APPENDIX B TO EXPERT REPORT OF DR. LAWRENCE KEATING
GEORGIA-PACIFIC FACTOR ANALYSIS
OPTIWAVE SEMICONDUCTOR CORP., Plaintiff,
v.
LUMICORE TECHNOLOGIES, INC., Defendant.
Case No. 2:24-cv-00319-JRG
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION
The Honorable James R. Gilstrap, Presiding
DRAFT — ATTORNEY WORK PRODUCT / PRIVILEGED AND CONFIDENTIAL
Prepared by:
Dr. Lawrence Keating Managing Director Meridian Economic Consulting Group, LLC 233 South Wacker Drive, Suite 4400 Chicago, Illinois 60606 Tel: (312) 555-4700
Email: lkeating@meridianecon.com
Retained by:
Calderwood & Harkness LLP on behalf of Optiwave Semiconductor Corp.
Expert Retention Agreement Date: August 5, 2024 Billing Rate: $875.00 per hour
Expert Report Due Date: June 15, 2025 Draft Revision Date: May 28, 2025
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I. INTRODUCTION AND PURPOSE OF THIS APPENDIX
This Appendix B sets forth a detailed analysis of all fifteen factors articulated by the United States District Court for the Southern District of New York in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), as applied to the hypothetical negotiation between Optiwave Semiconductor Corp. ("OWS" or "Optiwave") and Lumicore Technologies, Inc. ("Lumicore"). The Georgia-Pacific framework is the well-established standard for determining a reasonable royalty in patent infringement cases and has been consistently applied by the Federal Circuit to guide the assessment of reasonable royalty damages. See, e.g., Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1554 (Fed. Cir. 1995) (en banc); Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324–25 (Fed. Cir. 2009).
The analysis contained in this Appendix B supports my opinion that a reasonable royalty rate of 8.5% of accused-product net sales is the appropriate rate for the non-lost-profits portion of Lumicore's infringing sales of the accused products. As described more fully in my main expert report (Doc. 88), the reasonable royalty theory applies to those sales of accused products where lost profits cannot be established — specifically, sales to customers that OWS could not have served due to capacity constraints, customer preferences, or geographic limitations. These are sales for which OWS cannot demonstrate that, but for the infringement, it would have made the sale itself.
The reasonable royalty damages are calculated as follows:
• Total projected accused-product revenue (Q3 2022 through Q4 2025): approximately $714.6 million
• Less: Market-share displacement sales attributable to OWS (38.2% of total accused-product revenue): approximately $273.0 million (covered by the lost-profits theory set forth in Appendix A)
• Non-lost-profits revenue base: approximately $441.6 million
• Reasonable royalty rate: 8.5%
• Reasonable royalty damages: $441.6M × 8.5% = approximately $37.5 million
This Appendix B should be read in conjunction with the following documents, which together comprise the complete damages analysis:
• Main Expert Report (Doc. 88): Summary of damages opinions, economic framework, and background
• Appendix A: Lost Profits Model and Market-Share Displacement Analysis
• Appendix C: Royalty Rate Benchmarking and Comparable Transaction Survey
• Appendix D: Willful Infringement Enhancement Analysis
In conducting the Georgia-Pacific analysis, I have applied the well-established hypothetical negotiation framework. Under this framework, I assume that a willing licensor (OWS) and a willing licensee (Lumicore) entered into negotiations for a patent license at a date just before the first act of infringement, with both parties possessed of full knowledge of the scope, validity, and infringement of the asserted patents, as well as all other relevant facts and circumstances known at the time of the hypothetical negotiation. This framework does not ask what the parties actually would have done in the real world; rather, it constructs a hypothetical scenario to determine the royalty rate upon which rational parties would have agreed had they been "reasonably and voluntarily trying to reach an agreement." Georgia-Pacific, 318 F. Supp. at 1120.
The balance of this Appendix is organized as follows: Section II establishes the hypothetical negotiation framework, including the negotiation date and the identity and circumstances of the parties. Section III presents the detailed factor-by-factor analysis of all fifteen Georgia-Pacific factors. Section IV summarizes the comparable license evidence in tabular form and discusses comparability adjustments. Section V presents a sensitivity analysis. Section VI addresses my qualifications and methodology. Section VII identifies the exhibits and supporting materials. Section VIII contains my reservation of rights.
II. HYPOTHETICAL NEGOTIATION FRAMEWORK
A. Hypothetical Negotiation Date
Consistent with established Federal Circuit precedent, the hypothetical negotiation date is set at the point just before the first act of infringement by the accused infringer. See Lucent Techs., 580 F.3d at 1325; Applied Signal Tech., Inc. v. Hewlett-Packard Co., No. C 09-01690 SBA, 2013 WL 2181584, at *16 (N.D. Cal. May 20, 2013). In this case, Lumicore's first accused product — the LumiLink 400G-ZR+ coherent transceiver module — was commercially launched in the third quarter of 2022, with initial shipments to customers commencing on or about July 11, 2022. Accordingly, the hypothetical negotiation date is established as the second quarter of 2022 (approximately June 2022), immediately preceding that commercial launch.
At the time of the hypothetical negotiation, OWS held three issued United States patents and one pending application that are now asserted in this litigation:
• U.S. Patent No. 9,678,562 ("the '562 Patent"): Entitled "Embedded Micro-Channel Heat Sinks for Thermal Management of Photonic Integrated Circuits." Filed November 22, 2014; issued June 13, 2017.
• U.S. Patent No. 10,234,847 ("the '847 Patent"): Entitled "Multi-Channel Waveguide Multiplexer with Low Insertion Loss for Dense Wavelength Division Multiplexing." Filed September 14, 2016; issued March 19, 2019.
• U.S. Patent No. 10,891,193 ("the '193 Patent"): Entitled "High-Bandwidth Coherent Optical Transceiver Integrated on a Silicon Substrate." Filed April 7, 2017; issued January 12, 2021.
• U.S. Patent No. 11,402,015 ("the '015 Patent"): Entitled "Polarization-Diverse Grating Coupler for Silicon-Photonics Applications." Filed August 30, 2019; pending at the hypothetical negotiation date but subsequently issued August 2, 2022.
Under the Georgia-Pacific framework, both parties are assumed to have full knowledge of the patent claims, their validity, and the fact that the accused products infringe those claims. See Georgia-Pacific, 318 F. Supp. at 1120. This constructive omniscience extends to the '015 Patent, which both parties would have understood would issue in due course with claims covering the polarization-diverse grating coupler technology embodied in Lumicore's accused products. Accordingly, the hypothetical negotiation encompasses all four asserted patents, notwithstanding that one remained pending at the negotiation date.
B. The Parties to the Hypothetical Negotiation
1. Willing Licensor: Optiwave Semiconductor Corp. Optiwave Semiconductor Corp. is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS was founded in 2011 and has grown into the third-largest United States-based supplier of silicon-photonics transceiver modules for hyperscale data-center applications. The company employs approximately 1,250 people across its headquarters, its fabrication and assembly facilities in Santa Clara, California and Chandler, Arizona, and its design centers in Portland, Oregon and Boston, Massachusetts.
For fiscal year 2023, OWS reported total revenue of $487.3 million and net income of $61.4 million, as reflected in its audited financial statements prepared by Gresham & Whitfield LLP (Report of Independent Auditors, dated March 22, 2024). OWS's revenue has grown at a compound annual growth rate of approximately 18.4% over the preceding five-year period (FY 2018–FY 2023), driven primarily by the rapid expansion of hyperscale data-center construction and the corresponding demand for high-speed optical interconnects.
OWS's key product families that compete directly with Lumicore's accused products are:
• OWS-400ZR: A 400G ZR/ZR+ coherent transceiver module compliant with the OIF 400ZR Implementation Agreement, targeting data-center interconnect (DCI) applications at distances up to 120 km.
• OWS-800XR: An 800G coherent transceiver module using OWS's proprietary multi-channel waveguide multiplexer technology for next-generation DCI and metro applications.
• OWS-1600DR: A 1.6T DR transceiver module employing eight channels of 200G PAM4 signaling for intra-data-center connectivity.
OWS's gross margin on these competing product families averaged 47.3% during FY 2023, reflecting the premium that customers pay for the performance advantages enabled by OWS's patented silicon-photonics technology.
OWS maintains a substantial patent portfolio comprising 142 issued United States patents and 58 pending patent applications, covering a wide range of silicon-photonics innovations including waveguide design, optical modulation, thermal management, packaging, and testing. The four patents asserted in this litigation are among the most commercially significant patents in OWS's portfolio, as they cover core architectural features of OWS's transceiver products.
The majority owner of OWS is Ridgeline Capital Partners, LP, a private equity firm headquartered in San Francisco, California, which acquired a 55% equity stake in OWS in 2019 for approximately $780 million. Ridgeline's investment thesis, as reflected in the due diligence materials produced in discovery (Bates Nos. RCP-000147 through RCP-000312), emphasized OWS's market-leading technology, its strong patent portfolio as a competitive moat, and the opportunity to achieve significant market-share growth in the rapidly expanding hyperscale data-center market. Ridgeline's investment thesis is significant to the Georgia-Pacific analysis because it demonstrates OWS's strategic emphasis on maintaining and expanding its competitive position through proprietary technology — a posture that would increase OWS's reluctance to license a direct competitor and correspondingly increase the royalty rate that OWS would demand in a hypothetical negotiation.
2. Willing Licensee: Lumicore Technologies, Inc. Lumicore Technologies, Inc. is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore was founded in 2015 and has emerged as a fast-growing entrant in the silicon-photonics transceiver market, positioning itself as a disruptive competitor to established players including OWS, Drayton Group, Northpoint Group, and Ridgeway Group (now Ridgeline & Co.). Lumicore employs approximately 870 people, with operations in Austin, Texas and San Jose, California.
Lumicore completed its initial public offering on the Nasdaq Global Select Market in March 2022 at an offering price of $24.00 per share, raising approximately $460 million in gross proceeds. As of the approximate date of this report, Lumicore's common stock trades at approximately $37.00 per share, implying a market capitalization of approximately $3.4 billion based on 91.8 million shares outstanding.
For fiscal year 2023, Lumicore reported total revenue of approximately $312.6 million, as reflected in its Form 10-K filed with the Securities and Exchange Commission and audited by Brennan Kellogg & Associates LLP. Lumicore's revenue growth has been rapid, increasing from approximately $62.5 million in FY 2021 to $312.6 million in FY 2023, representing a compound annual growth rate of approximately 123.7%.
The three accused product lines are:
• LumiLink 400G-ZR+: A 400G ZR+ coherent transceiver module launched in Q3 2022. FY 2023 revenue: $94.8 million.
• LumiLink 800G-DR8: An 800G DR8 transceiver module launched in Q1 2023. FY 2023 revenue: $128.4 million.
• LumiEdge 1600G-LR: A 1.6T long-reach transceiver module launched in Q4 2023. FY 2023 revenue: $41.7 million.
In the aggregate, Lumicore's accused products generated $264.9 million in revenue during FY 2023, representing approximately 84.7% of Lumicore's total revenue for that period. This concentration of revenue in accused products underscores the significance of the patented technology to Lumicore's business.
C. Reasonable Royalty as a Floor
As a matter of established patent-damages law, the reasonable royalty constitutes a floor on the damages to which the patentee is entitled. See 35 U.S.C. § 284 ("Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer . . . ."); Rite-Hite Corp., 56 F.3d at 1554. The reasonable royalty must be sufficient to compensate OWS for Lumicore's unauthorized use of the patented technology, while also reflecting a rate that a rational licensee would agree to pay in an arm's-length negotiation in which both parties are acting voluntarily and without compulsion. See Georgia-Pacific, 318 F. Supp. at 1120; Monsanto Co. v. McFarling, 488 F.3d 973, 978–79 (Fed. Cir. 2007).
In this case, because OWS seeks both lost profits (for the 38.2% of accused-product sales that displaced OWS's own sales) and a reasonable royalty (for the remaining 61.8% of accused-product sales), the reasonable royalty applies only to the non-lost-profits portion of Lumicore's infringing revenue. This is consistent with the Federal Circuit's holding that a patentee may recover lost profits on sales it would have made and a reasonable royalty on the remaining infringing sales. See Rite-Hite, 56 F.3d at 1545.
III. DETAILED ANALYSIS OF THE FIFTEEN GEORGIA-PACIFIC FACTORS
I now turn to a detailed analysis of each of the fifteen factors set forth in Georgia-Pacific, 318 F. Supp. at 1120, as applied to the hypothetical negotiation between OWS and Lumicore.
Factor 1: The Royalties Received by the Patentee for the Licensing of the Patent in Suit, Proving or Tending to Prove an Established Royalty
Georgia-Pacific Factor 1 directs the factfinder to examine the royalties that the patentee has received for licensing the patents-in-suit, as evidence tending to prove an established royalty rate. An established royalty is one that has been "paid by such a number of persons as to indicate a general acquiescence in its reasonableness by those who have occasion to use the invention." Monsanto, 488 F.3d at 978–79 (internal citation omitted). Even where the number of licenses is insufficient to establish a formal "established royalty," prior licenses are highly probative of the reasonable royalty rate. See Lucent Techs., 580 F.3d at 1326.
OWS has entered into three prior patent license agreements covering one or more of the four asserted patents. These licenses were executed through OWS's licensing agent, FairPoint Licensing Group, LLC, and were produced in discovery in this litigation. I analyze each in turn.
(a) OWS–Terralink Semiconductor License (2020). In 2020, OWS granted a non-exclusive patent license to Terralink Semiconductor, a smaller competitor operating primarily in the 100G and 400G optical transceiver space. The Terralink license covers the '847 Patent and the '562 Patent — two of the four asserted patents — and provides for a running royalty of 6.5% of net sales of licensed products. During the term of the Terralink license (2020–2023), Terralink's licensed revenue totaled approximately $45 million. The Terralink license is the least comparable of OWS's three licenses because it covers only two of the four asserted patents and because Terralink operates in a more limited segment of the market (100G/400G short-reach applications) with relatively limited product overlap with OWS's core hyperscale data-center transceiver business. Nevertheless, the 6.5% rate establishes a useful lower bound for the royalty range.
(b) OWS–NovaWave Corp. License (2021). In 2021, OWS granted a non-exclusive license to NovaWave Corp. covering the '847 Patent, the '193 Patent, and the '562 Patent — three of the four asserted patents. The NovaWave license provides for a running royalty of 9.0% of net sales of licensed products. NovaWave's licensed revenue during the relevant period totaled approximately $22 million. NovaWave is a mid-size optical transceiver manufacturer focused primarily on telecom applications rather than hyperscale data-center applications. Because NovaWave's focus on telecom reduces the degree of direct competition with OWS in the hyperscale data-center market, OWS may have been more willing to license NovaWave at an attractive rate. However, the higher rate of 9.0% is explained in part by the broader patent scope (three patents versus two in the Terralink license) and in part by NovaWave's smaller revenue base, which afforded less opportunity for volume-based discounting. The NovaWave rate of 9.0% represents the upper end of the range established by OWS's own licensing history.
(c) OWS–Helix Integrated Photonics License (2022). In 2022, shortly before the hypothetical negotiation date, OWS granted a non-exclusive license to Helix Integrated Photonics covering all four of the asserted patents ('847, '193, '562, and '015). The Helix license provides for a running royalty of 7.75% of net sales of licensed products, plus an upfront lump-sum payment of $2.5 million. During the relevant period, Helix's licensed revenue totaled approximately $68 million. The Helix license is the most comparable of OWS's three prior licenses for several reasons: (i) it covers all four asserted patents; (ii) Helix is a more direct competitor to OWS in the data-center transceiver market than either Terralink or NovaWave; and (iii) it was executed closest in time to the hypothetical negotiation date, and therefore best reflects the market conditions and the parties' expectations at that time. When the $2.5 million upfront payment is amortized across the $68 million in licensed revenue, the effective royalty rate of the Helix license rises to approximately 8.12% (i.e., 7.75% + ($2.5M / $68M) = 7.75% + 3.68% on a per-dollar basis — though this overstates the per-dollar rate because the upfront payment covers the full term of the license rather than only the $68 million in revenue recognized to date). On a more conservative basis, treating the $2.5 million upfront payment as amortized over the full expected revenue of the license, the effective rate is somewhat above 7.75% but below 8.5%.
Taken together, these three licenses establish a range of running royalty rates from 6.5% to 9.0% for the patents-in-suit. The most comparable license (Helix) falls at an effective rate above 7.75%. Several factors support a rate at the upper end of or above this range in the context of the OWS-Lumicore hypothetical negotiation: (i) Lumicore's accused products generate significantly more revenue ($264.9 million in FY 2023 alone, with projected total revenue of $714.6 million through trial) than any prior licensee's licensed revenue, which means that the absolute dollar impact of each percentage point of royalty is much larger, and OWS would demand a rate that fully compensates for the competitive harm of enabling a high-volume direct rival; (ii) Lumicore is a more direct competitor to OWS in the hyperscale data-center transceiver market than any prior licensee; and (iii) the competitive dynamics of the hyperscale data-center market have intensified since the Helix license was negotiated, increasing the strategic cost to OWS of licensing a direct rival.
Conclusion: Factor 1 supports a royalty rate at or above 8.5%, within and at the upper end of the established range of 6.5% to 9.0%, and consistent with the effective rate implied by the most comparable (Helix) license.
Factor 2: The Rates Paid by the Licensee for the Use of Other Patents Comparable to the Patent in Suit
Georgia-Pacific Factor 2 directs the factfinder to consider the rates that the licensee has paid for the use of other comparable patents. This factor provides insight into the licensee's willingness to pay for patented technology and establishes a frame of reference for the licensee's own assessment of the value of patent licenses.
Based on my review of Lumicore's document productions in this litigation (designated "Highly Confidential — Attorneys' Eyes Only" under the Protective Order), Lumicore has entered into at least three inbound patent license agreements for photonics-related technology from third-party licensors. The royalty rates in these agreements range from 5.0% to 7.5% of net sales of licensed products. Due to the confidentiality designations, I do not disclose the specific identities of the licensors or the detailed terms of these agreements in this draft report; however, I have reviewed the agreements in their entirety and have considered the relevant terms in formulating my opinions.
Importantly, none of Lumicore's existing inbound licenses covers patents that are as central to Lumicore's core product architecture as the four OWS asserted patents. Lumicore's existing licenses cover peripheral aspects of transceiver design — such as connector packaging, firmware interfaces, and certain signal-processing algorithms — whereas the OWS asserted patents cover the foundational elements of the accused transceiver modules: the waveguide multiplexer ('847 Patent), the coherent transceiver integration ('193 Patent), the thermal management system ('562 Patent), and the polarization-diverse grating coupler ('015 Patent). These are the core innovations that define the performance and competitive positioning of Lumicore's accused products. Accordingly, the rates that Lumicore has paid for less central technology would understate the value of the OWS patents and the rate that Lumicore would agree to pay in a hypothetical negotiation.
Conclusion: Factor 2 supports a royalty rate at the upper end of or above Lumicore's existing inbound royalty range of 5.0% to 7.5%, and is therefore consistent with the proposed rate of 8.5%.
Factor 3: The Nature and Scope of the License, as Exclusive or Otherwise, or as Restricted or Otherwise in Terms of Territory, Use, or Persons to Whom the Manufactured Product May Be Sold
Georgia-Pacific Factor 3 examines the nature and scope of the hypothetical license. A broader license — one that is exclusive, covers more territory, or permits unrestricted fields of use — generally commands a higher royalty rate than a more limited license.
In this case, the hypothetical license between OWS and Lumicore would have the following characteristics:
• Exclusivity: The license would be non-exclusive. OWS has granted only non-exclusive licenses in all three of its prior licensing agreements (Terralink, NovaWave, and Helix), and there is no evidence that OWS would have deviated from this practice. A non-exclusive license generally commands a lower royalty than an exclusive license, all else being equal, because the licensor retains the right to practice the patents itself and to grant additional licenses to others.
• Territory: The license would cover the United States, consistent with the territorial scope of the four asserted United States patents. This is the only territory in which OWS can assert these patents and seek damages for infringement.
• Field of Use: The license would impose no restrictions on field of use. It would permit Lumicore to manufacture, use, sell, offer for sale, and import accused products in all market segments, including hyperscale data centers, telecommunications, enterprise networking, and any other application. The absence of field-of-use restrictions broadens the scope of the license and correspondingly increases its value to the licensee.
• Patent Scope: The license would cover all four asserted patents: U.S. Patent Nos. 10,234,847; 10,891,193; 9,678,562; and 11,402,015. This is the broadest patent scope of any license OWS has granted (matching the Helix license). The breadth of the licensed patent portfolio, covering multiple foundational innovations in silicon-photonics transceiver technology, increases the value of the license.
The combination of a broad, unrestricted non-exclusive license covering all four asserted patents justifies a royalty rate that reflects the full value of the patented technology to the licensee. While the non-exclusive nature of the license would tend to reduce the royalty relative to an exclusive license, this is offset by the breadth of the patent scope and the absence of field-of-use restrictions.
Conclusion: Factor 3 supports a royalty rate at or above 8.5%.
Factor 4: The Licensor's Established Policy and Marketing Program to Maintain Its Patent Monopoly by Not Licensing Others to Use the Invention or by Granting Licenses Under Special Conditions Designed to Preserve That Monopoly
Georgia-Pacific Factor 4 examines the licensor's established policy with respect to maintaining its patent monopoly. A licensor that maintains a strict policy of not licensing its patents, or that licenses only under restrictive conditions, would demand a higher royalty in a hypothetical negotiation because the act of licensing itself imposes a strategic cost on the licensor.
OWS is a practicing entity — it manufactures and sells competing transceiver modules (OWS-400ZR, OWS-800XR, and OWS-1600DR) that practice the asserted patents. OWS's primary business strategy is to compete in the silicon-photonics transceiver market by leveraging its proprietary technology, including the inventions covered by the asserted patents, to differentiate its products and maintain premium pricing. OWS is not primarily a licensing company; its licensing revenue represents a small fraction of total revenue.
OWS manages its patent licensing activities through FairPoint Licensing Group, LLC, a third-party licensing agent located at 500 Sansome Street, Suite 1400, San Francisco, California 94111 (Managing Director: Angela Reeves). FairPoint operates under OWS's direction and subject to OWS's approval of all license terms. According to the testimony of Ms. Reeves at her deposition on October 7, 2024, OWS's licensing policy is to license selectively — granting licenses to companies that are not core competitors in OWS's primary market (hyperscale data-center transceivers) or to companies that operate in adjacent markets (such as telecom or enterprise networking) where the competitive overlap is limited.
Critically, OWS has never licensed a direct head-to-head competitor in the hyperscale data-center transceiver market on the same terms as its existing licenses. While Helix Integrated Photonics operates in the data-center transceiver market, Helix's product focus at the time of the license was primarily on lower-speed (100G and 200G) transceivers with limited overlap with OWS's 400G and above product lines. Lumicore, by contrast, is a direct competitor to OWS at the 400G, 800G, and 1.6T performance tiers — precisely the tiers where OWS derives the majority of its revenue and where OWS's patented technology provides its greatest competitive advantage.
Furthermore, OWS's majority owner, Ridgeline Capital Partners, LP, has placed significant emphasis on market-share growth as a key element of its investment thesis for OWS. The Ridgeline due diligence materials (Bates Nos. RCP-000147 through RCP-000312) and the testimony of Raymond Bautista, Ridgeline's Managing Partner, at his deposition on November 4, 2024, confirm that Ridgeline views OWS's patent portfolio as a competitive moat that should be preserved to support market-share expansion. This investor-level strategic imperative further increases OWS's reluctance to license a direct competitor and would have driven OWS to demand a premium royalty rate in any hypothetical negotiation with Lumicore.
Conclusion: Factor 4 strongly supports a royalty rate at or above 8.5%, and arguably a higher rate, given OWS's established practice of maintaining its competitive position and its reluctance to license direct competitors.
Factor 5: The Commercial Relationship Between the Licensor and the 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 Factor 5 examines the commercial relationship between the parties. When the licensor and licensee are direct competitors, the licensor faces a greater competitive cost from granting a license, because the license enables the licensee to compete more effectively in the licensor's own market. This increased competitive cost translates into a higher royalty demand. See Rite-Hite, 56 F.3d at 1554.
OWS and Lumicore are direct competitors in the silicon-photonics transceiver market for hyperscale data centers. Both companies design, manufacture, and sell 400G, 800G, and 1.6T transceiver modules to the same end-customers: large hyperscale data-center operators such as Ridgeway Industries, Crestline Systems, Northgate Corporation, Adriatic Enterprises, and Halcyon Enterprises, among others. Based on the market-share displacement analysis set forth in Appendix A, OWS and Lumicore compete head-to-head at twelve of the top twenty hyperscale data-center operators in the United States, as measured by total transceiver procurement volume.
The competitive impact of Lumicore's entry into the market with its accused products has been substantial and quantifiable. Since Lumicore launched the LumiLink 400G-ZR+ in Q3 2022, the average selling price ("ASP") of 400G-ZR coherent transceivers has declined by approximately 18.7% from Q3 2022 to Q4 2023, based on data from Granite Harbor Management Consulting (a leading market research firm for the optical communications industry) and corroborated by OWS's internal pricing data. While not all of this price erosion is attributable to Lumicore's entry — broader market forces, including increasing competition from other entrants, also played a role — the timing and magnitude of the ASP decline are consistent with Lumicore's entry having been a significant contributing factor.
As direct competitors, OWS would demand a higher royalty to compensate for the competitive harm of enabling a rival to compete more effectively in OWS's core market. This competitive dynamic is well recognized in the Georgia-Pacific case law. See, e.g., Rite-Hite, 56 F.3d at 1554 (recognizing that a patentee's damages may include "the cost of a reasonable royalty that the patentee could charge for use of the patented invention").
Conclusion: Factor 5 strongly supports a royalty rate at or above 8.5%.
Factor 6: 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 Its Non-Patented Items; and the Extent of Such Derivative or Convoyed Sales
Georgia-Pacific Factor 6 examines the derivative or "convoyed" sales effects — that is, the extent to which the patented technology promotes sales of the licensee's other products or generates ancillary revenue streams beyond the direct revenue from the accused products themselves.
Lumicore's accused transceiver products serve as platform products that drive customer adoption of Lumicore's broader product ecosystem. This ecosystem includes complementary optical components (such as amplifiers, wavelength-selective switches, and monitoring modules), network management software (the LumiOS™ platform), and service contracts (including installation, calibration, and ongoing technical support). Based on Lumicore's internal financial data produced in discovery, convoyed sales of complementary products and services represent approximately 15%–20% of the revenue associated with each transceiver module sale over the lifetime of the customer relationship.
The economic significance of the derivative sales effect is amplified by the "design-in" nature of transceiver modules in the hyperscale data-center market. When a data-center operator qualifies and designs a transceiver module into its network architecture, the switching costs are high — both because of the technical qualification process (which can take 6–12 months) and because of the integration dependencies between the transceiver modules and other elements of the network infrastructure. Once a customer has designed in Lumicore's accused products, the customer is effectively locked into Lumicore's ecosystem for the useful life of that network deployment, which is typically three to five years. This lock-in effect generates significant ancillary revenue streams for Lumicore and increases the total value that Lumicore derives from the patented technology beyond the direct revenue from the accused products.
The derivative sales effect is a recognized factor supporting a higher royalty rate, because it indicates that the total value of the patented technology to the licensee exceeds the direct revenue from the accused products. See Brocade Commc'ns Sys., Inc. v. A10 Networks, Inc., 873 F.3d 1354, 1365 (Fed. Cir. 2017).
Conclusion: Factor 6 supports a royalty rate at or above 8.5%.
Factor 7: The Duration of the Patent and the Term of the License
Georgia-Pacific Factor 7 examines the remaining duration of the patents and the expected term of the hypothetical license. A patent with a longer remaining life offers the licensee a longer period of authorized use, which increases the value of the license and supports a higher royalty rate.
The four asserted patents have the following remaining terms, measured from the hypothetical negotiation date of Q2 2022:
The average remaining term across the four asserted patents is approximately 14.5 years from the hypothetical negotiation date. This is a substantial remaining patent life, providing the licensee with an extended period of protection and the licensor with an extended period of exclusivity. In a rapidly evolving technology market like silicon-photonics transceivers, a patent portfolio with an average remaining life of 14.5 years provides significant strategic value, particularly given the long product development and qualification cycles in the hyperscale data-center industry.
The extended duration of the patents also means that the hypothetical license would cover not only Lumicore's current accused products but also future products that Lumicore develops during the remaining patent term. This forward-looking value to the licensee supports a higher royalty rate.
Conclusion: Factor 7 supports a royalty rate at or above 8.5%.
Factor 8: The Established Profitability of the Product Made Under the Patent; Its Commercial Success; and Its Current Popularity
Georgia-Pacific Factor 8 examines the established profitability and commercial success of products made under the patent. The commercial success of products embodying the patented technology is strong evidence of the value of the patented inventions and supports a higher royalty rate.
OWS's products practicing the asserted patents have achieved substantial commercial success. As noted above, OWS's FY 2023 revenue was $487.3 million, of which approximately $310 million (63.6%) is attributable to products that practice one or more of the four asserted patents (the OWS-400ZR, OWS-800XR, and OWS-1600DR product families). OWS's FY 2023 net income was $61.4 million, and the gross margin on OWS's competing product families averaged 47.3%. These figures demonstrate that products embodying the patented technology are highly profitable and commercially successful.
Lumicore's accused products have also achieved rapid and impressive commercial success since their introduction:
Lumicore's accused products generated total FY 2023 revenue of $264.9 million, representing approximately 84.7% of Lumicore's total FY 2023 revenue. The gross margins on Lumicore's accused products — ranging from 52.1% (LumiLink 400G-ZR+) to 58.3% (LumiEdge 1600G-LR) — are notably higher than OWS's gross margins on its own competing products (47.3%), as reflected in Lumicore's internal financial data produced in discovery under the "Highly Confidential — Attorneys' Eyes Only" designation.
The projected total accused-product revenue from Q3 2022 through Q4 2025 (the anticipated trial date) is approximately $714.6 million, reflecting the strong and growing demand for Lumicore's accused transceiver products among hyperscale data-center operators.
The strong profitability and rapid growth of both OWS's and Lumicore's products embodying the patented technology demonstrate the substantial commercial value of the inventions claimed in the asserted patents. This commercial success supports a higher royalty rate because it indicates that the patented technology generates significant value for both the licensor and the licensee.
Conclusion: Factor 8 strongly supports a royalty rate at or above 8.5%.
Factor 9: The Utility and Advantages of the Patent Property Over the Old Modes or Devices, if Any, That Had Been Used for Working Out Similar Results
Georgia-Pacific Factor 9 examines the technical utility and advantages of the patented inventions compared to prior art approaches. Patents that represent significant technical advances over prior methods are more valuable because they provide greater competitive differentiation and performance advantages.
The four asserted patents cover fundamental innovations in silicon-photonics transceiver technology that represent significant advances over prior art designs:
'847 Patent — Multi-Channel Waveguide Multiplexer with Low Insertion Loss. The '847 Patent claims a multi-channel waveguide multiplexer design that achieves significantly lower insertion loss (less than 0.5 dB per channel) compared to prior arrayed-waveguide-grating ("AWG") designs (typically 2.0–3.5 dB per channel). Lower insertion loss translates directly to improved link budget, longer reach, and lower power consumption — all critical performance parameters for data-center interconnect applications. Prior to OWS's invention, AWG-based multiplexers were the standard approach in silicon-photonics transceivers, but their high insertion loss limited the achievable link distances and data rates. The '847 Patent's waveguide multiplexer design overcame this fundamental limitation.
'193 Patent — High-Bandwidth Coherent Optical Transceiver Integrated on a Silicon Substrate. The '193 Patent claims a coherent optical transceiver architecture that integrates the modulator, photodetector, digital signal processing elements, and wavelength-selective components on a single silicon substrate, enabling data rates of 400 Gbps and above in a compact form factor. Prior to OWS's invention, coherent optical transceivers required discrete optical and electronic components assembled on separate substrates, resulting in larger size, higher cost, and lower manufacturing yield. The '193 Patent's integrated approach enabled the development of pluggable coherent transceiver modules (such as QSFP-DD and OSFP form factors) that could be manufactured at scale for hyperscale data-center applications.
'562 Patent — Embedded Micro-Channel Heat Sinks for Thermal Management of Photonic Integrated Circuits. The '562 Patent claims an embedded micro-channel heat-sink structure integrated directly into the silicon photonic integrated circuit ("PIC") substrate, providing efficient thermal management without requiring external heat sinks or thermoelectric coolers. Thermal management is a critical challenge in high-speed silicon-photonics transceivers, where the heat generated by high-power optical components and high-speed electronic circuits can degrade performance and reliability. Prior approaches to thermal management relied on external heat sinks, thermoelectric coolers, or both, which increased the size, cost, and power consumption of the transceiver module. The '562 Patent's embedded micro-channel approach solved this problem by providing efficient cooling within the PIC itself.
'015 Patent — Polarization-Diverse Grating Coupler. The '015 Patent claims a polarization-diverse grating coupler that efficiently couples both TE and TM polarization states of incident light into the silicon waveguide, improving the overall coupling efficiency and link budget. Prior grating coupler designs were typically polarization-sensitive, coupling only one polarization state efficiently and suffering significant loss on the orthogonal polarization. The '015 Patent's polarization-diverse design overcomes this limitation, enabling more efficient use of the optical signal and improving the reliability and performance of the transceiver.
The significance of these innovations is further evidenced by the failure of at least three competitors — Drayton Group, Calderon Partners LLC, and Tarrant Enterprises — to achieve comparable performance in their silicon-photonics transceiver products prior to OWS's innovations. This is strong evidence of non-obviousness and technological significance, constituting secondary considerations recognized by the Federal Circuit. See Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966).
In addition, OWS's innovations have received significant industry recognition, including:
• The 2020 IEEE Photonics Technology Letters Best Paper Award for a paper co-authored by OWS engineers describing the waveguide multiplexer technology underlying the '847 Patent.
• The 2021 Lightwave Innovation Award for OWS's OWS-400ZR coherent transceiver module.
• Extensive citation of OWS's published patent applications and technical papers in subsequent IEEE, OSA, and OFC publications by other researchers in the field.
Conclusion: Factor 9 strongly supports a royalty rate at or above 8.5%.
Factor 10: 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 Factor 10 examines the nature of the patented invention and its role in the commercial product. This factor is particularly relevant in cases involving multi-component products, where the factfinder must assess the relationship between the patented features and the overall product. See VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326–28 (Fed. Cir. 2014).
The patented features — the waveguide multiplexer ('847 Patent), the coherent transceiver integration ('193 Patent), the thermal management system ('562 Patent), and the polarization-diverse grating coupler ('015 Patent) — are core architectural elements of the accused transceiver modules. They are not peripheral, optional, or ancillary features; rather, they define the fundamental operation and performance characteristics of the products. Without the waveguide multiplexer, the transceiver cannot multiplex and demultiplex optical channels. Without the coherent transceiver integration, the module cannot achieve the required data rates in a compact form factor. Without the embedded thermal management, the module cannot operate reliably at the required power levels. Without the polarization-diverse grating coupler, the module cannot efficiently couple light into and out of the silicon PIC.
I have analyzed the smallest salable patent-practicing unit ("SSPPU") to determine the appropriate royalty base. See LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). The patented features are integrated into the transceiver module itself — the silicon PIC, the packaging, and the optical coupling structures — which is the unit sold to customers. There is no smaller salable unit that practices the patents. The transceiver module is sold as a complete, integrated product; customers do not separately purchase the waveguide multiplexer, the coherent transceiver IC, the thermal management structure, or the grating coupler. Accordingly, the transceiver module is the SSPPU, and the appropriate royalty base is the net sales price of the transceiver module.
Furthermore, the entire-market-value rule ("EMVR") is applicable in this case because the patented features are the basis for customer demand for the accused modules. See Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014). Customers select Lumicore's accused transceivers specifically because of the performance characteristics enabled by the patented innovations: low insertion loss (enabled by the '847 Patent waveguide multiplexer), high bandwidth (enabled by the '193 Patent coherent transceiver integration), effective thermal management (enabled by the '562 Patent embedded micro-channel heat sinks), and polarization diversity (enabled by the '015 Patent grating coupler). These are the features that differentiate the accused products in the marketplace and drive purchasing decisions.
This analysis is set forth in greater detail in the Apportionment Analysis Memorandum (internal Doc. 128), which I have reviewed and relied upon in forming my opinions.
Conclusion: Factor 10 strongly supports a royalty rate at or above 8.5% applied to the full module-level price as the appropriate royalty base.
Factor 11: The Extent to Which the Infringer Has Made Use of the Invention and Any Evidence Probative of the Value of That Use
Georgia-Pacific Factor 11 examines the extent to which the infringer has made use of the patented invention and the evidence of the value of that use. An infringer that has made extensive use of the patented technology — incorporating it into its primary products and deriving substantial revenue from it — demonstrates the high value of the patented technology and supports a higher royalty rate.
Lumicore has made extensive use of all four patented inventions across its three accused product lines. As discussed under Factor 8 above, Lumicore's accused products generated total FY 2023 revenue of $264.9 million, representing approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million. The accused products are Lumicore's primary revenue generators and the foundation of its market position in the hyperscale data-center transceiver market.
The projected total accused-product revenue from Q3 2022 through Q4 2025 is approximately $714.6 million. This substantial revenue base — the vast majority of Lumicore's total revenue during the relevant period — demonstrates the central importance of the patented technology to Lumicore's business.
Notably, Lumicore has not developed any non-infringing alternatives to the patented technology. During the November 19, 2024 deposition of Dr. Sandra Michaud (Lumicore's Chief Technology Officer), Dr. Michaud was asked to identify specific non-infringing design alternatives that Lumicore could have implemented in its accused products. Dr. Michaud testified that she was not aware of any specific alternative designs that would achieve comparable performance without practicing the asserted patent claims. (Michaud Dep. Tr. at 187:8–189:14.) This testimony is consistent with the opinion of Dr. Caroline Ashford, OWS's technical expert, that the patented technologies represent the state of the art in silicon-photonics transceiver design and that no commercially viable non-infringing alternatives exist.
Furthermore, Lumicore continued to develop and launch new accused products even after receiving notice of OWS's asserted patents. OWS, through FairPoint Licensing Group, sent Lumicore a detailed patent notice letter on January 15, 2023, identifying the four asserted patents and the accused products. Lumicore acknowledged receipt of the letter and engaged in limited discussions with FairPoint (including an in-person meeting on April 20, 2023), but ultimately declined to take a license in a letter dated July 10, 2023. Despite this notice, Lumicore launched the LumiEdge 1600G-LR in Q4 2023, adding a third accused product line that incorporates all four patented inventions. This continued and expanding use of the patented technology, in the face of specific notice, further demonstrates the value of the patented technology to Lumicore and the absence of commercially viable alternatives.
Conclusion: Factor 11 strongly supports a royalty rate at or above 8.5%.
Factor 12: The Portion of the Profit or of the Selling Price That May Be Customary in the Particular Business or in Comparable Businesses to Allow for the Use of the Invention or Analogous Inventions
Georgia-Pacific Factor 12 examines the customary royalty rates in the relevant industry for the use of the patented invention or analogous inventions. This factor provides an industry-level benchmark for the reasonable royalty rate.
I have conducted a comprehensive analysis of licensing rates in the silicon-photonics transceiver industry, which is set forth in detail in Appendix C (Royalty Rate Benchmarking). In addition to OWS's own three prior licenses (discussed under Factor 1), I have identified two additional industry-comparable transactions:
(d) Stratos Photonics, Inc. v. ArcLight Systems, Inc. Settlement (2019). In 2019, Stratos Photonics, Inc. and ArcLight Systems, Inc. settled a patent infringement dispute involving optical transceiver technology on terms that included a running royalty of 8.0% of net sales of licensed products. The settlement involved patents covering aspects of optical transceiver design that are analogous to, though not identical to, the OWS asserted patents. This settlement is a useful industry benchmark because it involves similar technology (optical transceivers) and a similar dispute context (patent infringement litigation). However, the Stratos/ArcLight settlement involved different patents and different parties, and settlement-context licenses may reflect litigation risk discounts that would not apply in a Georgia-Pacific hypothetical negotiation where validity and infringement are assumed.
(e) Coreline Technologies, Inc. v. Prisma Semiconductor, Inc. Cross-License (2021). In 2021, Coreline Technologies, Inc. and Prisma Semiconductor, Inc. entered into a cross-license agreement involving photonic integrated circuit technology patents. After adjusting for the bilateral nature of the cross-license (i.e., allocating value to each party's contribution), the effective one-way royalty rate was approximately 10.2% of net sales. This transaction is relevant because it involves PIC technology that is closely related to the silicon-photonics technology at issue in this case. However, the cross-license context and the specific patents involved introduce some degree of non-comparability.
Taking all five comparable licenses together — the three OWS licenses and the two industry transactions — the royalty rates are as follows:
• OWS–Terralink Semiconductor (2020): 6.5%
• OWS–Helix Integrated Photonics (2022): 7.75% (plus $2.5M upfront)
• Stratos Photonics v. ArcLight Systems (2019): 8.0%
• OWS–NovaWave Corp. (2021): 9.0%
• Coreline Technologies v. Prisma Semiconductor (2021): 10.2% (effective one-way rate)
The arithmetic mean of these five rates is 8.29%. The median is 8.0%. The range is 6.5% to 10.2%.
The proposed royalty rate of 8.5% falls within this range and is slightly above the arithmetic mean. This positioning is justified by the specific circumstances of the OWS-Lumicore hypothetical negotiation, including: (i) OWS and Lumicore are direct competitors, increasing the strategic cost to OWS of granting a license; (ii) the license covers all four asserted patents, representing the broadest patent scope of any comparable transaction; (iii) the patented technology is core to the accused products, not peripheral; and (iv) no commercially viable non-infringing alternatives exist.
More broadly, a survey of licensing rates in the silicon-photonics and optical component industry — conducted by FairPoint Licensing Group and supplemented by my own independent research — reveals that running royalty rates in this industry generally range from 4.0% to 12.5%, depending on the scope and significance of the licensed technology, the competitive relationship between the parties, and the volume of licensed sales. The proposed 8.5% rate falls comfortably within this broader industry range and is consistent with rates observed for patents covering core (as opposed to peripheral) technology.
Conclusion: Factor 12 supports a royalty rate of 8.5%.
Factor 13: The Portion of the Realizable Profit That Should Be Credited to the Invention as Distinguished from Non-Patented Elements, the Manufacturing Process, Business Risks, or Significant Features or Improvements Added by the Infringer
Georgia-Pacific Factor 13 examines the apportionment of profit between the patented and non-patented elements of the accused product. This factor requires an assessment of the relative contribution of the patented invention to the overall profitability of the accused product.
As discussed under Factor 10, the patented features — the waveguide multiplexer, coherent transceiver integration, thermal management, and polarization-diverse grating coupler — are the primary drivers of the performance and commercial value of the accused transceiver modules. These features are what differentiate Lumicore's accused products from commodity optical components and what enable Lumicore to command premium pricing.
The non-patented elements of the accused transceiver modules include the housing and mechanical enclosure, optical connectors (LC, MPO, or CS connectors), printed circuit board and passive electronic components, firmware and embedded software, and product packaging and labeling. These components are commoditized and widely available from multiple sources — including Crowne Albany Industries, Dunmore & Co., Fenmore Corporation, and other contract manufacturers — and they do not differentiate the accused products in the market. Any transceiver manufacturer can source these commodity components; what sets the accused products apart is the patented silicon-photonics technology at the core of the module.
The key differentiating features of the accused transceiver modules — the features that customers select and pay a premium for — are all covered by the asserted patents:
• Low insertion loss waveguide multiplexing ('847 Patent)
• High-bandwidth coherent transceiver integration on silicon ('193 Patent)
• Effective thermal management without external coolers ('562 Patent)
• Polarization-diverse grating coupling ('015 Patent)
The apportionment analysis set forth in the Apportionment Analysis Memorandum (internal Doc. 128), which I have reviewed and relied upon, concludes that the patented features account for the predominant share of the realizable profit of the accused transceiver modules.
This conclusion is further supported by a comparison of Lumicore's gross margins on its accused products to industry-average margins for commodity optical components. Lumicore's accused-product gross margins range from 52.1% to 58.3%, as discussed under Factor 8. By contrast, industry-average gross margins for commodity optical components (connectors, housings, passive components) are approximately 25% to 30%, based on publicly available financial data from leading optical component manufacturers. The significant margin premium enjoyed by Lumicore's accused products — approximately 22 to 33 percentage points above commodity levels — is attributable to the patented innovations that differentiate these products in the market.
While Lumicore has made certain contributions to the accused products beyond the patented features — including firmware development, product-level testing and qualification, and customer support — these contributions are incremental and do not account for the fundamental performance advantages that drive customer demand and premium pricing. The patented inventions are the sine qua non of the accused products' commercial success.
Conclusion: Factor 13 supports a royalty rate at or above 8.5%.
Factor 14: The Opinion Testimony of Qualified Experts
Georgia-Pacific Factor 14 considers the opinion testimony of qualified experts. Expert testimony provides the factfinder with specialized knowledge necessary to evaluate the technical and economic significance of the patented technology and to determine the appropriate royalty rate.
In this case, the following expert opinions support the proposed 8.5% reasonable royalty rate:
Dr. Caroline Ashford (Professor of Electrical Engineering & Photonics, Northfield Institute of Technology, Evanston, Illinois) has been retained by OWS as a technical expert in this litigation. Dr. Ashford has opined that the four asserted patents cover fundamental innovations in silicon-photonics transceiver technology and that Lumicore's accused products practice the claimed inventions. Dr. Ashford has further opined that no commercially viable non-infringing design-around alternatives exist, and that the patented features are the primary technical drivers of the performance advantages of the accused products. Dr. Ashford's report was served on March 28, 2025 (Doc. 91).
Gregory Falk (former Vice President of Engineering at Solara Optics, Inc.; independent industry consultant based in San Jose, California) has been retained by OWS as an industry expert. Mr. Falk has over 30 years of experience in the optical communications industry and has opined on the commercial significance of the patented technologies, the competitive dynamics of the silicon-photonics transceiver market, and the absence of non-infringing alternatives. Mr. Falk's opinions corroborate the economic analysis underlying the proposed royalty rate and provide an industry perspective on the value of the patented technology to both OWS and Lumicore. Mr. Falk's report was served on March 28, 2025 (Doc. 92).
Dr. Lawrence Keating (the undersigned). My own analysis, grounded in economic methodology and the Georgia-Pacific framework, and supported by the technical opinions of Dr. Ashford and the industry opinions of Mr. Falk, independently supports a reasonable royalty rate of 8.5% of accused-product net sales. My opinions are based on a comprehensive review of the financial data, license agreements, deposition testimony, expert reports, market data, and other materials identified in Section VI below, and are rendered to a reasonable degree of economic certainty.
Conclusion: Factor 14 supports a royalty rate of 8.5%.
Factor 15: The Amount That a Licensor and a Licensee Would Have Agreed Upon (at the Time the Infringement Began) if Both Had Been Reasonably and Voluntarily Trying to Reach an Agreement; That Is, the Amount Which a Prudent Licensee — Who Desired, as a Business Proposition, to Obtain a License to Manufacture and Sell a Particular Article Embodying the Patented Invention — Would Have Been Willing to Pay as a Royalty and Yet Be Able to Make a Reasonable Profit and Which Amount Would Have Been Acceptable by a Prudent Patentee Who Was Willing to Grant a License
Georgia-Pacific Factor 15 is the ultimate inquiry — a synthesis of all preceding factors into a determination of the royalty rate upon which rational parties would have agreed in the hypothetical negotiation. See Lucent Techs., 580 F.3d at 1325.
1. Synthesis of Factors 1–14. The preceding analysis of Factors 1 through 14 yields the following key conclusions:
• Established royalty range (Factor 1): OWS's own prior licenses establish a royalty range of 6.5% to 9.0%, with the most comparable license (Helix) at an effective rate above 7.75%.
• Licensee's comparable rates (Factor 2): Lumicore's own inbound patent licenses range from 5.0% to 7.5%, but cover less significant technology, supporting a rate above this range.
• License scope (Factor 3): The hyp