearly identifying where post-negotiation developments are used and the analytical basis for their relevance.

C. Hypothetical Negotiation Date

The hypothetical negotiation is set in Q2 2022, specifically the period of May through June 2022. This date is fixed just before the launch of Lumicore's first accused product, the LumiLink 400G-ZR+, which entered the market in Q3 2022 (with initial commercial shipments commencing in July 2022, based on Lumicore's public disclosures and SEC filings). Under established precedent, the hypothetical negotiation date is set at the time infringement began. See Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 870 (Fed. Cir. 1993). The first act of infringement in this matter — the manufacture, use, offer for sale, and sale of the LumiLink 400G-ZR+ — commenced no later than Q3 2022, and the negotiation is therefore set immediately prior to that date.

At the Q2 2022 negotiation date, the status of the asserted patents was as follows:

• The '847 Patent (U.S. Patent No. 10,234,847), titled "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss," had been issued on March 19, 2019, and was in force. All maintenance fees were current.

• The '193 Patent (U.S. Patent No. 10,891,193), titled "High-Bandwidth coherent Optical Transceiver Integrated on Silicon Substrate," had been issued on January 12, 2021, and was in force. All maintenance fees were current.

• The '562 Patent (U.S. Patent No. 9,678,562), titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks," had been issued on June 13, 2017, and was in force. All maintenance fees were current. This patent was originally assigned to Solara Optics, Inc. and acquired by OWS via asset purchase agreement dated June 15, 2018.

• The '015 Patent (U.S. Patent No. 11,402,015), titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers," had not yet issued as of Q2 2022. The underlying application was filed on August 30, 2019, claiming priority to Provisional Application No. 62/499,117, filed April 7, 2017. The application was pending and published. The patent subsequently issued on August 2, 2022. In the hypothetical negotiation, both parties — as reasonably informed actors — would be aware of the pending application and its claims, and would account for its expected issuance. The parties would negotiate on the basis that the '015 Patent would likely issue in the near term and would be included in the scope of the license.

D. Parties to the Hypothetical Negotiation

1. Willing Licensor: Optiwave Semiconductor Corp. (OWS)

Optiwave Semiconductor Corp. ("OWS") 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 sale of silicon photonics chipsets and transceiver modules for high-speed data-center interconnects. As of its most recent fiscal year (FY 2023), OWS reported audited revenue of $487.3 million and employed approximately 1,250 individuals across its operations. OWS is the third-largest U.S.-based supplier of silicon-photonics transceiver modules, trailing only two significantly larger diversified semiconductor firms. Its financial statements are audited by Gresham & Whitfield LLP, San Jose office.

OWS was founded in 2011 and has grown through a combination of organic research and development and strategic acquisitions. A majority stake of approximately 55% is held by Ridgeline Capital Partners, LP, a private equity firm that acquired its interest in 2019 for $780 million. Franklin Osei, Managing Partner of Ridgeline Capital Partners, serves as Chair of the OWS Board of Directors. The company's senior leadership team includes Dr. Priya Ramaswamy (Chief Executive Officer), Dr. Jian-Wei Huang (Chief Technology Officer), Rebecca Tanaka (General Counsel), David Leitner (Chief Financial Officer), and Dr. Nikolai Petrov (Vice President of Engineering, Photonics Division).

OWS maintains a robust intellectual property portfolio comprising 142 issued U.S. patents and 58 pending applications covering a broad range of silicon-photonics technologies. Twelve patents, including the '562 Patent, were acquired from Solara Optics, Inc. pursuant to an asset purchase agreement dated June 15, 2018, for a purchase price of $34.5 million. OWS's key products — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families — directly compete with Lumicore's planned and accused products in the hyperscale data-center and telecom markets. OWS has reported a gross margin of 47.3% on these competing product lines.

2. Willing Licensee: Lumicore Technologies, Inc. (Lumicore)

Lumicore Technologies, Inc. ("Lumicore") 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, targeting hyperscale data-center operators and telecom service providers. Lumicore completed its initial public offering on the Nasdaq exchange in March 2022 at a price of $24.00 per share, with approximately 91.8 million shares outstanding, resulting in an approximate market capitalization of $2.2 billion as of Q2 2022. By April 2024, Lumicore's share price had risen to approximately $37.00 per share, reflecting a market capitalization of approximately $3.4 billion. The IPO was underwritten by Silverstone Capital Markets LLC, which continues to serve as an ongoing advisory firm. Lumicore's financial statements are audited by Brennan Kellogg & Associates LLP, Austin office.

Lumicore employs approximately 870 individuals and is led by Thomas "Tom" Kessler (Chief Executive Officer), Dr. Sandra Michaud (Chief Technology Officer), Raymond Bautista (General Counsel), Dr. Eric Dalmqvist (Vice President, Product Development), and Janet Moreno (Chief Financial Officer). As of Q2 2022, Lumicore's product pipeline included three transceiver module product lines that are the subject of this litigation:

• The LumiLink 400G-ZR+, targeted for launch in Q3 2022;

• The LumiLink 800G-DR8, targeted for launch in Q1 2023; and

• The LumiEdge 1600G-LR, which was in a later stage of development at the time of the hypothetical negotiation.

Lumicore's actual FY 2023 revenue, as reported in its Form 10-K filed with the Securities and Exchange Commission, was $312.6 million, of which $264.9 million was attributable to the accused products. Detailed accused-product revenue projections that would have been available to both parties at the time of the hypothetical negotiation — based on Lumicore's internal business plans, board presentations, and industry forecasts — are discussed in Section II.D below.

II. BACKGROUND INFORMATION AVAILABLE TO BOTH PARTIES AT THE HYPOTHETICAL NEGOTIATION DATE

The hypothetical negotiation framework assumes that both parties are "reasonably and voluntarily trying to reach an agreement" and possess all relevant information bearing on the value of the license. Georgia-Pacific, 318 F. Supp. at 1120. This section compiles the universe of factual information that both OWS and Lumicore would have had at their disposal during a Q2 2022 negotiation, supplemented by certain post-negotiation-date facts (principally actual revenue data) that are used to confirm or adjust forward-looking estimates. Where post-negotiation data is used, it is identified as such and its relevance to the hypothetical negotiation framework is explained.

A. OWS's Market Position and Patent Portfolio

OWS was founded in 2011 and has developed into a significant force in the silicon-photonics transceiver market. At the time of the hypothetical negotiation, OWS held the number-three market position among U.S.-based suppliers of silicon-photonics transceiver modules, behind two significantly larger, diversified semiconductor companies with broader product lines. OWS's focus on silicon photonics, in contrast to its larger competitors' diversified semiconductor businesses, made its patent portfolio particularly concentrated and strategically valuable in this specific technology segment.

The company's majority ownership by Ridgeline Capital Partners, LP — which acquired a 55% stake in 2019 for $780 million — provided OWS with the financial backing and strategic support to invest aggressively in research and development, pursue acquisitions, and enforce its intellectual property. Franklin Osei, Managing Partner of Ridgeline Capital Partners, serves as Chair of the OWS Board of Directors and has publicly stated that OWS's patent portfolio is a "cornerstone asset" of the company's competitive strategy. Board minutes and investor presentations from the pre-negotiation period reflect a clear emphasis on maximizing the value of OWS's IP portfolio through both product development and selective licensing.

OWS's intellectual property portfolio of 142 issued U.S. patents and 58 pending applications spans a wide range of silicon-photonics technologies, including waveguide design, optical modulation, photodetection, thermal management, packaging, and transceiver system architecture. Of particular note, OWS acquired twelve patents — including the '562 Patent — from Solara Optics, Inc. pursuant to an asset purchase agreement dated June 15, 2018, for a total consideration of $34.5 million. The Solara Optics patents were identified by OWS's engineering team as covering foundational thermal management and waveguide technologies that complemented OWS's organically developed portfolio. The acquisition was structured as an asset purchase of specified patent rights and did not involve the acquisition of Solara Optics as a going concern; Solara Optics subsequently ceased operations in late 2019.

OWS's key product families — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver modules — are directly competitive with Lumicore's accused products. These products are sold to many of the same hyperscale data-center operators and telecom customers. OWS's reported gross margin on these competing product lines is 47.3%, reflecting the premium pricing enabled by the company's technological differentiation and patent-protected features.

The senior leadership team at OWS includes individuals with deep expertise in silicon-photonics technology and semiconductor business management. Dr. Priya Ramaswamy, the CEO, holds a Ph.D. in Electrical Engineering from Stanford University and spent fifteen years in senior roles at major semiconductor firms before joining OWS. Dr. Jian-Wei Huang, the CTO, is a co-inventor on thirty-seven of OWS's issued patents, including two of the asserted patents in this litigation ('847 and '193). Rebecca Tanaka, the General Counsel, has extensive experience in patent licensing and enforcement, having previously served as in-house IP counsel at two other semiconductor companies. David Leitner, the CFO, oversees OWS's financial reporting and strategic planning, including the economic analysis underlying the company's licensing program.

B. Lumicore's Market Position and Business Plans

Lumicore was founded in 2015 by a team of engineers who previously worked at academic research institutions and established semiconductor firms. The company developed rapidly, securing Series A and Series B venture capital funding before completing its initial public offering on the Nasdaq exchange in March 2022 at $24.00 per share. The IPO, underwritten by Silverstone Capital Markets LLC, raised approximately $340 million in gross proceeds, providing Lumicore with significant capital for product development, manufacturing scale-up, and market entry.

At the time of the hypothetical negotiation in Q2 2022, Lumicore was on the cusp of launching its first major commercial product, the LumiLink 400G-ZR+ transceiver module. The company's IPO prospectus and subsequent quarterly filings identified three product lines targeted for launch:

• LumiLink 400G-ZR+: A 400-gigabit coherent optical transceiver module targeting data-center interconnect applications. Launch was planned for Q3 2022, with initial customer samples having been shipped to evaluation customers in Q1 2022. The product was designed to compete directly with OWS's OWS-400ZR and similar products from other vendors.

• LumiLink 800G-DR8: An 800-gigabit short-reach transceiver module designed for high-density data-center environments. Launch was planned for Q1 2023. This product incorporates all four of the patented technologies at issue in this litigation and was positioned as Lumicore's flagship product for the next generation of data-center interconnects.

• LumiEdge 1600G-LR: A 1.6-terabit long-reach transceiver module targeted for next-generation telecom and hyperscale applications. This product was in a later stage of development at the time of the hypothetical negotiation, with a planned launch of Q4 2023. It incorporates the coherent transceiver integration technology of the '193 Patent and the grating coupler technology of the '015 Patent.

Lumicore's internal business plans, board presentations, and financial projections — which would have been known to both parties in the hypothetical negotiation — reflected aggressive growth expectations. The company projected significant revenue ramp-up from the LumiLink 400G-ZR+ launch through FY 2025 and beyond, driven by design wins at multiple hyperscale data-center operators and telecom carriers. Lumicore's actual FY 2023 revenue of $312.6 million — of which $264.9 million was attributable to accused products — is broadly consistent with the company's pre-launch projections.

Lumicore's leadership team includes Dr. Sandra Michaud, the CTO, who holds a Ph.D. in Applied Physics from MIT and has been deposed in this litigation. Her deposition testimony (taken November 19, 2024) addresses, among other topics, Lumicore's product design decisions, its awareness of OWS's patent portfolio, the availability of non-infringing alternatives, and the feasibility and cost of design-around efforts. Raymond Bautista, the General Counsel, was deposed on December 3, 2024, and testified regarding Lumicore's IP clearance procedures (or lack thereof) prior to product launch. Dr. Eric Dalmqvist, Vice President of Product Development, led the engineering team responsible for the design and development of all three accused product lines. Janet Moreno, the CFO, oversaw Lumicore's financial reporting and the preparation of the accused-product revenue projections and margin analyses that are central to the damages calculation.

C. The Asserted Patents — Technical Overview

The four asserted patents cover distinct but interrelated technologies in the silicon-photonics transceiver space. Together, they form a portfolio that addresses four critical functional areas of a high-performance silicon-photonics transceiver module: optical multiplexing, coherent transceiver integration, thermal management, and optical coupling. Each patent is described in detail below.

1. The '847 Patent (U.S. Patent No. 10,234,847)

Title: "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss"

Filing Date: September 14, 2016

Issue Date: March 19, 2019

Original Assignee: Optiwave Semiconductor Corp.

The '847 Patent claims a multi-channel waveguide multiplexer structure fabricated on a silicon photonic integrated circuit (PIC) that achieves significantly reduced insertion loss compared to prior art arrayed waveguide grating (AWG) designs. The patented structure employs a novel tapering geometry and mode-matching technique at waveguide junctions that minimizes optical power loss during channel multiplexing. This technology is critical for high-bandwidth transceiver modules because excessive insertion loss at the multiplexer stage reduces overall link budget, limits achievable transmission distances, and increases power consumption. The '847 Patent's claims are embodied in the waveguide multiplexer structures used in the LumiLink 400G-ZR+ and LumiLink 800G-DR8 products. The '847 Patent is in the same patent family as the '562 Patent (continuation relationship), sharing a common specification and priority date chain.

2. The '193 Patent (U.S. Patent No. 10,891,193)

Title: "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate"

Filing Date: April 7, 2017

Issue Date: January 12, 2021

Original Assignee: Optiwave Semiconductor Corp.

The '193 Patent claims a coherent optical transceiver architecture in which both the transmitter and receiver optical paths — including modulator, photodetector, local oscillator, and 90-degree hybrid — are monolithically integrated on a single silicon substrate. Prior approaches relied on discrete-component assemblies or hybrid integration that required costly manual alignment and introduced performance variability. The '193 Patent enables higher bandwidth, lower manufacturing cost, and improved yield by leveraging standard CMOS-compatible fabrication processes. This technology is fundamental to the coherent transceiver design used in all three accused products (LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR). The '193 Patent shares a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017) with the '015 Patent.

3. The '562 Patent (U.S. Patent No. 9,678,562)

Title: "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks"

Filing Date: November 22, 2014

Issue Date: June 13, 2017

Original Assignee: Solara Optics, Inc.

Acquired by OWS: Asset Purchase Agreement dated June 15, 2018, for $34.5 million (among a portfolio of 12 patents)

The '562 Patent claims a method for managing thermal dissipation in photonic integrated circuits through the use of embedded micro-channel heat sinks fabricated directly within the silicon substrate adjacent to heat-generating optical components. Conventional approaches to thermal management in PICs relied on external heat sinks or thermoelectric coolers that added bulk, cost, and complexity to the module design. The '562 Patent's embedded micro-channel approach enables more efficient heat removal with a significantly smaller form factor, which is essential for the dense packaging requirements of modern data-center transceiver modules. The '562 Patent is in the same patent family as the '847 Patent (continuation relationship). The thermal management structures claimed by the '562 Patent are present in the LumiLink 400G-ZR+ and LumiLink 800G-DR8.

4. The '015 Patent (U.S. Patent No. 11,402,015)

Title: "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers"

Filing Date: August 30, 2019

Issue Date: August 2, 2022

Original Assignee: Optiwave Semiconductor Corp.

Priority: Claims priority to Provisional Application No. 62/499,117, filed April 7, 2017

The '015 Patent claims a polarization-diverse grating coupler structure that efficiently couples both transverse electric (TE) and transverse magnetic (TM) polarization modes from a standard single-mode fiber into the silicon waveguides of a photonic integrated circuit. Prior grating coupler designs were typically optimized for a single polarization mode, resulting in significant polarization-dependent loss (PDL) that degraded signal integrity in coherent transmission systems. The '015 Patent's polarization-diverse design addresses this limitation through a novel dual-layer grating geometry that simultaneously captures both polarization states with minimal loss. The '015 Patent was pending at the time of the hypothetical negotiation (its application having been filed August 30, 2019, and published) but was expected to issue — and did issue on August 2, 2022. The grating coupler technology is used in the LumiLink 800G-DR8 and LumiEdge 1600G-LR. The '015 Patent shares a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017) with the '193 Patent.

5. Patent Prosecution and Family Relationships

All four asserted patents were prosecuted by Cascade IP Advisors, LLC, located at 1550 Crystal Drive, Suite 600, Arlington, Virginia 22202. The lead prosecution attorney was Dr. Martin Chu. The '562 Patent and the '847 Patent are in the same patent family (continuation relationship), sharing common specification elements and a related priority date chain. The '193 Patent and the '015 Patent share a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017). These family relationships are relevant to the scope and breadth of the patent portfolio coverage and demonstrate that the four asserted patents collectively cover a coordinated and interrelated set of silicon-photonics innovations developed by OWS (and its predecessor, Solara Optics, in the case of the '562 Patent).

D. Accused Products and Revenue Projections

The three accused products, their launch dates, the asserted patents they are accused of infringing, and their actual and projected revenues are summarized below:

The FY 2023 revenue figures are derived from Lumicore's audited Form 10-K filing with the SEC and from product-level financial data produced in discovery (designated Highly Confidential — Attorneys' Eyes Only). The projected revenue figures for the full Q3 2022 through Q4 2025 period are based on Dr. Keating's preliminary analysis, which incorporates Lumicore's internal business plans, board-level financial projections, industry analyst forecasts, and actual revenue data through the most recent reporting period.

At the time of the hypothetical negotiation in Q2 2022, the parties would have had access to Lumicore's forward-looking revenue projections for the accused products, as well as industry forecasts for the silicon-photonics transceiver market. These projections indicated substantial revenue growth for Lumicore, driven by the rapid expansion of hyperscale data-center capacity and the industry transition to 400G, 800G, and 1.6T interconnect speeds. Both parties, as sophisticated commercial actors, would have recognized the significant revenue opportunity represented by the accused product lines and would have factored these projections into the royalty negotiation.

E. Prior Licensing History of OWS

OWS has an established patent licensing program that it has used to monetize portions of its patent portfolio while continuing to practice the patented technologies in its own products. The licensing program has been managed through a combination of direct licensing by OWS's in-house legal team and outsourced licensing services provided by FairPoint Licensing Group, LLC (Managing Director: Angela Reeves), located at 500 Sansome Street, Suite 1400, San Francisco, California 94111. However, FairPoint's engagement did not commence until after the hypothetical negotiation date; FairPoint's first outreach letter to potential licensees was sent on January 15, 2023. At the time of the hypothetical negotiation, OWS's existing licenses had been negotiated directly by the company's General Counsel, Rebecca Tanaka, in consultation with outside counsel.

1. OWS License Agreements (Licensor-Side Comparables)

Three existing OWS license agreements are relevant as comparable transactions for purposes of the Georgia-Pacific analysis:

OWS–Terralink Semiconductor License (2020):

Effective Date: June 2020. Terralink Semiconductor, Inc. ("Terralink") is a mid-size semiconductor company that manufactures optical components for telecom and enterprise networking applications. Terralink is not a direct competitor of OWS in the hyperscale data-center transceiver market; its products serve a different customer segment (enterprise networking) with limited overlap. The license covers a subset of OWS's patent portfolio, including the '562 Patent and the '847 Patent. The royalty rate is 6.5% of net sales of licensed products, with no upfront payment. Total licensed-product revenue in the first year of the license was approximately $45 million. The license is non-exclusive, U.S.-only, and runs for the life of the licensed patents.

OWS–NovaWave Corp. License (2021):

Effective Date: March 2021. NovaWave Corp. ("NovaWave") is a smaller semiconductor firm specializing in photonic components for medical imaging and LiDAR applications. NovaWave's products do not compete with OWS's data-center transceiver products; the license was granted to cover NovaWave's use of certain OWS waveguide and thermal management technologies in non-competing applications. The license covers the '562 Patent and the '193 Patent. The royalty rate is 9.0% of net sales of licensed products, with no upfront payment. Total licensed-product revenue in the first year of the license was approximately $22 million. The higher royalty rate relative to the Terralink license reflects the smaller revenue base and the narrower set of licensed products (which concentrated the royalty burden on a smaller number of units). The license is non-exclusive, U.S.-only, and runs for the life of the licensed patents.

OWS–Helix Integrated Photonics License (2022):

Effective Date: February 2022. Helix Integrated Photonics, Inc. ("Helix") is a fabless semiconductor company that designs and sells silicon-photonics transceiver modules for data-center applications. Helix operates in the same market as OWS and Lumicore, although Helix's product portfolio is narrower and targets a specific subsegment of the data-center market (short-reach intra-rack interconnects). The license covers the broadest set of the asserted patents — the '847 Patent, the '193 Patent, and the '562 Patent — as well as several other OWS patents not asserted in this litigation. The royalty rate is 7.75% of net sales of licensed products, plus an upfront payment of $2.5 million. Total licensed-product revenue in the first year of the license was approximately $68 million. The Helix license is the most recent of OWS's license agreements and covers the broadest set of asserted patents, making it the most probative comparable. The license is non-exclusive, U.S.-only, and runs for the life of the licensed patents.

2. Industry-Comparable License Agreements

Two additional license agreements from the silicon-photonics industry are available as comparables:

Stratos Photonics v. ArcLight Systems Settlement (2019):

This agreement was reached in settlement of patent infringement litigation between Stratos Photonics, Inc. and ArcLight Systems, Inc. concerning silicon-photonics transceiver patents. The settlement included a running royalty of 8.0% of net sales of licensed products. The licensed patents covered waveguide and modulator technologies comparable in scope to the '847 and '193 Patents. The settlement was reported in a joint press release and confirmed through publicly available court filings.

Coreline Technologies v. Prisma Semiconductor Cross-License (2021):

This cross-license agreement was negotiated as part of a broader technology partnership between Coreline Technologies, Inc. and Prisma Semiconductor Corp. The effective royalty rate — after netting out the value of the cross-licensed patents — was 10.2% of net sales of products covered by Coreline's licensed patents. The cross-license covered a portfolio of silicon-photonics patents including thermal management and grating coupler technologies comparable in scope to the '562 and '015 Patents.

3. Summary of Comparable Royalty Rates

The overall range of comparable royalty rates in silicon-photonics industry transactions, based on the five comparable agreements identified above and supplemented by industry survey data (discussed in Appendix D), is 4.0% to 12.5%, with a median of approximately 8.0% and a mean of approximately 8.3%. OWS's own license agreements yield a weighted average royalty rate of approximately 7.5% to 8.0%, with the most probative comparable (the Helix license) at 7.75% plus a $2.5 million upfront payment. These figures provide the quantitative anchors for the royalty rate negotiation.

III. GEORGIA-PACIFIC FACTOR-BY-FACTOR ANALYSIS

This section analyzes each of the fifteen Georgia-Pacific factors as applied to the hypothetical negotiation between OWS and Lumicore. For each factor, the analysis identifies the relevant evidence, assesses the directional impact on the royalty rate (upward, neutral, or downward), and explains how the factor would influence the parties' positions in the negotiation. The cumulative analysis supports a reasonable royalty rate of 8.5% of net sales of the accused products.

Factor 1: The Royalties Received by the Patentee for Licensing the Patents-in-Suit

"The royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty." — Georgia-Pacific, 318 F. Supp. at 1120.

OWS has an established licensing program, principally managed (after January 2023) through FairPoint Licensing Group, LLC. Prior to FairPoint's engagement, OWS negotiated three license agreements involving some or all of the asserted patents, as detailed in Section II.E above. These agreements constitute the most directly relevant evidence of the royalty rates the patentee has received for licensing the patents-in-suit.

The three OWS license agreements establish a royalty rate range of 6.5% to 9.0% for the asserted patents, as follows:

• OWS–Terralink Semiconductor (2020): 6.5% running royalty on $45 million in annual licensed revenue;

• OWS–NovaWave Corp. (2021): 9.0% running royalty on $22 million in annual licensed revenue; and

• OWS–Helix Integrated Photonics (2022): 7.75% running royalty plus $2.5 million upfront payment on $68 million in annual licensed revenue.

Each of these licenses was negotiated in an arm's-length transaction with entities operating in the silicon-photonics or adjacent technology markets. None of the licensees are affiliated with OWS, and each agreement was the product of independent commercial negotiation. These agreements therefore satisfy the foundational requirements for use as comparable transactions under the Federal Circuit's jurisprudence. See Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1310 (Fed. Cir. 2018) (prior licenses involving the patents-in-suit are "highly probative" of a reasonable royalty).

Among the three OWS licenses, the Helix license is the most probative comparable for several reasons. First, it is the most recent, having been executed in February 2022 — only months before the hypothetical negotiation date. Second, it covers the broadest set of asserted patents ('847, '193, and '562). Third, Helix, like Lumicore, is a fabless semiconductor company operating in the data-center transceiver market, making the competitive dynamics of the Helix license more analogous to the hypothetical OWS-Lumicore license than either the Terralink or NovaWave agreements.

The weighted average of OWS's own license agreements — considering both the royalty rate and the relative revenue bases — falls in the range of approximately 7.5% to 8.0%. In the hypothetical negotiation, OWS would point to this established licensing history as the baseline for royalty rate discussions, and would argue for upward adjustments to account for the specific circumstances of the OWS-Lumicore relationship, including Lumicore's status as a direct competitor (see Factors 4 and 5), the inclusion of the '015 Patent in the portfolio (which was not licensed to Helix), and the larger projected revenue base of Lumicore's accused products.

Directional Impact: This factor establishes a floor of approximately 6.5% and a central tendency of 7.5%–8.0%, with upward pressure warranted by the specific circumstances of the OWS-Lumicore relationship.

Factor 2: The Rates Paid by the Licensee for Use of Other Comparable Patents

"The rates paid by the licensee for the use of other patents comparable to the patent in suit." — Georgia-Pacific, 318 F. Supp. at 1120.

Based on discovery productions to date, there is no evidence that Lumicore held any patent licenses from third parties covering comparable silicon-photonics technologies as of Q2 2022. Lumicore's document productions have not revealed any licensing agreements for patents covering waveguide multiplexer, coherent transceiver integration, thermal management, or grating coupler technologies. This finding will be confirmed by Dr. Keating's independent review of Lumicore's produced documents, including any documents designated Highly Confidential — Attorneys' Eyes Only.

Lumicore's apparent absence of third-party patent licenses is consistent with the company's status as a relatively young firm (founded 2015) that had not yet faced significant patent enforcement prior to this litigation. However, this absence does not mean that the licensee-side rate is zero; rather, it means that there is simply no licensee-side comparable data to weigh against the licensor-side evidence.

In the absence of licensee-side comparables, greater weight necessarily falls on OWS's licensor-side licensing history (Factor 1) and on industry-comparable transactions. The two industry-comparable agreements identified in Section II.E — Stratos Photonics v. ArcLight Systems (8.0% royalty) and Coreline Technologies v. Prisma Semiconductor (10.2% effective rate) — provide additional reference points that are consistent with the range established by OWS's own licenses.

Directional Impact: This factor is neutral due to the absence of licensee-side comparables, but reinforces reliance on OWS's licensing history and industry comparables.

Factor 3: Nature and Scope of the License — Exclusive vs. Non-Exclusive; Territorial and Field-of-Use Restrictions

"The nature and scope of the license, as exclusive or nonexclusive; or as restricted or nonrestricted in terms of territory or with respect to whom the manufactured product may be sold." — Georgia-Pacific, 318 F. Supp. at 1120.

The hypothetical license between OWS and Lumicore would be non-exclusive. OWS is a practicing entity that manufactures and sells its own products embodying the patented technologies. OWS has also licensed its patents to multiple third parties (Terralink, NovaWave, and Helix) on a non-exclusive basis. There is no indication that OWS has ever granted, or would grant, an exclusive license under its core silicon-photonics patents, as doing so would undermine its own ability to practice the patented technologies and compete in the market.

The territorial scope of the license would be limited to the United States, consistent with the geographic scope of the U.S. utility patents at issue. The asserted patents are U.S. patents and confer rights only within the United States. While Lumicore may sell products abroad, the hypothetical license addresses only sales within the United States (imports, domestic sales, offers for sale, and use within the United States).

The field of use would be silicon-photonics transceiver modules for data-center interconnects and telecom applications — i.e., the specific markets in which Lumicore's accused products operate. This field-of-use restriction is consistent with the scope of OWS's existing licenses, which are similarly limited to specific product categories.

The license would not include sublicensing rights. OWS has not granted sublicensing rights in any of its existing licenses, and there is no reason to believe it would do so in a license to a direct competitor.

As a general matter, a non-exclusive license typically commands a lower royalty rate than an exclusive license, all else being equal, because a non-exclusive license does not confer monopoly rights on the licensee. See Monsanto Co. v. McFarling, 488 F.3d 973, 979 (Fed. Cir. 2007). However, the parties' direct competitive relationship (see Factor 5) would push the rate upward even for a non-exclusive arrangement, as OWS would demand compensation for the competitive harm of enabling a direct rival to practice its patented technologies alongside other licensees.

Directional Impact: The non-exclusive nature of the license exerts slight downward pressure on the royalty rate relative to an exclusive license, but this effect is largely offset by the direct competitive relationship between the parties.

Factor 4: The Licensor's Established Policy and Marketing Program to Maintain Patent Monopoly — Refusing to License or Granting Licenses Under Special Conditions

"The licensor's established policy and marketing program to maintain his patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly." — Georgia-Pacific, 318 F. Supp. at 1120.

OWS is a practicing entity that competes directly with Lumicore in the silicon-photonics transceiver market. OWS's products — the OWS-400ZR, OWS-800XR, and OWS-1600DR families — are the commercial embodiments of the patented technologies and represent the cornerstone of OWS's business. Any license to a direct competitor like Lumicore effectively enables that competitor to use OWS's own innovations to capture market share that would otherwise flow to OWS. This reality is a critical factor in the hypothetical negotiation.

OWS has adopted a selective licensing strategy. It has not engaged in blanket or program-wide licensing of its patent portfolio to all market participants. Rather, OWS has licensed its patents on a case-by-case basis, with each license reflecting the specific competitive posture of the licensee and the scope of the licensed patents. The three existing licenses illustrate this selectivity:

• The Terralink license (6.5%) was granted to a non-competing licensee operating in the enterprise networking space, which posed no direct competitive threat to OWS's hyperscale data-center business.

• The NovaWave license (9.0%) was granted to a licensee in a completely different application space (medical imaging/LiDAR), with no competitive overlap whatsoever. The higher rate in NovaWave, despite the absence of competitive overlap, reflects the smaller revenue base and the concentrated royalty burden.

• The Helix license (7.75% + $2.5M upfront) was granted to a competitor in the data-center transceiver market, but one with a narrower product portfolio targeting a specific subsegment (short-reach intra-rack interconnects) rather than the broader hyperscale market.

Lumicore, in contrast to Terralink, NovaWave, and Helix, is a direct head-to-head competitor in OWS's core hyperscale data-center transceiver market. A rational licensor in OWS's position would demand a significant royalty premium to compensate for the competitive harm of enabling a direct rival. The premium reflects not only the lost sales that Lumicore's products will capture from OWS, but also the price erosion and market-share dilution effects that additional competition generates across the market.

Dr. Keating should emphasize in his report that OWS's established policy of selective licensing supports a royalty rate that fully compensates OWS for the competitive harm of licensing a direct rival, and that this policy is consistent with OWS's broader business strategy of protecting its competitive position through its patent portfolio.

Directional Impact: This factor exerts strong upward pressure on the royalty rate, supporting a premium above the average of OWS's existing licenses.

Factor 5: The Commercial Relationship Between the Licensor and Licensee — Competitors vs. Non-Competitors

"The commercial relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of business; or whether they are inventor and promoter." — Georgia-Pacific, 318 F. Supp. at 1120.

OWS and Lumicore are direct competitors in the hyperscale data-center transceiver market. This is the single most significant factor driving the royalty rate upward from the baseline established by OWS's existing licenses, which were all negotiated with licensees that either were non-competitors or competed in a narrower subsegment of the market.

The competitive relationship between OWS and Lumicore is both deep and direct:

• Both companies design, market, and sell silicon-photonics transceiver modules for hyperscale data-center interconnect applications.

• Both companies target the same customer base — the top tier of hyperscale data-center operators (including, without limitation, the operators of the largest cloud computing platforms and content delivery networks in the United States).

• OWS and Lumicore compete head-to-head at 12 of the top 20 hyperscale data-center operators, per market share displacement analysis conducted by OWS's industry expert, Gregory Falk. In each of these competitive engagements, Lumicore's accused products are positioned as direct alternatives to OWS's competing products.

• OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules. Lumicore, following its IPO and product launches, has emerged as one of the fastest-growing entrants in the market, with aggressive pricing and customer acquisition strategies targeting OWS's existing customer base.

• Lumicore's IPO prospectus specifically identified OWS as a key competitor, and Lumicore's product specifications and marketing materials are benchmarked against OWS's product performance characteristics.

A willing licensor would demand substantially higher royalties from a direct competitor than from a non-competing licensee. This principle is well established in the damages literature and has been recognized by courts in numerous patent infringement cases. The economic rationale is straightforward: licensing a competitor imposes costs on the licensor beyond the simple foregone royalty opportunity. These costs include (a) lost sales due to direct market share displacement, (b) price erosion across the licensor's product line due to increased competition, (c) loss of design-win opportunities at shared customers, and (d) dilution of the licensor's competitive differentiation and brand premium.

The Federal Circuit has recognized that the competitive relationship between licensor and licensee is a critical factor in the reasonable royalty analysis. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554–55 (Fed. Cir. 1995) (en banc) (recognizing that lost profits and competitive harm are relevant to reasonable royalty determination); Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1373 (Fed. Cir. 2017).

Directional Impact: This factor exerts strong upward pressure on the royalty rate and is the most significant factor favoring a rate at the upper end of the comparable range.

Factor 6: The Effect of Selling the Patented Specialty in Promoting Sales of Other Products of the Licensee

"The effect of selling the patented specialty in promoting sales of other products of the licensee; the existing value of the invention to the licensor as a generator of sales of his non-patented items; and the extent of such derivative or convoyed sales." — Georgia-Pacific, 318 F. Supp. at 1120.

Lumicore's accused transceiver modules are not standalone, isolated components. They are designed into customer systems alongside Lumicore's other networking equipment, management software, and complementary silicon-photonics products. In the hyperscale data-center market, "design-in" relationships are critically important: once a customer qualifies and deploys a vendor's transceiver module in its network architecture, there is a strong tendency toward ongoing purchases from the same vendor for complementary products and successive product generations. This design-in effect creates significant switching costs and generates substantial follow-on revenue for the transceiver vendor.

Lumicore benefits from "convoyed sales" — sales of non-accused products that are driven by or facilitated by the sale of the accused transceiver modules. For example, when Lumicore wins a design slot for the LumiLink 400G-ZR+ at a hyperscale data-center operator, it gains not only the transceiver module revenue but also the opportunity to sell complementary products such as network management software, optical monitoring equipment, and subsequent-generation transceiver modules (including the LumiLink 800G-DR8 and LumiEdge 1600G-LR). These follow-on sales enhance Lumicore's overall revenue and profitability and increase the strategic value of the accused products to Lumicore's business.

The existence of convoyed sales increases the value of the license to Lumicore and, correspondingly, increases the royalty rate that a willing licensee would be willing to pay. Even if the royalty is calculated only on the accused products themselves (rather than on the full suite of convoyed sales), the convoyed-sales effect means that Lumicore's willingness to pay for the license is higher than it would be if the accused products were standalone items with no follow-on revenue implications.

Dr. Keating should, to the extent data permits, quantify the value of ancillary or convoyed sales driven by the accused product lines. This analysis may draw on Lumicore's customer-by-customer revenue data, internal planning documents discussing the "platform" value of design-in relationships, and industry analyst reports on the economics of transceiver-module design wins.

Directional Impact: This factor exerts moderate upward pressure on the royalty rate.

Factor 7: The Duration of the Patent and the Term of the License

"The duration of the patent and the term of the license." — Georgia-Pacific, 318 F. Supp. at 1120.

At the hypothetical negotiation date in Q2 2022, the remaining terms of the asserted patents were as follows:

All four patents have substantial remaining terms, ranging from approximately 12 to 17 years as of the hypothetical negotiation date. This provides long-duration patent protection that extends well beyond the commercially relevant product lifecycles of the current-generation accused products and into subsequent product generations.

The hypothetical license would run for the life of the patents, terminating upon the expiration of the last-to-expire patent. A license with a longer duration provides greater value to the licensee, as it eliminates the risk of future enforcement actions and provides certainty for long-term product planning and customer commitments. Conversely, longer remaining patent life increases the opportunity cost to the licensor of granting a license, as the licensor foregoes the option to enforce or renegotiate for a longer period.

The substantial remaining patent terms in this case — particularly the 15- and 17-year remaining terms of the '193 and '015 Patents, which cover the coherent transceiver integration and grating coupler technologies that are central to next-generation products — increase the value of the license and support a higher royalty rate.

Directional Impact: This factor exerts moderate upward pressure on the royalty rate.

Factor 8: The Established Profitability of the Product Made Under the Patent; Its Commercial Success; and Its Current Popularity

"The established profitability of the product made under the patent; its commercial success; and its current popularity." — Georgia-Pacific, 318 F. Supp. at 1120.

OWS's products practicing the asserted patents — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families — have achieved significant commercial success. In FY 2023, OWS reported total revenue of $487.3 million, of which approximately $310 million (63.6%) is attributable to products that practice one or more of the asserted patents. OWS's net income for FY 2023 was $61.4 million, reflecting the profitability of the company's operations, with a gross margin of 47.3% on its competing product lines. These figures demonstrate that the patented technologies are commercially successful when embodied in OWS's products and that the market rewards products incorporating these innovations with premium pricing and healthy margins.

The commercial success of OWS's products is also evidenced by the company's market position. OWS holds the number-three position among U.S.-based suppliers of silicon-photonics transceiver modules, a position it has built and maintained through the technological differentiation enabled by its patent portfolio. OWS's products have been qualified and deployed by multiple major hyperscale data-center operators, and the company has won competitive design evaluations against both larger and smaller competitors.

The commercial success of the patented technology is further corroborated by secondary considerations of non-obviousness, which also serve to reinforce the value of the patents in the royalty negotiation:

• Commercial success: OWS's revenue and market position, as noted above, demonstrate the commercial success of products embodying the patented technologies.

• Long-felt need: Prior to OWS's innovations (and Solara Optics' innovation in the case of the '562 Patent), the industry had long sought solutions to the problems addressed by the asserted patents — low-loss waveguide multiplexing, monolithic coherent transceiver integration, efficient thermal management of PICs, and polarization-diverse optical coupling. These needs were well-documented in academic and industry literature predating the filing dates of the asserted patents.

• Failure of others: At least three competitors attempted similar designs before OWS's innovations and were unable to achieve comparable performance. This failure-of-others evidence further supports the conclusion that the patented technologies represent non-obvious and commercially valuable advances over the prior art.

• Copying: Lumicore's accused products, as confirmed by the Benchmark Semiconductor Analysis, LLC teardown reports, incorporate structures that are strikingly similar to the patented designs. While the issue of copying is addressed more fully in the context of willful infringement (not the subject of this memorandum), the evidence of copying is relevant to the value of the patented technology.

Directional Impact: This factor exerts strong upward pressure on the royalty rate, as it demonstrates both the commercial value and the technological significance of the patented innovations.

Factor 9: The Utility and Advantages of the Patent Property Over the Old Modes or Devices

"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." — Georgia-Pacific, 318 F. Supp. at 1120.

The asserted patents cover innovations that represent significant advances over the prior art in each of their respective technology areas:

'847 Patent (Multi-Channel Waveguide Multiplexer): Prior art multiplexer designs, principally based on arrayed waveguide grating (AWG) architectures, suffered from relatively high insertion loss, particularly at higher channel counts. The '847 Patent's novel tapering geometry and mode-matching technique at waveguide junctions achieves significantly lower insertion loss — on the order of 1.2 dB per channel compared to 2.5–3.0 dB for conventional AWG designs — enabling more channels to be multiplexed at lower power penalty. This improvement is critical for high-bandwidth transceiver modules operating at 400G and above, where link budget is a binding constraint on transmission distance and channel capacity.

'193 Patent (Coherent Optical Transceiver Integration): Prior to the '193 Patent, coherent optical transceivers relied on discrete-component assemblies or hybrid integration approaches that required costly manual alignment of optical components, introduced performance variability between units, and limited manufacturing yield. The '193 Patent enables monolithic integration of both transmitter and receiver optical paths on a single silicon substrate, leveraging standard CMOS-compatible fabrication processes. This approach reduces manufacturing cost by an estimated 40–60% relative to hybrid integration, improves yield, and enables smaller form factors required by current pluggable transceiver standards (e.g., QSFP-DD, OSFP).

'562 Patent (Embedded Micro-Channel Heat Sinks): Conventional thermal management approaches for PICs relied on external heat sinks (bonded to the top surface of the PIC) or thermoelectric coolers (TECs) that added significant bulk, weight, and cost to the module design. The '562 Patent's embedded micro-channel approach fabricates heat-sink structures directly within the silicon substrate, immediately adjacent to heat-generating optical components, enabling more efficient heat removal with a dramatically smaller footprint. This innovation is essential for the dense packaging requirements of modern pluggable transceiver modules, where thermal dissipation is a primary design constraint.

'015 Patent (Polarization-Diverse Grating Coupler): Prior grating coupler designs were typically optimized for a single polarization mode (usually TE mode), resulting in significant polarization-dependent loss (PDL) of 3–5 dB for the orthogonal (TM) mode. In coherent transmission systems, where both polarization states carry independent data streams, this PDL directly reduces the system's effective signal-to-noise ratio and limits achievable transmission distances. The '015 Patent's dual-layer grating geometry simultaneously captures both polarization states with near-equal efficiency (PDL < 0.5 dB), significantly improving signal integrity and enabling longer-reach coherent transmission.

The utility and advantages of the patented technologies are further evidenced by the failure of at least three competitors to achieve comparable results prior to OWS's innovations. Dr. Caroline Ashford, OWS's technical expert (Professor of Electrical Engineering & Photonics, Northfield Institute of Technology), will testify in detail regarding the technical superiority of the patented approaches over prior art methods and the significance of the performance improvements they enable.

The patented technologies are not incremental improvements to existing designs. Rather, they are foundational innovations that enable new product categories and performance levels in the silicon-photonics transceiver market. The '193 Patent's monolithic coherent integration, in particular, is widely regarded in the industry as a paradigm-shifting advance that has transformed the economics and performance characteristics of coherent optical transceivers.

Directional Impact: This factor exerts strong upward pressure on the royalty rate, as it demonstrates that the patented technologies provide substantial utility and advantages over prior approaches.

Factor 10: The Nature of the Patented Invention; the Character of the Commercial Embodiment; and the Benefits to Those Who Have Used the Invention

"The nature of the patented invention; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the invention." — Georgia-Pacific, 318 F. Supp. at 1120.

The patented inventions are embodied i

CALDERWOOD & HARKNESS LLP ATTORNEYS AT LAW
ROYALTY RATE NEGOTIATION — HYPOTHETICAL NEGOTIATION SCENARIO
INTERNAL ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL
Date: May 2024
THIS MEMORANDUM IS PROTECTED BY THE ATTORNEY WORK PRODUCT DOCTRINE AND THE ATTORNEY-CLIENT PRIVILEGE. IT HAS BEEN PREPARED IN ANTICIPATION OF LITIGATION AND REFLECTS THE MENTAL IMPRESSIONS, CONCLUSIONS, OPINIONS, AND LEGAL THEORIES OF COUNSEL. THIS DOCUMENT IS NOT INTENDED FOR PRODUCTION TO ANY OPPOSING PARTY, THIRD PARTY, OR TRIBUNAL AND SHOULD NOT BE DISCLOSED OUTSIDE OF THE ATTORNEY-CLIENT RELATIONSHIP WITHOUT THE EXPRESS WRITTEN CONSENT OF CALDERWOOD & HARKNESS LLP.
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I. INTRODUCTION AND PURPOSE
A. Objective of This Memorandum
This memorandum constructs a detailed narrative of the hypothetical negotiation that would have taken place between Optiwave Semiconductor Corp. ("OWS") and Lumicore Technologies, Inc. ("Lumicore"), consistent with the framework established in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), to arrive at a reasonable royalty rate for a license under the four asserted patents in this litigation:
(1) U.S. Patent No. 10,234,847 (the "'847 Patent");
(2) U.S. Patent No. 10,891,193 (the "'193 Patent");
(3) U.S. Patent No. 9,678,562 (the "'562 Patent"); and
(4) U.S. Patent No. 11,402,015 (the "'015 Patent").
The memorandum is intended to serve as the primary analytical foundation for Dr. Lawrence Keating of the Meridian Economic Consulting Group, LLC, who has been retained as OWS's damages expert. The memorandum provides Dr. Keating with a structured walkthrough of each of the fifteen Georgia-Pacific factors, identifies the specific factual inputs informing each factor, and sets forth the reasoning supporting a proposed reasonable royalty rate of 8.5% of accused-product net sales. Dr. Keating will incorporate this analysis, together with his independent economic analysis, into his expert report, which is due June 15, 2025.
This memorandum is also designed to facilitate preparation for Dr. Keating's deposition and trial testimony by anticipating the defense's likely challenges to the hypothetical negotiation framework and the proposed royalty rate. Sections of this memorandum specifically address anticipated counter-arguments from Lumicore's damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP, and provide the factual and analytical bases for rebuttal.
B. The Hypothetical Negotiation Framework
Under the seminal decision in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), a reasonable royalty is determined by constructing a hypothetical negotiation between a willing licensor and a willing licensee at the time infringement began. This legal construct has been uniformly adopted by the Federal Circuit and is the standard methodology for calculating reasonable-royalty damages under 35 U.S.C. § 284. See, e.g., Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324–25 (Fed. Cir. 2009); Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292, 1312 (Fed. Cir. 2011); VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326 (Fed. Cir. 2014).
The hypothetical negotiation framework rests on several foundational assumptions:
(a) Both parties are assumed to be willing participants in the negotiation — the licensor is willing to license and the licensee is willing to take a license;
(b) Both parties are assumed to be reasonably informed and to have knowledge of the relevant facts bearing on the value of the patent rights, the competitive landscape, the financial circumstances of both parties, and the state of the technology;
(c) Both parties are assumed to be rational actors seeking to maximize their respective economic interests;
(d) The patents-in-suit are assumed to be valid and infringed for purposes of the negotiation — the hypothetical negotiation does not incorporate a discount for the probability of invalidation or a finding of non-infringement; and
(e) The negotiation is not a real-world exercise and does not attempt to recreate any actual negotiation that did or did not occur between the parties. Rather, it is a legal construct — a thought experiment — designed to estimate the royalty rate the parties would have agreed upon had they engaged in a good-faith, arm's-length negotiation at the relevant date.
The Federal Circuit has cautioned that the hypothetical negotiation must be grounded in the economic realities of the parties' positions at the time of the negotiation and must not be based on hindsight or post-infringement developments. See Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 772 (Fed. Cir. 2014); LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 76 (Fed. Cir. 2012). However, "the trier of fact may look to events subsequent to the hypothetical negotiation date to inform the damages calculation." Lucent, 580 F.3d at 1333. This memorandum draws on both pre-negotiation and post-negotiation facts, clearly identifying where post-negotiation developments are used and the analytical basis for their relevance.
C. Hypothetical Negotiation Date
The hypothetical negotiation is set in Q2 2022, specifically the period of May through June 2022. This date is fixed just before the launch of Lumicore's first accused product, the LumiLink 400G-ZR+, which entered the market in Q3 2022 (with initial commercial shipments commencing in July 2022, based on Lumicore's public disclosures and SEC filings). Under established precedent, the hypothetical negotiation date is set at the time infringement began. See Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 870 (Fed. Cir. 1993). The first act of infringement in this matter — the manufacture, use, offer for sale, and sale of the LumiLink 400G-ZR+ — commenced no later than Q3 2022, and the negotiation is therefore set immediately prior to that date.
At the Q2 2022 negotiation date, the status of the asserted patents was as follows:
•  The '847 Patent (U.S. Patent No. 10,234,847), titled "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss," had been issued on March 19, 2019, and was in force. All maintenance fees were current.
•  The '193 Patent (U.S. Patent No. 10,891,193), titled "High-Bandwidth coherent Optical Transceiver Integrated on Silicon Substrate," had been issued on January 12, 2021, and was in force. All maintenance fees were current.
•  The '562 Patent (U.S. Patent No. 9,678,562), titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks," had been issued on June 13, 2017, and was in force. All maintenance fees were current. This patent was originally assigned to Solara Optics, Inc. and acquired by OWS via asset purchase agreement dated June 15, 2018.
•  The '015 Patent (U.S. Patent No. 11,402,015), titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers," had not yet issued as of Q2 2022. The underlying application was filed on August 30, 2019, claiming priority to Provisional Application No. 62/499,117, filed April 7, 2017. The application was pending and published. The patent subsequently issued on August 2, 2022. In the hypothetical negotiation, both parties — as reasonably informed actors — would be aware of the pending application and its claims, and would account for its expected issuance. The parties would negotiate on the basis that the '015 Patent would likely issue in the near term and would be included in the scope of the license.
D. Parties to the Hypothetical Negotiation
1. Willing Licensor: Optiwave Semiconductor Corp. (OWS)
Optiwave Semiconductor Corp. ("OWS") 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 sale of silicon photonics chipsets and transceiver modules for high-speed data-center interconnects. As of its most recent fiscal year (FY 2023), OWS reported audited revenue of $487.3 million and employed approximately 1,250 individuals across its operations. OWS is the third-largest U.S.-based supplier of silicon-photonics transceiver modules, trailing only two significantly larger diversified semiconductor firms. Its financial statements are audited by Gresham & Whitfield LLP, San Jose office.
OWS was founded in 2011 and has grown through a combination of organic research and development and strategic acquisitions. A majority stake of approximately 55% is held by Ridgeline Capital Partners, LP, a private equity firm that acquired its interest in 2019 for $780 million. Franklin Osei, Managing Partner of Ridgeline Capital Partners, serves as Chair of the OWS Board of Directors. The company's senior leadership team includes Dr. Priya Ramaswamy (Chief Executive Officer), Dr. Jian-Wei Huang (Chief Technology Officer), Rebecca Tanaka (General Counsel), David Leitner (Chief Financial Officer), and Dr. Nikolai Petrov (Vice President of Engineering, Photonics Division).
OWS maintains a robust intellectual property portfolio comprising 142 issued U.S. patents and 58 pending applications covering a broad range of silicon-photonics technologies. Twelve patents, including the '562 Patent, were acquired from Solara Optics, Inc. pursuant to an asset purchase agreement dated June 15, 2018, for a purchase price of $34.5 million. OWS's key products — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families — directly compete with Lumicore's planned and accused products in the hyperscale data-center and telecom markets. OWS has reported a gross margin of 47.3% on these competing product lines.
2. Willing Licensee: Lumicore Technologies, Inc. (Lumicore)
Lumicore Technologies, Inc. ("Lumicore") 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, targeting hyperscale data-center operators and telecom service providers. Lumicore completed its initial public offering on the Nasdaq exchange in March 2022 at a price of $24.00 per share, with approximately 91.8 million shares outstanding, resulting in an approximate market capitalization of $2.2 billion as of Q2 2022. By April 2024, Lumicore's share price had risen to approximately $37.00 per share, reflecting a market capitalization of approximately $3.4 billion. The IPO was underwritten by Silverstone Capital Markets LLC, which continues to serve as an ongoing advisory firm. Lumicore's financial statements are audited by Brennan Kellogg & Associates LLP, Austin office.
Lumicore employs approximately 870 individuals and is led by Thomas "Tom" Kessler (Chief Executive Officer), Dr. Sandra Michaud (Chief Technology Officer), Raymond Bautista (General Counsel), Dr. Eric Dalmqvist (Vice President, Product Development), and Janet Moreno (Chief Financial Officer). As of Q2 2022, Lumicore's product pipeline included three transceiver module product lines that are the subject of this litigation:
•  The LumiLink 400G-ZR+, targeted for launch in Q3 2022;
•  The LumiLink 800G-DR8, targeted for launch in Q1 2023; and
•  The LumiEdge 1600G-LR, which was in a later stage of development at the time of the hypothetical negotiation.
Lumicore's actual FY 2023 revenue, as reported in its Form 10-K filed with the Securities and Exchange Commission, was $312.6 million, of which $264.9 million was attributable to the accused products. Detailed accused-product revenue projections that would have been available to both parties at the time of the hypothetical negotiation — based on Lumicore's internal business plans, board presentations, and industry forecasts — are discussed in Section II.D below.
II. BACKGROUND INFORMATION AVAILABLE TO BOTH PARTIES AT THE HYPOTHETICAL NEGOTIATION DATE
The hypothetical negotiation framework assumes that both parties are "reasonably and voluntarily trying to reach an agreement" and possess all relevant information bearing on the value of the license. Georgia-Pacific, 318 F. Supp. at 1120. This section compiles the universe of factual information that both OWS and Lumicore would have had at their disposal during a Q2 2022 negotiation, supplemented by certain post-negotiation-date facts (principally actual revenue data) that are used to confirm or adjust forward-looking estimates. Where post-negotiation data is used, it is identified as such and its relevance to the hypothetical negotiation framework is explained.
A. OWS's Market Position and Patent Portfolio
OWS was founded in 2011 and has developed into a significant force in the silicon-photonics transceiver market. At the time of the hypothetical negotiation, OWS held the number-three market position among U.S.-based suppliers of silicon-photonics transceiver modules, behind two significantly larger, diversified semiconductor companies with broader product lines. OWS's focus on silicon photonics, in contrast to its larger competitors' diversified semiconductor businesses, made its patent portfolio particularly concentrated and strategically valuable in this specific technology segment.
The company's majority ownership by Ridgeline Capital Partners, LP — which acquired a 55% stake in 2019 for $780 million — provided OWS with the financial backing and strategic support to invest aggressively in research and development, pursue acquisitions, and enforce its intellectual property. Franklin Osei, Managing Partner of Ridgeline Capital Partners, serves as Chair of the OWS Board of Directors and has publicly stated that OWS's patent portfolio is a "cornerstone asset" of the company's competitive strategy. Board minutes and investor presentations from the pre-negotiation period reflect a clear emphasis on maximizing the value of OWS's IP portfolio through both product development and selective licensing.
OWS's intellectual property portfolio of 142 issued U.S. patents and 58 pending applications spans a wide range of silicon-photonics technologies, including waveguide design, optical modulation, photodetection, thermal management, packaging, and transceiver system architecture. Of particular note, OWS acquired twelve patents — including the '562 Patent — from Solara Optics, Inc. pursuant to an asset purchase agreement dated June 15, 2018, for a total consideration of $34.5 million. The Solara Optics patents were identified by OWS's engineering team as covering foundational thermal management and waveguide technologies that complemented OWS's organically developed portfolio. The acquisition was structured as an asset purchase of specified patent rights and did not involve the acquisition of Solara Optics as a going concern; Solara Optics subsequently ceased operations in late 2019.
OWS's key product families — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver modules — are directly competitive with Lumicore's accused products. These products are sold to many of the same hyperscale data-center operators and telecom customers. OWS's reported gross margin on these competing product lines is 47.3%, reflecting the premium pricing enabled by the company's technological differentiation and patent-protected features.
The senior leadership team at OWS includes individuals with deep expertise in silicon-photonics technology and semiconductor business management. Dr. Priya Ramaswamy, the CEO, holds a Ph.D. in Electrical Engineering from Stanford University and spent fifteen years in senior roles at major semiconductor firms before joining OWS. Dr. Jian-Wei Huang, the CTO, is a co-inventor on thirty-seven of OWS's issued patents, including two of the asserted patents in this litigation ('847 and '193). Rebecca Tanaka, the General Counsel, has extensive experience in patent licensing and enforcement, having previously served as in-house IP counsel at two other semiconductor companies. David Leitner, the CFO, oversees OWS's financial reporting and strategic planning, including the economic analysis underlying the company's licensing program.
B. Lumicore's Market Position and Business Plans
Lumicore was founded in 2015 by a team of engineers who previously worked at academic research institutions and established semiconductor firms. The company developed rapidly, securing Series A and Series B venture capital funding before completing its initial public offering on the Nasdaq exchange in March 2022 at $24.00 per share. The IPO, underwritten by Silverstone Capital Markets LLC, raised approximately $340 million in gross proceeds, providing Lumicore with significant capital for product development, manufacturing scale-up, and market entry.
At the time of the hypothetical negotiation in Q2 2022, Lumicore was on the cusp of launching its first major commercial product, the LumiLink 400G-ZR+ transceiver module. The company's IPO prospectus and subsequent quarterly filings identified three product lines targeted for launch:
•  LumiLink 400G-ZR+: A 400-gigabit coherent optical transceiver module targeting data-center interconnect applications. Launch was planned for Q3 2022, with initial customer samples having been shipped to evaluation customers in Q1 2022. The product was designed to compete directly with OWS's OWS-400ZR and similar products from other vendors.
•  LumiLink 800G-DR8: An 800-gigabit short-reach transceiver module designed for high-density data-center environments. Launch was planned for Q1 2023. This product incorporates all four of the patented technologies at issue in this litigation and was positioned as Lumicore's flagship product for the next generation of data-center interconnects.
•  LumiEdge 1600G-LR: A 1.6-terabit long-reach transceiver module targeted for next-generation telecom and hyperscale applications. This product was in a later stage of development at the time of the hypothetical negotiation, with a planned launch of Q4 2023. It incorporates the coherent transceiver integration technology of the '193 Patent and the grating coupler technology of the '015 Patent.
Lumicore's internal business plans, board presentations, and financial projections — which would have been known to both parties in the hypothetical negotiation — reflected aggressive growth expectations. The company projected significant revenue ramp-up from the LumiLink 400G-ZR+ launch through FY 2025 and beyond, driven by design wins at multiple hyperscale data-center operators and telecom carriers. Lumicore's actual FY 2023 revenue of $312.6 million — of which $264.9 million was attributable to accused products — is broadly consistent with the company's pre-launch projections.
Lumicore's leadership team includes Dr. Sandra Michaud, the CTO, who holds a Ph.D. in Applied Physics from MIT and has been deposed in this litigation. Her deposition testimony (taken November 19, 2024) addresses, among other topics, Lumicore's product design decisions, its awareness of OWS's patent portfolio, the availability of non-infringing alternatives, and the feasibility and cost of design-around efforts. Raymond Bautista, the General Counsel, was deposed on December 3, 2024, and testified regarding Lumicore's IP clearance procedures (or lack thereof) prior to product launch. Dr. Eric Dalmqvist, Vice President of Product Development, led the engineering team responsible for the design and development of all three accused product lines. Janet Moreno, the CFO, oversaw Lumicore's financial reporting and the preparation of the accused-product revenue projections and margin analyses that are central to the damages calculation.
C. The Asserted Patents — Technical Overview
The four asserted patents cover distinct but interrelated technologies in the silicon-photonics transceiver space. Together, they form a portfolio that addresses four critical functional areas of a high-performance silicon-photonics transceiver module: optical multiplexing, coherent transceiver integration, thermal management, and optical coupling. Each patent is described in detail below.
1. The '847 Patent (U.S. Patent No. 10,234,847)
Title: "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss"
Filing Date: September 14, 2016
Issue Date: March 19, 2019
Original Assignee: Optiwave Semiconductor Corp.
The '847 Patent claims a multi-channel waveguide multiplexer structure fabricated on a silicon photonic integrated circuit (PIC) that achieves significantly reduced insertion loss compared to prior art arrayed waveguide grating (AWG) designs. The patented structure employs a novel tapering geometry and mode-matching technique at waveguide junctions that minimizes optical power loss during channel multiplexing. This technology is critical for high-bandwidth transceiver modules because excessive insertion loss at the multiplexer stage reduces overall link budget, limits achievable transmission distances, and increases power consumption. The '847 Patent's claims are embodied in the waveguide multiplexer structures used in the LumiLink 400G-ZR+ and LumiLink 800G-DR8 products. The '847 Patent is in the same patent family as the '562 Patent (continuation relationship), sharing a common specification and priority date chain.
2. The '193 Patent (U.S. Patent No. 10,891,193)
Title: "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate"
Filing Date: April 7, 2017
Issue Date: January 12, 2021
Original Assignee: Optiwave Semiconductor Corp.
The '193 Patent claims a coherent optical transceiver architecture in which both the transmitter and receiver optical paths — including modulator, photodetector, local oscillator, and 90-degree hybrid — are monolithically integrated on a single silicon substrate. Prior approaches relied on discrete-component assemblies or hybrid integration that required costly manual alignment and introduced performance variability. The '193 Patent enables higher bandwidth, lower manufacturing cost, and improved yield by leveraging standard CMOS-compatible fabrication processes. This technology is fundamental to the coherent transceiver design used in all three accused products (LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR). The '193 Patent shares a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017) with the '015 Patent.
3. The '562 Patent (U.S. Patent No. 9,678,562)
Title: "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks"
Filing Date: November 22, 2014
Issue Date: June 13, 2017
Original Assignee: Solara Optics, Inc.
Acquired by OWS: Asset Purchase Agreement dated June 15, 2018, for $34.5 million (among a portfolio of 12 patents)
The '562 Patent claims a method for managing thermal dissipation in photonic integrated circuits through the use of embedded micro-channel heat sinks fabricated directly within the silicon substrate adjacent to heat-generating optical components. Conventional approaches to thermal management in PICs relied on external heat sinks or thermoelectric coolers that added bulk, cost, and complexity to the module design. The '562 Patent's embedded micro-channel approach enables more efficient heat removal with a significantly smaller form factor, which is essential for the dense packaging requirements of modern data-center transceiver modules. The '562 Patent is in the same patent family as the '847 Patent (continuation relationship). The thermal management structures claimed by the '562 Patent are present in the LumiLink 400G-ZR+ and LumiLink 800G-DR8.
4. The '015 Patent (U.S. Patent No. 11,402,015)
Title: "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers"
Filing Date: August 30, 2019
Issue Date: August 2, 2022
Original Assignee: Optiwave Semiconductor Corp.
Priority: Claims priority to Provisional Application No. 62/499,117, filed April 7, 2017
The '015 Patent claims a polarization-diverse grating coupler structure that efficiently couples both transverse electric (TE) and transverse magnetic (TM) polarization modes from a standard single-mode fiber into the silicon waveguides of a photonic integrated circuit. Prior grating coupler designs were typically optimized for a single polarization mode, resulting in significant polarization-dependent loss (PDL) that degraded signal integrity in coherent transmission systems. The '015 Patent's polarization-diverse design addresses this limitation through a novel dual-layer grating geometry that simultaneously captures both polarization states with minimal loss. The '015 Patent was pending at the time of the hypothetical negotiation (its application having been filed August 30, 2019, and published) but was expected to issue — and did issue on August 2, 2022. The grating coupler technology is used in the LumiLink 800G-DR8 and LumiEdge 1600G-LR. The '015 Patent shares a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017) with the '193 Patent.
5. Patent Prosecution and Family Relationships
All four asserted patents were prosecuted by Cascade IP Advisors, LLC, located at 1550 Crystal Drive, Suite 600, Arlington, Virginia 22202. The lead prosecution attorney was Dr. Martin Chu. The '562 Patent and the '847 Patent are in the same patent family (continuation relationship), sharing common specification elements and a related priority date chain. The '193 Patent and the '015 Patent share a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017). These family relationships are relevant to the scope and breadth of the patent portfolio coverage and demonstrate that the four asserted patents collectively cover a coordinated and interrelated set of silicon-photonics innovations developed by OWS (and its predecessor, Solara Optics, in the case of the '562 Patent).
D. Accused Products and Revenue Projections
The three accused products, their launch dates, the asserted patents they are accused of infringing, and their actual and projected revenues are summarized below:
The FY 2023 revenue figures are derived from Lumicore's audited Form 10-K filing with the SEC and from product-level financial data produced in discovery (designated Highly Confidential — Attorneys' Eyes Only). The projected revenue figures for the full Q3 2022 through Q4 2025 period are based on Dr. Keating's preliminary analysis, which incorporates Lumicore's internal business plans, board-level financial projections, industry analyst forecasts, and actual revenue data through the most recent reporting period.
At the time of the hypothetical negotiation in Q2 2022, the parties would have had access to Lumicore's forward-looking revenue projections for the accused products, as well as industry forecasts for the silicon-photonics transceiver market. These projections indicated substantial revenue growth for Lumicore, driven by the rapid expansion of hyperscale data-center capacity and the industry transition to 400G, 800G, and 1.6T interconnect speeds. Both parties, as sophisticated commercial actors, would have recognized the significant revenue opportunity represented by the accused product lines and would have factored these projections into the royalty negotiation.
E. Prior Licensing History of OWS
OWS has an established patent licensing program that it has used to monetize portions of its patent portfolio while continuing to practice the patented technologies in its own products. The licensing program has been managed through a combination of direct licensing by OWS's in-house legal team and outsourced licensing services provided by FairPoint Licensing Group, LLC (Managing Director: Angela Reeves), located at 500 Sansome Street, Suite 1400, San Francisco, California 94111. However, FairPoint's engagement did not commence until after the hypothetical negotiation date; FairPoint's first outreach letter to potential licensees was sent on January 15, 2023. At the time of the hypothetical negotiation, OWS's existing licenses had been negotiated directly by the company's General Counsel, Rebecca Tanaka, in consultation with outside counsel.
1. OWS License Agreements (Licensor-Side Comparables)
Three existing OWS license agreements are relevant as comparable transactions for purposes of the Georgia-Pacific analysis:
OWS–Terralink Semiconductor License (2020):
Effective Date: June 2020. Terralink Semiconductor, Inc. ("Terralink") is a mid-size semiconductor company that manufactures optical components for telecom and enterprise networking applications. Terralink is not a direct competitor of OWS in the hyperscale data-center transceiver market; its products serve a different customer segment (enterprise networking) with limited overlap. The license covers a subset of OWS's patent portfolio, including the '562 Patent and the '847 Patent. The royalty rate is 6.5% of net sales of licensed products, with no upfront payment. Total licensed-product revenue in the first year of the license was approximately $45 million. The license is non-exclusive, U.S.-only, and runs for the life of the licensed patents.
OWS–NovaWave Corp. License (2021):
Effective Date: March 2021. NovaWave Corp. ("NovaWave") is a smaller semiconductor firm specializing in photonic components for medical imaging and LiDAR applications. NovaWave's products do not compete with OWS's data-center transceiver products; the license was granted to cover NovaWave's use of certain OWS waveguide and thermal management technologies in non-competing applications. The license covers the '562 Patent and the '193 Patent. The royalty rate is 9.0% of net sales of licensed products, with no upfront payment. Total licensed-product revenue in the first year of the license was approximately $22 million. The higher royalty rate relative to the Terralink license reflects the smaller revenue base and the narrower set of licensed products (which concentrated the royalty burden on a smaller number of units). The license is non-exclusive, U.S.-only, and runs for the life of the licensed patents.
OWS–Helix Integrated Photonics License (2022):
Effective Date: February 2022. Helix Integrated Photonics, Inc. ("Helix") is a fabless semiconductor company that designs and sells silicon-photonics transceiver modules for data-center applications. Helix operates in the same market as OWS and Lumicore, although Helix's product portfolio is narrower and targets a specific subsegment of the data-center market (short-reach intra-rack interconnects). The license covers the broadest set of the asserted patents — the '847 Patent, the '193 Patent, and the '562 Patent — as well as several other OWS patents not asserted in this litigation. The royalty rate is 7.75% of net sales of licensed products, plus an upfront payment of $2.5 million. Total licensed-product revenue in the first year of the license was approximately $68 million. The Helix license is the most recent of OWS's license agreements and covers the broadest set of asserted patents, making it the most probative comparable. The license is non-exclusive, U.S.-only, and runs for the life of the licensed patents.
2. Industry-Comparable License Agreements
Two additional license agreements from the silicon-photonics industry are available as comparables:
Stratos Photonics v. ArcLight Systems Settlement (2019):
This agreement was reached in settlement of patent infringement litigation between Stratos Photonics, Inc. and ArcLight Systems, Inc. concerning silicon-photonics transceiver patents. The settlement included a running royalty of 8.0% of net sales of licensed products. The licensed patents covered waveguide and modulator technologies comparable in scope to the '847 and '193 Patents. The settlement was reported in a joint press release and confirmed through publicly available court filings.
Coreline Technologies v. Prisma Semiconductor Cross-License (2021):
This cross-license agreement was negotiated as part of a broader technology partnership between Coreline Technologies, Inc. and Prisma Semiconductor Corp. The effective royalty rate — after netting out the value of the cross-licensed patents — was 10.2% of net sales of products covered by Coreline's licensed patents. The cross-license covered a portfolio of silicon-photonics patents including thermal management and grating coupler technologies comparable in scope to the '562 and '015 Patents.
3. Summary of Comparable Royalty Rates
The overall range of comparable royalty rates in silicon-photonics industry transactions, based on the five comparable agreements identified above and supplemented by industry survey data (discussed in Appendix D), is 4.0% to 12.5%, with a median of approximately 8.0% and a mean of approximately 8.3%. OWS's own license agreements yield a weighted average royalty rate of approximately 7.5% to 8.0%, with the most probative comparable (the Helix license) at 7.75% plus a $2.5 million upfront payment. These figures provide the quantitative anchors for the royalty rate negotiation.
III. GEORGIA-PACIFIC FACTOR-BY-FACTOR ANALYSIS
This section analyzes each of the fifteen Georgia-Pacific factors as applied to the hypothetical negotiation between OWS and Lumicore. For each factor, the analysis identifies the relevant evidence, assesses the directional impact on the royalty rate (upward, neutral, or downward), and explains how the factor would influence the parties' positions in the negotiation. The cumulative analysis supports a reasonable royalty rate of 8.5% of net sales of the accused products.
Factor 1: The Royalties Received by the Patentee for Licensing the Patents-in-Suit
"The royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty." — Georgia-Pacific, 318 F. Supp. at 1120.
OWS has an established licensing program, principally managed (after January 2023) through FairPoint Licensing Group, LLC. Prior to FairPoint's engagement, OWS negotiated three license agreements involving some or all of the asserted patents, as detailed in Section II.E above. These agreements constitute the most directly relevant evidence of the royalty rates the patentee has received for licensing the patents-in-suit.
The three OWS license agreements establish a royalty rate range of 6.5% to 9.0% for the asserted patents, as follows:
•  OWS–Terralink Semiconductor (2020): 6.5% running royalty on $45 million in annual licensed revenue;
•  OWS–NovaWave Corp. (2021): 9.0% running royalty on $22 million in annual licensed revenue; and
•  OWS–Helix Integrated Photonics (2022): 7.75% running royalty plus $2.5 million upfront payment on $68 million in annual licensed revenue.
Each of these licenses was negotiated in an arm's-length transaction with entities operating in the silicon-photonics or adjacent technology markets. None of the licensees are affiliated with OWS, and each agreement was the product of independent commercial negotiation. These agreements therefore satisfy the foundational requirements for use as comparable transactions under the Federal Circuit's jurisprudence. See Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1310 (Fed. Cir. 2018) (prior licenses involving the patents-in-suit are "highly probative" of a reasonable royalty).
Among the three OWS licenses, the Helix license is the most probative comparable for several reasons. First, it is the most recent, having been executed in February 2022 — only months before the hypothetical negotiation date. Second, it covers the broadest set of asserted patents ('847, '193, and '562). Third, Helix, like Lumicore, is a fabless semiconductor company operating in the data-center transceiver market, making the competitive dynamics of the Helix license more analogous to the hypothetical OWS-Lumicore license than either the Terralink or NovaWave agreements.
The weighted average of OWS's own license agreements — considering both the royalty rate and the relative revenue bases — falls in the range of approximately 7.5% to 8.0%. In the hypothetical negotiation, OWS would point to this established licensing history as the baseline for royalty rate discussions, and would argue for upward adjustments to account for the specific circumstances of the OWS-Lumicore relationship, including Lumicore's status as a direct competitor (see Factors 4 and 5), the inclusion of the '015 Patent in the portfolio (which was not licensed to Helix), and the larger projected revenue base of Lumicore's accused products.
Directional Impact: This factor establishes a floor of approximately 6.5% and a central tendency of 7.5%–8.0%, with upward pressure warranted by the specific circumstances of the OWS-Lumicore relationship.
Factor 2: The Rates Paid by the Licensee for Use of Other Comparable Patents
"The rates paid by the licensee for the use of other patents comparable to the patent in suit." — Georgia-Pacific, 318 F. Supp. at 1120.
Based on discovery productions to date, there is no evidence that Lumicore held any patent licenses from third parties covering comparable silicon-photonics technologies as of Q2 2022. Lumicore's document productions have not revealed any licensing agreements for patents covering waveguide multiplexer, coherent transceiver integration, thermal management, or grating coupler technologies. This finding will be confirmed by Dr. Keating's independent review of Lumicore's produced documents, including any documents designated Highly Confidential — Attorneys' Eyes Only.
Lumicore's apparent absence of third-party patent licenses is consistent with the company's status as a relatively young firm (founded 2015) that had not yet faced significant patent enforcement prior to this litigation. However, this absence does not mean that the licensee-side rate is zero; rather, it means that there is simply no licensee-side comparable data to weigh against the licensor-side evidence.
In the absence of licensee-side comparables, greater weight necessarily falls on OWS's licensor-side licensing history (Factor 1) and on industry-comparable transactions. The two industry-comparable agreements identified in Section II.E — Stratos Photonics v. ArcLight Systems (8.0% royalty) and Coreline Technologies v. Prisma Semiconductor (10.2% effective rate) — provide additional reference points that are consistent with the range established by OWS's own licenses.
Directional Impact: This factor is neutral due to the absence of licensee-side comparables, but reinforces reliance on OWS's licensing history and industry comparables.
Factor 3: Nature and Scope of the License — Exclusive vs. Non-Exclusive; Territorial and Field-of-Use Restrictions
"The nature and scope of the license, as exclusive or nonexclusive; or as restricted or nonrestricted in terms of territory or with respect to whom the manufactured product may be sold." — Georgia-Pacific, 318 F. Supp. at 1120.
The hypothetical license between OWS and Lumicore would be non-exclusive. OWS is a practicing entity that manufactures and sells its own products embodying the patented technologies. OWS has also licensed its patents to multiple third parties (Terralink, NovaWave, and Helix) on a non-exclusive basis. There is no indication that OWS has ever granted, or would grant, an exclusive license under its core silicon-photonics patents, as doing so would undermine its own ability to practice the patented technologies and compete in the market.
The territorial scope of the license would be limited to the United States, consistent with the geographic scope of the U.S. utility patents at issue. The asserted patents are U.S. patents and confer rights only within the United States. While Lumicore may sell products abroad, the hypothetical license addresses only sales within the United States (imports, domestic sales, offers for sale, and use within the United States).
The field of use would be silicon-photonics transceiver modules for data-center interconnects and telecom applications — i.e., the specific markets in which Lumicore's accused products operate. This field-of-use restriction is consistent with the scope of OWS's existing licenses, which are similarly limited to specific product categories.
The license would not include sublicensing rights. OWS has not granted sublicensing rights in any of its existing licenses, and there is no reason to believe it would do so in a license to a direct competitor.
As a general matter, a non-exclusive license typically commands a lower royalty rate than an exclusive license, all else being equal, because a non-exclusive license does not confer monopoly rights on the licensee. See Monsanto Co. v. McFarling, 488 F.3d 973, 979 (Fed. Cir. 2007). However, the parties' direct competitive relationship (see Factor 5) would push the rate upward even for a non-exclusive arrangement, as OWS would demand compensation for the competitive harm of enabling a direct rival to practice its patented technologies alongside other licensees.
Directional Impact: The non-exclusive nature of the license exerts slight downward pressure on the royalty rate relative to an exclusive license, but this effect is largely offset by the direct competitive relationship between the parties.
Factor 4: The Licensor's Established Policy and Marketing Program to Maintain Patent Monopoly — Refusing to License or Granting Licenses Under Special Conditions
"The licensor's established policy and marketing program to maintain his patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly." — Georgia-Pacific, 318 F. Supp. at 1120.
OWS is a practicing entity that competes directly with Lumicore in the silicon-photonics transceiver market. OWS's products — the OWS-400ZR, OWS-800XR, and OWS-1600DR families — are the commercial embodiments of the patented technologies and represent the cornerstone of OWS's business. Any license to a direct competitor like Lumicore effectively enables that competitor to use OWS's own innovations to capture market share that would otherwise flow to OWS. This reality is a critical factor in the hypothetical negotiation.
OWS has adopted a selective licensing strategy. It has not engaged in blanket or program-wide licensing of its patent portfolio to all market participants. Rather, OWS has licensed its patents on a case-by-case basis, with each license reflecting the specific competitive posture of the licensee and the scope of the licensed patents. The three existing licenses illustrate this selectivity:
•  The Terralink license (6.5%) was granted to a non-competing licensee operating in the enterprise networking space, which posed no direct competitive threat to OWS's hyperscale data-center business.
•  The NovaWave license (9.0%) was granted to a licensee in a completely different application space (medical imaging/LiDAR), with no competitive overlap whatsoever. The higher rate in NovaWave, despite the absence of competitive overlap, reflects the smaller revenue base and the concentrated royalty burden.
•  The Helix license (7.75% + $2.5M upfront) was granted to a competitor in the data-center transceiver market, but one with a narrower product portfolio targeting a specific subsegment (short-reach intra-rack interconnects) rather than the broader hyperscale market.
Lumicore, in contrast to Terralink, NovaWave, and Helix, is a direct head-to-head competitor in OWS's core hyperscale data-center transceiver market. A rational licensor in OWS's position would demand a significant royalty premium to compensate for the competitive harm of enabling a direct rival. The premium reflects not only the lost sales that Lumicore's products will capture from OWS, but also the price erosion and market-share dilution effects that additional competition generates across the market.
Dr. Keating should emphasize in his report that OWS's established policy of selective licensing supports a royalty rate that fully compensates OWS for the competitive harm of licensing a direct rival, and that this policy is consistent with OWS's broader business strategy of protecting its competitive position through its patent portfolio.
Directional Impact: This factor exerts strong upward pressure on the royalty rate, supporting a premium above the average of OWS's existing licenses.
Factor 5: The Commercial Relationship Between the Licensor and Licensee — Competitors vs. Non-Competitors
"The commercial relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of business; or whether they are inventor and promoter." — Georgia-Pacific, 318 F. Supp. at 1120.
OWS and Lumicore are direct competitors in the hyperscale data-center transceiver market. This is the single most significant factor driving the royalty rate upward from the baseline established by OWS's existing licenses, which were all negotiated with licensees that either were non-competitors or competed in a narrower subsegment of the market.
The competitive relationship between OWS and Lumicore is both deep and direct:
•  Both companies design, market, and sell silicon-photonics transceiver modules for hyperscale data-center interconnect applications.
•  Both companies target the same customer base — the top tier of hyperscale data-center operators (including, without limitation, the operators of the largest cloud computing platforms and content delivery networks in the United States).
•  OWS and Lumicore compete head-to-head at 12 of the top 20 hyperscale data-center operators, per market share displacement analysis conducted by OWS's industry expert, Gregory Falk. In each of these competitive engagements, Lumicore's accused products are positioned as direct alternatives to OWS's competing products.
•  OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules. Lumicore, following its IPO and product launches, has emerged as one of the fastest-growing entrants in the market, with aggressive pricing and customer acquisition strategies targeting OWS's existing customer base.
•  Lumicore's IPO prospectus specifically identified OWS as a key competitor, and Lumicore's product specifications and marketing materials are benchmarked against OWS's product performance characteristics.
A willing licensor would demand substantially higher royalties from a direct competitor than from a non-competing licensee. This principle is well established in the damages literature and has been recognized by courts in numerous patent infringement cases. The economic rationale is straightforward: licensing a competitor imposes costs on the licensor beyond the simple foregone royalty opportunity. These costs include (a) lost sales due to direct market share displacement, (b) price erosion across the licensor's product line due to increased competition, (c) loss of design-win opportunities at shared customers, and (d) dilution of the licensor's competitive differentiation and brand premium.
The Federal Circuit has recognized that the competitive relationship between licensor and licensee is a critical factor in the reasonable royalty analysis. See Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554–55 (Fed. Cir. 1995) (en banc) (recognizing that lost profits and competitive harm are relevant to reasonable royalty determination); Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1373 (Fed. Cir. 2017).
Directional Impact: This factor exerts strong upward pressure on the royalty rate and is the most significant factor favoring a rate at the upper end of the comparable range.
Factor 6: The Effect of Selling the Patented Specialty in Promoting Sales of Other Products of the Licensee
"The effect of selling the patented specialty in promoting sales of other products of the licensee; the existing value of the invention to the licensor as a generator of sales of his non-patented items; and the extent of such derivative or convoyed sales." — Georgia-Pacific, 318 F. Supp. at 1120.
Lumicore's accused transceiver modules are not standalone, isolated components. They are designed into customer systems alongside Lumicore's other networking equipment, management software, and complementary silicon-photonics products. In the hyperscale data-center market, "design-in" relationships are critically important: once a customer qualifies and deploys a vendor's transceiver module in its network architecture, there is a strong tendency toward ongoing purchases from the same vendor for complementary products and successive product generations. This design-in effect creates significant switching costs and generates substantial follow-on revenue for the transceiver vendor.
Lumicore benefits from "convoyed sales" — sales of non-accused products that are driven by or facilitated by the sale of the accused transceiver modules. For example, when Lumicore wins a design slot for the LumiLink 400G-ZR+ at a hyperscale data-center operator, it gains not only the transceiver module revenue but also the opportunity to sell complementary products such as network management software, optical monitoring equipment, and subsequent-generation transceiver modules (including the LumiLink 800G-DR8 and LumiEdge 1600G-LR). These follow-on sales enhance Lumicore's overall revenue and profitability and increase the strategic value of the accused products to Lumicore's business.
The existence of convoyed sales increases the value of the license to Lumicore and, correspondingly, increases the royalty rate that a willing licensee would be willing to pay. Even if the royalty is calculated only on the accused products themselves (rather than on the full suite of convoyed sales), the convoyed-sales effect means that Lumicore's willingness to pay for the license is higher than it would be if the accused products were standalone items with no follow-on revenue implications.
Dr. Keating should, to the extent data permits, quantify the value of ancillary or convoyed sales driven by the accused product lines. This analysis may draw on Lumicore's customer-by-customer revenue data, internal planning documents discussing the "platform" value of design-in relationships, and industry analyst reports on the economics of transceiver-module design wins.
Directional Impact: This factor exerts moderate upward pressure on the royalty rate.
Factor 7: The Duration of the Patent and the Term of the License
"The duration of the patent and the term of the license." — Georgia-Pacific, 318 F. Supp. at 1120.
At the hypothetical negotiation date in Q2 2022, the remaining terms of the asserted patents were as follows:
All four patents have substantial remaining terms, ranging from approximately 12 to 17 years as of the hypothetical negotiation date. This provides long-duration patent protection that extends well beyond the commercially relevant product lifecycles of the current-generation accused products and into subsequent product generations.
The hypothetical license would run for the life of the patents, terminating upon the expiration of the last-to-expire patent. A license with a longer duration provides greater value to the licensee, as it eliminates the risk of future enforcement actions and provides certainty for long-term product planning and customer commitments. Conversely, longer remaining patent life increases the opportunity cost to the licensor of granting a license, as the licensor foregoes the option to enforce or renegotiate for a longer period.
The substantial remaining patent terms in this case — particularly the 15- and 17-year remaining terms of the '193 and '015 Patents, which cover the coherent transceiver integration and grating coupler technologies that are central to next-generation products — increase the value of the license and support a higher royalty rate.
Directional Impact: This factor exerts moderate upward pressure on the royalty rate.
Factor 8: The Established Profitability of the Product Made Under the Patent; Its Commercial Success; and Its Current Popularity
"The established profitability of the product made under the patent; its commercial success; and its current popularity." — Georgia-Pacific, 318 F. Supp. at 1120.
OWS's products practicing the asserted patents — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families — have achieved significant commercial success. In FY 2023, OWS reported total revenue of $487.3 million, of which approximately $310 million (63.6%) is attributable to products that practice one or more of the asserted patents. OWS's net income for FY 2023 was $61.4 million, reflecting the profitability of the company's operations, with a gross margin of 47.3% on its competing product lines. These figures demonstrate that the patented technologies are commercially successful when embodied in OWS's products and that the market rewards products incorporating these innovations with premium pricing and healthy margins.
The commercial success of OWS's products is also evidenced by the company's market position. OWS holds the number-three position among U.S.-based suppliers of silicon-photonics transceiver modules, a position it has built and maintained through the technological differentiation enabled by its patent portfolio. OWS's products have been qualified and deployed by multiple major hyperscale data-center operators, and the company has won competitive design evaluations against both larger and smaller competitors.
The commercial success of the patented technology is further corroborated by secondary considerations of non-obviousness, which also serve to reinforce the value of the patents in the royalty negotiation:
•  Commercial success: OWS's revenue and market position, as noted above, demonstrate the commercial success of products embodying the patented technologies.
•  Long-felt need: Prior to OWS's innovations (and Solara Optics' innovation in the case of the '562 Patent), the industry had long sought solutions to the problems addressed by the asserted patents — low-loss waveguide multiplexing, monolithic coherent transceiver integration, efficient thermal management of PICs, and polarization-diverse optical coupling. These needs were well-documented in academic and industry literature predating the filing dates of the asserted patents.
•  Failure of others: At least three competitors attempted similar designs before OWS's innovations and were unable to achieve comparable performance. This failure-of-others evidence further supports the conclusion that the patented technologies represent non-obvious and commercially valuable advances over the prior art.
•  Copying: Lumicore's accused products, as confirmed by the Benchmark Semiconductor Analysis, LLC teardown reports, incorporate structures that are strikingly similar to the patented designs. While the issue of copying is addressed more fully in the context of willful infringement (not the subject of this memorandum), the evidence of copying is relevant to the value of the patented technology.
Directional Impact: This factor exerts strong upward pressure on the royalty rate, as it demonstrates both the commercial value and the technological significance of the patented innovations.
Factor 9: The Utility and Advantages of the Patent Property Over the Old Modes or Devices
"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." — Georgia-Pacific, 318 F. Supp. at 1120.
The asserted patents cover innovations that represent significant advances over the prior art in each of their respective technology areas:
'847 Patent (Multi-Channel Waveguide Multiplexer): Prior art multiplexer designs, principally based on arrayed waveguide grating (AWG) architectures, suffered from relatively high insertion loss, particularly at higher channel counts. The '847 Patent's novel tapering geometry and mode-matching technique at waveguide junctions achieves significantly lower insertion loss — on the order of 1.2 dB per channel compared to 2.5–3.0 dB for conventional AWG designs — enabling more channels to be multiplexed at lower power penalty. This improvement is critical for high-bandwidth transceiver modules operating at 400G and above, where link budget is a binding constraint on transmission distance and channel capacity.
'193 Patent (Coherent Optical Transceiver Integration): Prior to the '193 Patent, coherent optical transceivers relied on discrete-component assemblies or hybrid integration approaches that required costly manual alignment of optical components, introduced performance variability between units, and limited manufacturing yield. The '193 Patent enables monolithic integration of both transmitter and receiver optical paths on a single silicon substrate, leveraging standard CMOS-compatible fabrication processes. This approach reduces manufacturing cost by an estimated 40–60% relative to hybrid integration, improves yield, and enables smaller form factors required by current pluggable transceiver standards (e.g., QSFP-DD, OSFP).
'562 Patent (Embedded Micro-Channel Heat Sinks): Conventional thermal management approaches for PICs relied on external heat sinks (bonded to the top surface of the PIC) or thermoelectric coolers (TECs) that added significant bulk, weight, and cost to the module design. The '562 Patent's embedded micro-channel approach fabricates heat-sink structures directly within the silicon substrate, immediately adjacent to heat-generating optical components, enabling more efficient heat removal with a dramatically smaller footprint. This innovation is essential for the dense packaging requirements of modern pluggable transceiver modules, where thermal dissipation is a primary design constraint.
'015 Patent (Polarization-Diverse Grating Coupler): Prior grating coupler designs were typically optimized for a single polarization mode (usually TE mode), resulting in significant polarization-dependent loss (PDL) of 3–5 dB for the orthogonal (TM) mode. In coherent transmission systems, where both polarization states carry independent data streams, this PDL directly reduces the system's effective signal-to-noise ratio and limits achievable transmission distances. The '015 Patent's dual-layer grating geometry simultaneously captures both polarization states with near-equal efficiency (PDL < 0.5 dB), significantly improving signal integrity and enabling longer-reach coherent transmission.
The utility and advantages of the patented technologies are further evidenced by the failure of at least three competitors to achieve comparable results prior to OWS's innovations. Dr. Caroline Ashford, OWS's technical expert (Professor of Electrical Engineering & Photonics, Northfield Institute of Technology), will testify in detail regarding the technical superiority of the patented approaches over prior art methods and the significance of the performance improvements they enable.
The patented technologies are not incremental improvements to existing designs. Rather, they are foundational innovations that enable new product categories and performance levels in the silicon-photonics transceiver market. The '193 Patent's monolithic coherent integration, in particular, is widely regarded in the industry as a paradigm-shifting advance that has transformed the economics and performance characteristics of coherent optical transceivers.
Directional Impact: This factor exerts strong upward pressure on the royalty rate, as it demonstrates that the patented technologies provide substantial utility and advantages over prior approaches.
Factor 10: The Nature of the Patented Invention; the Character of the Commercial Embodiment; and the Benefits to Those Who Have Used the Invention
"The nature of the patented invention; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the invention." — Georgia-Pacific, 318 F. Supp. at 1120.
The patented inventions are embodied i

CALDERWOOD & HARKNESS LLP ATTORNEYS AT LAW

I. INTRODUCTION AND PURPOSE

III. GEORGIA-PACIFIC FACTOR-BY-FACTOR ANALYSIS

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