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ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

This document is protected by the attorney-client privilege and the work product doctrine. It was prepared by counsel for Optiwave Semiconductor Corp. in anticipation of litigation and in connection with the provision of legal advice. No portion of this document may be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

MARKET ANALYSIS: ACCUSED PRODUCTS AND OWS COMPETITIVE IMPACT

Prepared by Calderwood & Harkness LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071

For Optiwave Semiconductor Corp.

In Connection with Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc. Case No. 2:24-cv-00319-JRG United States District Court for the Eastern District of Texas

Date: October 2024

Authors:

• Wendy Schultz, Lead Associate, Calderwood & Harkness LLP

• Omar Siddiqui, Associate, Calderwood & Harkness LLP

• With contributions from Gregory Falk, Industry Expert (Independent Consultant; formerly Vice President of Engineering, Solara Optics, Inc.)

Reviewed by:

• Alan Ngo, Responsible Partner, Calderwood & Harkness LLP

• Marcus Delgado, Billing Partner, Calderwood & Harkness LLP

Distribution:

• Rebecca Tanaka, General Counsel, Optiwave Semiconductor Corp.

• Franklin Osei, Board Chair, Optiwave Semiconductor Corp. / Ridgeline Capital Partners, LP

Purpose: To assess the competitive overlap between Optiwave Semiconductor Corp. ("OWS") and Lumicore Technologies, Inc. ("Lumicore") in the silicon-photonics transceiver module market; to quantify the percentage of Lumicore revenue at risk in the event of a permanent injunction; and to identify the hyperscale data-center customers purchasing from both OWS and Lumicore, in support of OWS's irreparable harm and injunction arguments.

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I. EXECUTIVE SUMMARY

This Market Analysis provides a comprehensive assessment of the competitive dynamics between OWS and Lumicore in the U.S. silicon-photonics transceiver module market, with particular focus on the three accused product lines at issue in this litigation. The analysis is designed to support OWS's arguments for a permanent injunction, to underpin the irreparable harm showing required under the Northgate Group v. MercExchange, L.L.C., 547 U.S. 388 (2006) framework, and to provide the factual foundation for the lost-profits damages theory advanced by OWS's damages expert, Dr. Lawrence Keating of Meridian Economic Consulting Group, LLC.

Core Finding. Lumicore's three accused product lines — the LumiLink 400G-ZR+, the LumiLink 800G-DR8, and the LumiEdge 1600G-LR — directly compete with, and materially overlap against, OWS's OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families across the same hyperscale data-center and telecommunications customer segments. The competitive overlap is not incidental or peripheral; rather, the accused products are Lumicore's core revenue-generating product lines, and they target the identical end-use applications, qualify at the same customer accounts, and compete on the same performance specifications as OWS's corresponding products.

Revenue at Risk. If a permanent injunction is granted enjoining Lumicore from making, using, selling, offering to sell, or importing the accused products within the United States, approximately 42% of Lumicore's total product revenue would be immediately at risk. This figure is based on FY 2023 accused-product revenue of $264.9 million out of Lumicore's total estimated FY 2023 revenue of $312.6 million. The 42% figure reflects a conservative estimate that accounts for Lumicore's non-accused product lines and services revenue; the accused-product share as a raw percentage of total revenue is substantially higher — approximately 84.7% — but some Lumicore revenue derives from non-module service contracts and legacy products not at issue in this litigation. The adjusted 42% figure applies forward-looking normalization assumptions, as detailed in Section V below, and is the figure used in OWS's injunction analysis memorandum (Document 108).

Customer Overlap. Seven major hyperscale data-center operators purchase transceiver modules from both OWS and Lumicore, creating direct head-to-head competition and measurable customer-diversion risk. These seven dual-source customers represent a significant share of the U.S. hyperscale transceiver market and are among the most strategically important accounts for both companies. OWS and Lumicore compete at twelve of the top twenty hyperscale data-center operators in the United States, but the seven dual-source customers are particularly significant because they have qualified and are actively procuring competing products from both companies at the same speed tiers.

Price Erosion. Average selling prices for 400G-ZR transceiver modules declined 18.7% from Q3 2022 — when Lumicore launched the LumiLink 400G-ZR+ — through Q4 2023. This decline is attributable in significant part to Lumicore's market entry with infringing products priced aggressively below OWS's established pricing, which forced OWS and other market participants to reduce prices to retain customer accounts. The price erosion has caused harm to OWS that extends beyond lost unit volumes and has permanently altered customer pricing expectations in the 400G segment.

Relevance to Case. This analysis directly supports the following elements of OWS's case:

(a) Permanent Injunction — Cascade Holdings Factors. The competitive overlap, customer diversion, and price erosion documented herein support OWS's showing of irreparable harm (Factor 1), the inadequacy of monetary remedies (Factor 2), and the balance of hardships favoring OWS (Factor 3).

(b) Lost-Profits Damages — Panduit Factor Analysis. The market-share displacement analysis, customer-overlap data, and absence of acceptable non-infringing substitutes support Dr. Keating's lost-profits theory under the framework of Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978).

(c) Willful Infringement. Lumicore's decision to launch the LumiEdge 1600G-LR in Q4 2023 — after receiving two licensing letters from FairPoint Licensing Group, LLC and after declining to negotiate a license — supports OWS's willful infringement theory and the request for enhanced damages under 35 U.S.C. § 284.

Lumicore Redesign Timeline. Lumicore has estimated that a redesign to work around the asserted patents would take 18 to 24 months. During this redesign period, Lumicore would be unable to serve customer demand for the accused products, resulting in a significant supply gap and potential permanent loss of customer design-in positions. OWS's analysis indicates that this supply gap would redirect customer demand to OWS and other non-infringing suppliers, partially mitigating but not eliminating the irreparable harm OWS has already suffered.

II. SCOPE AND METHODOLOGY

A. Scope of Analysis

This analysis covers the U.S. silicon-photonics transceiver module market for data-center interconnect ("DCI") applications, with particular focus on the 400G, 800G, and 1600G speed tiers — the three speed tiers at which the accused Lumicore products and the corresponding OWS competing products are offered and sold. The geographic scope is limited to the United States, consistent with the territorial reach of the asserted U.S. patents and the relief sought in this litigation.

The time period covered by this analysis extends from Q3 2022, when Lumicore launched the first accused product (the LumiLink 400G-ZR+), through Q4 2023, which represents the most recent full fiscal year for which financial data is available from both OWS and Lumicore. Where appropriate, the analysis includes forward projections through Q4 2025, reflecting the projected trial date of February 2, 2026 and the need to quantify the ongoing and escalating harm to OWS through the trial period.

The accused Lumicore products analyzed in this report are as follows:

(1) LumiLink 400G-ZR+ — launched Q3 2022; a 400G coherent transceiver module for metro and long-haul DCI applications; accused of infringing U.S. Patent No. 10,234,847 (the "'847 Patent"), U.S. Patent No. 10,891,193 (the "'193 Patent"), and U.S. Patent No. 9,678,562 (the "'562 Patent").

(2) LumiLink 800G-DR8 — launched Q1 2023; an 800G intensity-modulation/direct-detection (IM/DD) transceiver module for intra-data-center applications; accused of infringing all four asserted patents: the '847, '193, '562, and '015 Patents (U.S. Patent No. 11,402,015).

(3) LumiEdge 1600G-LR — launched Q4 2023; a 1600G coherent transceiver module for long-reach DCI applications; accused of infringing the '193 Patent and the '015 Patent.

The corresponding OWS competing products analyzed are:

(1) OWS-400ZR — OWS's flagship 400G coherent transceiver module; launched prior to Lumicore's market entry; practices the '847, '193, and '562 Patents.

(2) OWS-800XR — OWS's next-generation 800G transceiver module; practices all four asserted patents ('847, '193, '562, and '015).

(3) OWS-1600DR — OWS's most advanced transceiver module, targeting the emerging 1600G market segment; practices the '193 and '015 Patents.

B. Data Sources

The analysis presented herein draws upon the following data sources, each of which has been evaluated for reliability and relevance:

OWS Internal Financial Records. OWS's internal financial records, including product-level revenue data, gross margin information, pricing history, and customer-by-customer sales data, have been reviewed. These records were produced in discovery and form the basis for the calculation of OWS's gross margin on competing products (47.3%), which is a key input to the lost-profits calculation. All OWS financial data referenced herein is consistent with OWS's FY 2023 audited financial statements prepared by Gresham & Whitfield LLP (San Jose office), which report total OWS revenue of $487.3 million and net income of $61.4 million for FY 2023.

Lumicore discovery Productions. Lumicore's product-level financial data was produced in discovery pursuant to the Court's October 4, 2024 discovery Order (Dkt. 87). This data has been designated "Highly Confidential — Attorneys' Eyes Only" under the parties' three-tier Stipulated Protective Order (Dkt. 42). The Lumicore discovery productions include segment-level revenue data, average selling price information, customer-by-customer breakdowns, product cost data, and internal strategic planning documents. All references to Lumicore's non-public financial data in this report are subject to the confidentiality protections of the Protective Order, and this report is correspondingly designated as "Highly Confidential — Attorneys' Eyes Only."

Lumicore Public Filings. Lumicore's FY 2023 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 28, 2024, and publicly available via the SEC's EDGAR database and the Nasdaq exchange, provides total revenue of $312.6 million for FY 2023 along with segment-level disclosures for the accused product lines. Additional information was obtained from Lumicore's quarterly filings on Form 10-Q, its S-1 registration statement filed in connection with its March 2022 IPO, and its earnings call transcripts.

OWS FY 2023 Audited Financials. OWS's FY 2023 financial statements were audited by Gresham & Whitfield LLP (San Jose office) and reflect total revenue of $487.3 million and net income of $61.4 million. These audited financials have been produced to Lumicore in discovery and form the basis for the revenue and margin figures used throughout this analysis.

Gregory Falk Industry Expertise and Independent Market Research. Gregory Falk is an independent consultant with over 25 years of experience in the silicon-photonics industry. Mr. Falk previously served as Vice President of Engineering at Solara Optics, Inc., the predecessor company from which OWS acquired the '562 Patent (along with 11 other patents) via an Asset Purchase Agreement dated June 15, 2018, for a total consideration of $34.5 million. Mr. Falk has provided expert analysis of market dynamics, competitive positioning, and technology trends for this report, drawing upon his deep familiarity with the silicon-photonics transceiver market and his knowledge of the patented technologies at issue.

Third-Party Industry Reports and Public Announcements. The analysis incorporates data from third-party industry research firms, including publicly available market sizing data, growth forecasts, and technology roadmaps for the silicon-photonics transceiver market. Customer announcements regarding data-center deployments, vendor qualifications, and procurement activities have also been reviewed.

Deposition Testimony. Key deposition testimony has been reviewed and incorporated into the analysis, including:

(i) Dr. Sandra Michaud, Chief Technology Officer of Lumicore, deposed on November 19, 2024, who testified regarding the design and development of the accused products, Lumicore's awareness of OWS's patents, and the feasibility and timeline of a potential redesign.

(ii) Angela Reeves, Managing Director of FairPoint Licensing Group, LLC, deposed on December 10, 2024, who testified regarding the pre-suit licensing negotiations between OWS and Lumicore, including the two licensing letters sent to Lumicore (January 15, 2023 and May 15, 2023), the in-person licensing meeting in Austin, Texas on April 20, 2023, and Lumicore's declination letter of July 10, 2023.

Benchmark Semiconductor Analysis, LLC Teardown Reports. Benchmark Semiconductor Analysis, LLC, under the direction of Lead Engineer Kevin Ng, performed physical teardown and reverse-engineering analyses of all three accused Lumicore products. These teardown reports confirmed the presence of the accused structures — including the waveguide multiplexer architecture, micro-channel thermal management features, and polarization-diverse grating coupler designs — in each of the accused products. The teardown reports were delivered on December 12, 2022 (LumiLink 400G-ZR+), June 15, 2023 (LumiLink 800G-DR8), and February 9, 2024 (LumiEdge 1600G-LR).

C. Analytical Framework

The analysis employs the following analytical framework, which has been designed to support both the permanent injunction analysis and the lost-profits damages theory:

Competitive-Overlap Analysis. A product-by-product comparison of technical specifications, target applications, customer segments, and pricing has been performed for each of the three accused product tiers. This analysis establishes that the accused Lumicore products and the corresponding OWS products are direct competitors serving the same market segments, rather than products serving distinct or non-overlapping applications.

Revenue-at-Risk Calculation. The percentage of Lumicore's total revenue attributable to accused products has been calculated, with appropriate adjustments for non-module revenue streams, partial-year product launches, and forward-looking product mix changes. This calculation yields the 42% revenue-at-risk figure used in OWS's injunction analysis and the balance-of-hardships assessment.

Customer-Overlap Identification. OWS's customer list has been cross-referenced with Lumicore's customer list (obtained from Lumicore's discovery productions) to identify dual-source purchasers — i.e., hyperscale data-center operators that purchase transceiver modules from both OWS and Lumicore. This cross-referencing has identified seven major dual-source customers and a total of twelve overlapping customers among the top twenty hyperscale operators.

Price-Erosion Analysis. Average selling price ("ASP") trends have been tracked for 400G-ZR transceiver modules before and after Lumicore's Q3 2022 market entry, with causal analysis attributing the observed price decline to Lumicore's entry with aggressively priced infringing products. Similar analysis has been performed for the 800G tier where sufficient data is available.

Market-Share Displacement Assessment. The analysis provides the factual basis for the 38.2% market-share displacement figure used in Dr. Keating's damages model. This figure represents the estimated percentage of Lumicore's accused-product sales that, but for infringement, would have been captured by OWS. The displacement figure is derived from the customer-overlap data, OWS's qualification status at overlapping accounts, and an assessment of competitive dynamics in the relevant market.

III. SILICON-PHOTONICS TRANSCEIVER MARKET OVERVIEW

A. Market Definition and Size

The silicon-photonics transceiver module market encompasses pluggable and embedded optical transceiver modules that utilize silicon-photonics technology — the integration of optical components on a silicon substrate — for intra- and inter-data-center interconnect applications. These transceiver modules are used to transmit and receive high-speed data signals over optical fiber at distances ranging from approximately 500 meters (for intra-data-center "DR" applications) to 120 kilometers (for metro and long-haul "ZR" and "LR" applications). The market includes both coherent transceivers, which use advanced modulation formats (such as dual-polarization quadrature phase-shift keying, or DP-QPSK) to achieve high spectral efficiency over longer distances, and intensity-modulation/direct-detection (IM/DD) transceivers, which use simpler modulation schemes for shorter-reach applications.

The primary demand driver for silicon-photonics transceiver modules is the rapid expansion of hyperscale data centers operated by the major cloud service providers, content delivery networks, and enterprise IT companies. These hyperscale operators require enormous volumes of high-speed optical transceivers to interconnect servers, switches, and routers within their data centers and to link geographically distributed data-center campuses. The market is characterized by rapid technology transitions, with each new generation of transceivers offering higher aggregate data rates, lower power consumption per bit, and smaller form factors than the prior generation.

The U.S. addressable market for silicon-photonics transceiver modules is estimated at $4.2 billion in FY 2023, based on a synthesis of third-party industry reports and Mr. Falk's independent market research. The market is projected to grow at a compound annual growth rate ("CAGR") of approximately 22% through 2027, driven by continued data-center construction, the deployment of AI and machine-learning workloads that require massive inter-node bandwidth, and the ongoing migration from 100G and 200G interconnect speeds to 400G, 800G, and the emerging 1600G standard.

The key technology enablers that differentiate silicon-photonics transceiver modules — and that are at the heart of this litigation — include the following:

(i) Waveguide Multiplexing — the use of on-chip waveguide structures to multiplex multiple optical channels onto a single fiber, enabling higher aggregate data rates without proportional increases in fiber count. This technology is covered by the '847 Patent (U.S. Patent No. 10,234,847), which claims a specific waveguide multiplexer architecture for silicon-photonics transceivers.

(ii) Coherent Optical Transceiver Integration on Silicon — the monolithic integration of coherent optical transmitter and receiver components, including modulators, photodetectors, and digital signal processing interfaces, on a single silicon photonic integrated circuit. This technology is covered by the '193 Patent (U.S. Patent No. 10,891,193).

(iii) Thermal Management of Photonic Integrated Circuits via Micro-Channel Heat Sinks — the use of micro-channel heat sink structures integrated with or adjacent to the photonic integrated circuit to dissipate heat generated by the high-power optical and electronic components. Effective thermal management is critical at higher data rates and power densities. This technology is covered by the '562 Patent (U.S. Patent No. 9,678,562).

(iv) Polarization-Diverse Grating Couplers — the use of grating coupler structures that efficiently couple light from an optical fiber into the silicon waveguide regardless of the polarization state of the incoming light. Polarization diversity is essential for coherent transceiver architectures and for achieving consistent performance in deployed data-center environments. This technology is covered by the '015 Patent (U.S. Patent No. 11,402,015).

Each of these technology enablers addresses a distinct technical challenge in the design of high-performance silicon-photonics transceiver modules, and the combination of all four technologies in a single transceiver product represents the state of the art in the industry. As discussed in Section IV below, both OWS's competing products and Lumicore's accused products incorporate these specific technologies.

B. Market Participants

Optiwave Semiconductor Corp. ("OWS"). OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, by revenue. Founded in 2011, OWS has grown to approximately 1,250 employees and is headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS holds a substantial intellectual property portfolio consisting of 142 issued U.S. patents and 58 pending U.S. patent applications, covering a broad range of silicon-photonics technologies. OWS is majority-owned (55%) by Ridgeline Capital Partners, LP, a private equity firm that acquired its stake in OWS in 2019 for $780 million. The Ridgeline investment was predicated in significant part on the strength and enforceability of OWS's patent portfolio, including the four patents asserted in this litigation. OWS's FY 2023 revenue was $487.3 million, with net income of $61.4 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. OWS's product line includes transceiver modules at the 100G, 200G, 400G, 800G, and 1600G speed tiers, with the 400G, 800G, and 1600G products (OWS-400ZR, OWS-800XR, and OWS-1600DR) being the products at issue in this litigation.

Lumicore Technologies, Inc. ("Lumicore"). Lumicore is a fast-growing entrant in the silicon-photonics transceiver market. Founded in 2015, Lumicore has approximately 870 employees and is headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore completed an initial public offering on the Nasdaq exchange in March 2022 at $24 per share. As of the date OWS filed the Complaint in this action on April 22, 2024, Lumicore's stock was trading at approximately $37 per share, giving the company a market capitalization of approximately $3.4 billion based on 91.8 million shares outstanding. Lumicore's FY 2023 total revenue was $312.6 million, as reported in its Form 10-K filed with the SEC. Lumicore also maintains a sales office and technical support center at 2700 Earl Campbell Parkway, Suite 150, Tyler, Texas 75701, which is relevant to the venue analysis in this Eastern District of Texas proceeding.

Other Market Participants. The U.S. silicon-photonics transceiver market includes several other significant participants, including three to four companies that offer transceiver modules at the relevant speed tiers. However, none of these competitors offers products that incorporate the specific combination of patented features — waveguide multiplexing, micro-channel thermal management, coherent integration on silicon, and polarization-diverse grating coupling — that are used by both OWS and Lumicore. As detailed in the separate Panduit factor analysis (Document 125), four potential non-infringing alternatives have been evaluated, and each was found to lack one or more of the key patented features. Specifically:

(a) Alternative Supplier A offers 400G coherent transceivers but uses a different waveguide architecture that does not achieve the insertion-loss performance enabled by the '847 Patent's waveguide multiplexer, resulting in inferior signal quality and reduced link budget.

(b) Alternative Supplier B offers 800G transceiver modules but relies on a legacy thermal management approach (external heat sink with thermal interface material) rather than the micro-channel heat sink design of the '562 Patent, resulting in higher thermal resistance and reduced reliability at full operating power.

(c) Alternative Supplier C offers coherent transceivers at the 400G and 800G tiers but does not implement polarization-diverse grating couplers, instead using edge-coupling technology that requires more complex and costly fiber-attachment processes and does not achieve the same coupling efficiency.

(d) Alternative Supplier D is developing a 1600G product but has not yet achieved volume production or customer qualification, and its announced specifications do not include the coherent integration architecture claimed in the '193 Patent.

The absence of fully comparable non-infringing alternatives is a critical element of OWS's Panduit factor analysis and supports the conclusion that, but for Lumicore's infringement, a significant share of Lumicore's accused-product sales would have been captured by OWS.

C. Market Dynamics and Growth Drivers

The silicon-photonics transceiver market is experiencing explosive growth driven by several converging factors. The most significant of these is the rapid expansion of hyperscale data-center infrastructure, fueled by the continued growth of cloud computing, the proliferation of artificial intelligence and machine-learning workloads, and the increasing demand for content delivery and streaming services. Hyperscale data-center operators are deploying ever-larger data centers with hundreds of thousands of servers, each requiring high-speed optical interconnects to communicate with other servers, storage systems, and network infrastructure.

The migration from lower-speed interconnects (100G and 200G) to higher-speed interconnects (400G and 800G) is well underway, and the emerging 1600G standard represents the next frontier. Each speed tier increase drives incremental transceiver demand, as operators must upgrade their optical infrastructure to match the higher bandwidth capabilities of new server and switch platforms. At the same time, the transition to higher speeds places greater demands on transceiver technology, requiring more sophisticated waveguide architectures, more effective thermal management solutions, and more efficient optical coupling designs — precisely the technologies covered by OWS's asserted patents.

The market is also characterized by increasing supply-chain concentration. Hyperscale data-center operators maintain rigorous vendor qualification processes that can take 6 to 18 months to complete, and once a transceiver supplier is qualified for a particular deployment, switching to an alternative supplier involves significant engineering, testing, and validation effort. This creates a "sticky" customer relationship dynamic, in which design-in wins generate multi-year revenue streams and design-in losses represent long-term competitive setbacks. As discussed further in Section IX.B, this dynamic means that each quarter of continued infringement by Lumicore causes compounding harm to OWS that cannot be fully remedied through monetary damages.

Finally, the demand for low-insertion-loss waveguide multiplexing and advanced thermal management solutions is increasing as photonic integrated circuits become more densely integrated at higher speed tiers. The 800G and 1600G products require significantly more optical channels, higher modulation rates, and greater power dissipation than prior-generation products, making the patented technologies at issue in this case increasingly critical to competitive performance.

IV. PRODUCT-BY-PRODUCT COMPETITIVE OVERLAP ANALYSIS

This section presents a detailed product-by-product comparison of the three accused Lumicore product lines and their corresponding OWS competitors, demonstrating that the accused products and OWS's products directly compete across the same applications, customer segments, and performance specifications.

A. 400G Tier: OWS-400ZR vs. LumiLink 400G-ZR+

1. OWS-400ZR. The OWS-400ZR is OWS's flagship 400G coherent transceiver module, designed for metro and long-haul data-center interconnect applications at distances up to 120 kilometers over single-mode fiber. The OWS-400ZR was launched prior to Lumicore's entry into the 400G coherent transceiver market and has been qualified and deployed at multiple Tier 1 hyperscale data-center operators in the United States. The OWS-400ZR practices the '847 Patent (waveguide multiplexer architecture), the '193 Patent (coherent optical transceiver integration on silicon), and the '562 Patent (micro-channel heat sink thermal management), incorporating each of the claimed structures as detailed in OWS's claim charts (Documents 14–16).

The OWS-400ZR delivers 400 Gbps aggregate data rate using a DP-QPSK coherent modulation format, packaged in an industry-standard QSFP-DD form factor. The module achieves low optical insertion loss through its proprietary waveguide multiplexer design, which is the subject of the '847 Patent, and maintains reliable operation across the full industrial temperature range through the micro-channel heat sink structure claimed in the '562 Patent. The OWS-400ZR has been widely recognized in the industry for its combination of high performance, compact form factor, and thermal reliability.

2. LumiLink 400G-ZR+

The LumiLink 400G-ZR+ is the first of Lumicore's three accused products. It was launched in Q3 2022 and is accused of infringing the '847 Patent, the '193 Patent, and the '562 Patent. According to Lumicore's FY 2023 financial data produced in discovery, the LumiLink 400G-ZR+ generated revenue of $94.8 million in FY 2023.

The LumiLink 400G-ZR+ is a 400G coherent transceiver module targeting the same metro and long-haul DCI applications as the OWS-400ZR. It uses a DP-QPSK modulation format, is packaged in a QSFP-DD form factor, and claims optical reach of up to 120 kilometers over single-mode fiber — specifications that are materially identical to those of the OWS-400ZR. Benchmark Semiconductor Analysis, LLC performed a physical teardown of the LumiLink 400G-ZR+ under the direction of Lead Engineer Kevin Ng, with the teardown report delivered on December 12, 2022. The teardown confirmed the use of waveguide multiplexer structures that correspond to the accused structures described in OWS's claim charts for the '847 Patent, as well as the presence of micro-channel heat sink features corresponding to the accused structures under the '562 Patent and the coherent integration architecture accused under the '193 Patent.

3. Specification Comparison

The following table summarizes the key technical specifications of the OWS-400ZR and the LumiLink 400G-ZR+:

As the table illustrates, the two products are functionally equivalent across every major performance specification, differing only in that the OWS-400ZR practices the asserted patents with authorization while the LumiLink 400G-ZR+ uses those same patented technologies without a license.

4. Competitive Positioning and Customer Impact

Both the OWS-400ZR and the LumiLink 400G-ZR+ target the same hyperscale DCI application. Prior to Lumicore's Q3 2022 launch of the LumiLink 400G-ZR+, OWS was one of a limited number of qualified suppliers for 400G coherent transceivers at the Tier 1 hyperscale operators. Lumicore's entry with a product that offers comparable performance at lower prices — made possible in part by Lumicore's avoidance of the R&D and licensing costs associated with the patented technologies — introduced significant competitive pressure that directly eroded OWS's pricing power and customer relationships.

The customer overlap at the 400G tier is substantial. As detailed in Section VI, both products are qualified at multiple overlapping hyperscale data-center operators, and competitive bidding records obtained in discovery show that customers have used the LumiLink 400G-ZR+ as leverage to negotiate lower prices from OWS for the OWS-400ZR.

B. 800G Tier: OWS-800XR vs. LumiLink 800G-DR8

1. OWS-800XR. The OWS-800XR is OWS's next-generation 800G transceiver module, designed for intra-data-center applications at distances up to 2 kilometers over single-mode fiber. The OWS-800XR uses an 8×100G direct-detect architecture and is packaged in an OSFP form factor. The OWS-800XR practices all four of the asserted patents: the '847 Patent (waveguide multiplexer), the '193 Patent (silicon photonic integration), the '562 Patent (micro-channel thermal management), and the '015 Patent (polarization-diverse grating coupler). This product represents OWS's highest-growth product line and is the cornerstone of OWS's strategy for the rapidly expanding 800G market segment.

2. LumiLink 800G-DR8

The LumiLink 800G-DR8 is the second of Lumicore's accused products, launched in Q1 2023 — approximately six months after Lumicore received the first FairPoint licensing letter on January 15, 2023. It is accused of infringing all four asserted patents ('847, '193, '562, and '015). The LumiLink 800G-DR8 is Lumicore's highest-revenue accused product, generating FY 2023 revenue of $128.4 million.

The LumiLink 800G-DR8 uses an 8×100G DR architecture in an OSFP form factor, targeting the same intra-data-center applications as the OWS-800XR. The product is designed for distances up to 2 kilometers over single-mode fiber and incorporates silicon photonic integration, waveguide multiplexing, micro-channel thermal management, and polarization-diverse grating coupler technology.

Benchmark Semiconductor Analysis, LLC performed a follow-on teardown of the LumiLink 800G-DR8 in June 2023, confirming the presence of all four accused structures. Of particular significance, the teardown confirmed the presence of a polarization-diverse grating coupler structure that corresponds to the claims of the '015 Patent — a feature that is absent from the products of the other market participants identified in the Panduit factor analysis.

3. Specification Comparison

4. Strategic Significance

The 800G product tier represents the highest-growth segment in the silicon-photonics transceiver market and accounts for the largest share of both OWS's and Lumicore's forward-looking revenue. Industry analysts project that 800G transceiver shipments will grow at a CAGR of approximately 35% through 2027, driven by the deployment of new AI/ML training clusters that require massive bandwidth between GPU servers within a data center.

The competitive dynamics at the 800G tier are particularly intense because hyperscale operators are in the process of qualifying suppliers for new 800G deployments, meaning that design-in decisions being made now will determine revenue allocation for the next three to five years. Lumicore's ability to compete for these design-in wins with an infringing product is causing ongoing and compounding harm to OWS.

5. Deposition Testimony — Dr. Sandra Michaud

Dr. Sandra Michaud, Lumicore's Chief Technology Officer, was deposed on November 19, 2024. During her deposition, Dr. Michaud made several admissions relevant to the competitive overlap at the 800G tier:

(a) Dr. Michaud admitted that during the design phase of the LumiLink 800G-DR8, she personally reviewed OWS's published patent application No. 2018/0123456, which corresponds to the '193 Patent. She testified that the published application was "relevant to the design approach" being considered for the LumiLink 800G product.

(b) When asked to identify specific non-infringing design alternatives for the 800G product's coherent integration architecture, Dr. Michaud was unable to do so, testifying that the LumiLink team had "evaluated multiple approaches" but that the approach ultimately selected was "the most technically viable" for achieving the required performance specifications.

(c) Dr. Michaud estimated that a redesign of the LumiLink 800G-DR8 to work around the asserted patents would take "at least 18 months, and more likely closer to 24 months," due to the complexity of re-architecting the photonic integrated circuit and the need for extensive reliability qualification testing.

This testimony is significant for multiple reasons: it supports OWS's willful infringement theory (Lumicore's engineers reviewed OWS's patent applications during the design process), it undermines any argument that non-infringing alternatives were readily available, and it establishes the substantial redesign timeline that would result from an injunction.

C. 1600G Tier: OWS-1600DR vs. LumiEdge 1600G-LR

1. OWS-1600DR. The OWS-1600DR is OWS's most advanced transceiver module, targeting the emerging 1600G long-reach DCI market. The OWS-1600DR uses a coherent transceiver architecture with advanced modulation formats to achieve 1600 Gbps aggregate data rate over distances up to 80 kilometers. The product practices the '193 Patent (coherent integration on silicon) and the '015 Patent (polarization-diverse grating coupler). The OWS-1600DR represents OWS's technology leadership position and is a key competitive differentiator in the market.

2. LumiEdge 1600G-LR

The LumiEdge 1600G-LR is Lumicore's newest accused product, launched in Q4 2023. This launch date is critically significant to the willful infringement analysis: the LumiEdge 1600G-LR was launched after Lumicore had received both licensing letters from FairPoint Licensing Group, LLC (dated January 15, 2023 and May 15, 2023), after the in-person licensing meeting in Austin, Texas on April 20, 2023, and after Lumicore formally declined to negotiate a license in its July 10, 2023 response letter. In other words, Lumicore chose to introduce a new product incorporating the patented technologies with full knowledge and notice of OWS's patent rights, and after affirmatively declining the opportunity to obtain a license.

The LumiEdge 1600G-LR is accused of infringing the '193 Patent and the '015 Patent. It generated FY 2023 revenue of $41.7 million — a figure that reflects only one quarter of sales, as the product launched in Q4 2023. Annualized, the LumiEdge 1600G-LR is on a revenue run-rate well in excess of $100 million, making it a significant and growing contributor to Lumicore's overall revenue.

3. Specification Comparison

4. Benchmark Teardown Confirmation

Benchmark Semiconductor Analysis, LLC performed a teardown of the LumiEdge 1600G-LR in February 2024, with the report delivered on February 9, 2024. The teardown confirmed the presence of the accused coherent integration architecture corresponding to the '193 Patent and the polarization-diverse grating coupler structure corresponding to the '015 Patent. The teardown report has been provided to OWS's technical expert for incorporation into the infringement analysis (Document 97).

5. Strategic Importance

The 1600G segment represents an emerging market with high strategic importance for design-in wins at hyperscale operators. As operators begin planning their next-generation data-center deployments, the selection of 1600G transceiver suppliers will determine competitive positioning for several years. The fact that Lumicore is competing for these design-in wins with an infringing product — launched with full knowledge of OWS's patent rights — threatens to cause lasting harm to OWS's competitive position that will be extremely difficult to reverse, even with an eventual injunction.

D. Summary Comparison Table

The following table provides a side-by-side summary of all three accused product tiers:

The data in the summary table confirms that the competitive overlap between OWS and Lumicore extends across all three speed tiers and all three accused product lines. Lumicore's accused products are not peripheral or tangential to its business — they are its core products, generating the vast majority of its revenue, and they directly compete against OWS's corresponding products for the same customers and applications.

V. LUMICORE REVENUE AT RISK — QUANTIFICATION

A. Accused-Product Revenue as Share of Total Lumicore Revenue

Lumicore's total estimated FY 2023 revenue was $312.6 million, as reported in its Form 10-K filing on the Nasdaq exchange. This figure encompasses all of Lumicore's revenue streams, including revenue from the three accused product lines, revenue from non-accused legacy products (such as earlier-generation 100G and 200G transceiver modules), and revenue from non-module services (such as technical support contracts, engineering services, and design consulting).

The accused-product FY 2023 revenue breakdown, based on Lumicore's product-level financial data produced in discovery, is as follows:

The total accused-product revenue of $264.9 million represents approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million ($264.9M ÷ $312.6M = 84.7%). This raw percentage underscores the overwhelming dominance of the accused product lines within Lumicore's overall business. The remaining $47.7 million in FY 2023 revenue ($312.6M − $264.9M) is attributable to Lumicore's non-accused legacy products and non-module services.

B. Adjusted Revenue-at-Risk Calculation (42% Figure)

The 42% revenue-at-risk figure used in OWS's injunction analysis reflects the proportion of Lumicore's total product revenue that would be immediately at risk in the event of a permanent injunction, after applying the following adjustments and normalization factors:

Non-Module Revenue Adjustment. Lumicore's total revenue includes revenue from non-module products and services that are not covered by the accused product lines and would not be directly affected by an injunction limited to the accused transceiver modules. These non-module revenue streams include technical support contracts, engineering consulting services, and other ancillary revenue. Excluding these non-module revenue streams reduces the denominator against which the accused-product revenue is measured.

Partial-Year Adjustment. The LumiEdge 1600G-LR was launched in Q4 2023 and thus generated only one quarter of revenue in FY 2023. Its FY 2023 revenue of $41.7 million substantially understates the product's annualized revenue run-rate. However, for purposes of a conservative revenue-at-risk estimate, the analysis uses actual (not annualized) FY 2023 revenue figures.

Forward-Looking Normalization. The 42% figure incorporates forward-looking adjustments to account for Lumicore's projected product mix over the next several quarters. Lumicore has announced plans to introduce new non-accused product lines in the 200G and coherent 400G-OpenZR+ segments, which — if successfully launched — would dilute the accused products' share of total revenue. Additionally, Lumicore's non-module services revenue is projected to grow as a percentage of total revenue. These forward-looking normalization factors reduce the revenue-at-risk percentage from the raw 84.7% figure.

Conservative Assumption Regarding Customer Retention. The 42% figure also reflects a conservative assumption that Lumicore could retain some customer relationships by offering non-accused alternative products, even in the event of an injunction on the three accused product lines. However, as noted in Section III.B above, no fully comparable non-infringing alternatives currently exist at the relevant performance tiers, and Lumicore's non-accused products do not offer the same combination of patented features that customers require. The assumption of partial customer retention through non-accused products is therefore generous to Lumicore and may overstate Lumicore's ability to mitigate the revenue impact of an injunction.

Resulting Calculation. The 42% revenue-at-risk figure represents a conservatively adjusted proportion that accounts for all of the foregoing factors. It is used in OWS's injunction analysis as the baseline estimate of the percentage of Lumicore's business that would be directly affected by a permanent injunction. The raw accused-product percentage of 84.7% represents the upper bound and is more reflective of the current state of Lumicore's product portfolio as of FY 2023.

C. Projected Revenue Through Trial

Dr. Lawrence Keating of Meridian Economic Consulting Group, LLC (Chicago, Illinois) has prepared a preliminary damages analysis that includes projections of accused-product revenue through the anticipated trial date. Dr. Keating's analysis projects the following:

(i) Total accused-product revenue for the infringement period Q3 2022 – Q1 2024: approximately $378.2 million. This figure represents actual revenue data for FY 2023 ($264.9 million) plus estimated revenue for Q3 and Q4 2022 (the initial two quarters of the LumiLink 400G-ZR+ launch) and Q1 2024.

(ii) Projected total accused-product revenue for the period Q3 2022 – Q4 2025 (through the anticipated trial date of February 2, 2026): approximately $714.6 million. This projection incorporates the growth trajectory of the accused product lines, the annualization of LumiEdge 1600G-LR revenue, and market growth assumptions consistent with the 22% CAGR discussed in Section III.A.

The projected $714.6 million in total accused-product revenue through trial forms the revenue base for the lost-profits calculation described in Section VIII. The growth trajectory of the accused products — with revenues accelerating in each successive quarter — underscores the expanding scope of irreparable harm to OWS with each passing quarter. Every quarter that Lumicore continues to sell infringing products at scale, OWS loses additional customer accounts, design-in positions, and pricing leverage that cannot be retroactively restored.

D. Impact of Injunction on Lumicore's Business

An assessment of the impact of a permanent injunction on Lumicore's business is relevant to the balance-of-hardships analysis under Cascade Holdings Factor 3. The analysis reflects the following considerations:

Redesign Timeline. Lumicore has estimated, through the deposition testimony of Dr. Sandra Michaud and in response to interrogatories, that a product redesign to work around the asserted patents would require 18 to 24 months. This estimate encompasses the time required to re-architect the photonic integrated circuit, design new waveguide, thermal management, and grating coupler structures that do not infringe the asserted patents, fabricate and test prototype devices, conduct reliability qualification testing, and obtain customer re-qualification. During this redesign period, Lumicore would be unable to manufacture, sell, or offer to sell the accused products in their current form.

Supply Gap. During the 18- to 24-month redesign period, Lumicore would be unable to serve customer demand for the accused products. This supply gap would create significant disruption for Lumicore's customer relationships, particularly at the hyperscale operators that have qualified and are actively deploying the accused products. However, as discussed below, this disruption is self-inflicted and does not weigh against an injunction.

Market Opportunity for OWS and Others. OWS's analysis indicates that Lumicore's inability to supply 400G, 800G, and 1600G transceiver modules for 18 to 24 months would shift customer demand to OWS and other non-infringing suppliers. OWS has the manufacturing capacity, technical capability, and customer relationships to capture a significant share of the redirected demand, which would partially offset the ongoing harm OWS has suffered during the infringement period.

Financial Context. Lumicore's market capitalization as of the April 22, 2024 filing date was approximately $3.4 billion, based on 91.8 million shares outstanding at an approximate trading price of $37 per share. An injunction affecting 42% of product revenue — or potentially as much as 84.7% of FY 2023 revenue — could materially impact Lumicore's financial performance, stock price, and shareholder value. While this impact is significant, it is important to note that Lumicore entered the market and built its business on the foundation of technologies that it had no license to use, and it continued to introduce new infringing products even after receiving explicit notice of OWS's patent rights. The hardship Lumicore would face from an injunction is therefore entirely self-inflicted and does not support a finding that the balance of hardships favors denying injunctive relief. See Camberwell & Co. v. Northgate & Co. Elecs. Co., 809 F.3d 633, 647 (Fed. Cir. 2015) (hardship resulting from intentional infringement is self-imposed and does not weigh against injunction).

VI. CUSTOMER OVERLAP ANALYSIS

A. Identification of Dual-Source Customers

A central element of OWS's irreparable harm showing is the identification of customers that purchase transceiver modules from both OWS and Lumicore, creating direct head-to-head competition and measurable customer-diversion risk. To identify these dual-source customers, OWS's customer database was cross-referenced with Lumicore's customer data produced in discovery.

Lumicore's customer-level data was produced pursuant to the Court's discovery Order and is designated "Highly Confidential — Attorneys' Eyes Only" under the parties' three-tier Stipulated Protective Order (Dkt. 42). The Protective Order establishes three tiers of confidentiality: (1) "Confidential," (2) "Highly Confidential — Attorneys' Eyes Only" ("AEO"), and (3) "Highly Confidential — Source Code." Lumicore's customer-by-customer revenue and procurement data falls within the AEO tier, and all references to specific Lumicore customer data in this report are subject to the corresponding restrictions. Consistent with the Protective Order, customer identities in this report are presented using anonymized designations.

Cross-Referencing Results. The cross-referencing analysis revealed that OWS and Lumicore compete head-to-head at 12 of the top 20 hyperscale data-center operators in the United States. This represents a substantial degree of competitive overlap and confirms that OWS and Lumicore are direct competitors for the highest-value customer accounts in the market.

Of these 12 overlapping customers, 7 major hyperscale customers purchase transceiver modules from both OWS and Lumicore at one or more speed tiers. These seven dual-source customers are of particular significance because they have qualified products from both companies and are actively allocating procurement spend between OWS and Lumicore, creating the most direct form of competitive overlap and the greatest risk of customer diversion.

The following table summarizes the seven dual-source customers:

As the table illustrates, all seven dual-source customers have qualified products from both OWS and Lumicore at the same speed tier, meaning that the two companies' products are directly interchangeable from the customer's perspective. This creates the conditions for active price competition, procurement-share shifting, and customer diversion — all of which OWS has experienced since Lumicore's market entry with the accused products.

The remaining five overlapping customers (of the 12 total) have qualified products from both companies but are not currently purchasing from both at the same speed tier — for example, a customer may be purchasing OWS's 800G product and Lumicore's 400G product but has not yet dual-qualified at the same tier. These customers represent potential future diversion risk as they evaluate suppliers for upcoming speed-tier upgrades.

B. Venue-Related Customers

Three customers located in the Eastern District of Texas have been identified as purchasers of Lumicore's accused products, establishing a basis for venue in this judicial district:

(1) Pinnacle Data Systems, LLC, located at 1800 Judson Road, Longview, Texas 75601. Pinnacle operates a regional data-center facility and has purchased LumiLink 400G-ZR+ modules from Lumicore for deployment in its Longview facility.

(2) Frontier Cloud Services, Inc., located at 400 East Houston Street, marshall, Texas 75670. Frontier operates a cloud services platform from its marshall data center and has purchased both LumiLink 400G-ZR+ and LumiLink 800G-DR8 modules from Lumicore.

(3) CrossPoint Networking Corp., located at 7500 Dallas Parkway, Suite 200, Plano, Texas 75024 (case management transferred to Tyler Division). CrossPoint is a network infrastructure company that has purchased LumiLink 800G-DR8 modules from Lumicore for deployment in customer data centers.

In addition to these customer locations, Lumicore maintains a sales office and technical support center at 2700 Earl Campbell Parkway, Suite 150, Tyler, Texas 75701. This facility serves as a regional base for Lumicore's sales and customer-support activities in the Eastern District of Texas and surrounding areas.

C. Customer Diversion Evidence

The customer-overlap data presented above is corroborated by specific evidence of customer diversion — instances in which OWS has lost sales, design-in opportunities, or procurement share to Lumicore's accused products at overlapping customer accounts. This evidence includes the following categories:

OWS Sales Personnel Testimony. OWS's internal sales records and communications, reviewed in connection with this analysis, document multiple instances of OWS losing competitive bids, design-in opportunities, or existing purchase-order volumes to Lumicore's accused products. Karen Whitfield, OWS's Vice President of Sales, and three regional sales directors have provided information regarding specific customer accounts where OWS was the incumbent or leading supplier prior to Lumicore's entry and where Lumicore subsequently won a portion or all of the customer's transceiver procurement. Declarations from Ms. Whitfield and the regional sales directors are being prepared for trial per the Document 113 template.

Competitive Bidding Records. Competitive bidding records obtained from Lumicore's discovery productions and from customer procurement documents show that Lumicore systematically undercut OWS's pricing with the accused products. In multiple instances, Lumicore priced the LumiLink 400G-ZR+ at 10 to 15% below OWS's pre-entry OWS-400ZR pricing, and customers explicitly cited Lumicore's lower pricing as the basis for shifting procurement volume away from OWS.

Design-In Losses. In the silicon-photonics transceiver market, "design-in" wins — where a customer qualifies and commits to a supplier's product for a specific data-center deployment — are the primary competitive battleground, because a design-in win typically locks in a multi-year revenue stream for the winning supplier. OWS has documented specific design-in losses to Lumicore's accused products at several of the seven dual-source customers during the infringement period (Q3 2022 to the present). These design-in losses represent long-term competitive harm because, once a design-in is lost, the switching costs and re-qualification requirements make it extremely difficult and costly for OWS to recapture the account for the duration of the deployment cycle, which typically spans three to five years.

VII. PRICE EROSION ANALYSIS

A. Pre-Entry Pricing Baseline

Prior to Lumicore's launch of the LumiLink 400G-ZR+ in Q3 2022, OWS enjoyed strong pricing power in the 400G coherent transceiver segment. OWS's average selling price for OWS-400ZR modules during the period from Q1 2022 through Q2 2022 — the two quarters immediately preceding Lumicore's entry — represented the pre-entry baseline against which post-entry price erosion is measured.

During this baseline period, OWS was one of a limited number of qualified suppliers of 400G coherent transceivers for hyperscale DCI applications. The supply-constrained nature of the market allowed OWS to maintain stable pricing and healthy gross margins. OWS's gross margin on the OWS-400ZR during the baseline period was consistent with its overall product gross margin of 47.3%, reflecting the premium pricing that customers were willing to pay for the performance advantages enabled by the patented technologies.

The pricing dynamics in the 400G segment during the baseline period were characterized by relatively stable ASPs, with modest quarter-over-quarter fluctuations driven primarily by volume-based tiered pricing arrangements with individual customers. There was no significant downward pressure on pricing during this period, as the limited number of qualified suppliers and the strong demand from hyperscale operators supported pricing stability.

B. Post-Entry Price Decline

The market dynamics changed markedly following Lumicore's launch of the LumiLink 400G-ZR+ in Q3 2022. From Q3 2022 through Q4 2023, the average selling price of 400G-ZR transceiver modules in the market declined by 18.7%. This decline was significantly more rapid and more pronounced than the normal technology-driven ASP erosion that characterizes the semiconductor industry, and it occurred during a period of strong and growing demand for 400G transceivers — a market condition that would ordinarily support stable or even increasing prices.

Causal Analysis. The 18.7% price decline is attributable in significant part to Lumicore's entry into the market with the lower-priced LumiLink 400G-ZR+, which uses patented OWS technology without a license and therefore does not bear the R&D investment costs and licensing expenses associated with the development and authorized use of those technologies. Lumicore's pricing strategy for the LumiLink 400G-ZR+ was to enter the market at a significant discount to the incumbent pricing established by OWS and other authorized suppliers, creating immediate downward pressure on market ASPs.

Customer-Level Pricing Data. Customer-by-customer pricing data obtained from Lumicore's discovery productions (designated AEO) demonstrates the mechanism by which Lumicore's entry drove price erosion. At multiple overlapping customer accounts, customers that had been purchasing OWS-400ZR modules at established pricing levels used Lumicore's lower-priced competing product as leverage to negotiate reduced prices from OWS. Internal OWS sales communications document instances in which OWS sales personnel were informed by customer procurement organizations that Lumicore was offering the LumiLink 400G-ZR+ at 10 to 15% below OWS's then-current pricing, and that OWS would need to match or approach Lumicore's pricing to retain the account.

Competitive Bid Data. Competitive bid records from discovery productions further corroborate the pricing dynamic. In formal procurement processes conducted by several of the seven dual-source customers identified in Section VI, Lumicore consistently submitted bids for the LumiLink 400G-ZR+ at prices 10 to 15% below OWS's pre-entry OWS-400ZR pricing. In several instances, OWS was forced to reduce its bid prices to remain competitive, and in other instances, OWS lost the bid entirely to Lumicore's lower-priced accused product.

Detailed ASP Trend Data. The quarter-by-quarter ASP trend data for 400G-ZR transceiver modules, from Q1 2022 through Q4 2023, is presented in Appendix D in chart form. The chart clearly shows the inflection point at Q3 2022, coinciding with Lumicore's market entry, after which ASPs declined steeply and continuously for five consecutive quarters. The 18.7% total decline from Q3 2022 to Q4 2023 represents an annualized decline rate of approximately 14%, which is well in excess of the historical norm for this product category and is inconsistent with normal technology-maturation price curves.

C. Implications for Damages

The price erosion documented above has several important implications for both the damages analysis and the irreparable harm assessment:

Incremental Damages Beyond Lost Volumes. Price erosion supports incremental damages beyond the lost-unit-volume analysis. Even on sales that OWS retained during the infringement period, OWS earned reduced

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL
This document is protected by the attorney-client privilege and the work product doctrine. It was prepared by counsel for Optiwave Semiconductor Corp. in anticipation of litigation and in connection with the provision of legal advice. No portion of this document may be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
MARKET ANALYSIS: ACCUSED PRODUCTS AND OWS COMPETITIVE IMPACT
Prepared by Calderwood & Harkness LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071
For Optiwave Semiconductor Corp.
In Connection with Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc. Case No. 2:24-cv-00319-JRG United States District Court for the Eastern District of Texas
Date: October 2024
Authors:
•  Wendy Schultz, Lead Associate, Calderwood & Harkness LLP
•  Omar Siddiqui, Associate, Calderwood & Harkness LLP
•  With contributions from Gregory Falk, Industry Expert (Independent Consultant; formerly Vice President of Engineering, Solara Optics, Inc.)
Reviewed by:
•  Alan Ngo, Responsible Partner, Calderwood & Harkness LLP
•  Marcus Delgado, Billing Partner, Calderwood & Harkness LLP
Distribution:
•  Rebecca Tanaka, General Counsel, Optiwave Semiconductor Corp.
•  Franklin Osei, Board Chair, Optiwave Semiconductor Corp. / Ridgeline Capital Partners, LP
Purpose: To assess the competitive overlap between Optiwave Semiconductor Corp. ("OWS") and Lumicore Technologies, Inc. ("Lumicore") in the silicon-photonics transceiver module market; to quantify the percentage of Lumicore revenue at risk in the event of a permanent injunction; and to identify the hyperscale data-center customers purchasing from both OWS and Lumicore, in support of OWS's irreparable harm and injunction arguments.
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I. EXECUTIVE SUMMARY
This Market Analysis provides a comprehensive assessment of the competitive dynamics between OWS and Lumicore in the U.S. silicon-photonics transceiver module market, with particular focus on the three accused product lines at issue in this litigation. The analysis is designed to support OWS's arguments for a permanent injunction, to underpin the irreparable harm showing required under the Northgate Group v. MercExchange, L.L.C., 547 U.S. 388 (2006) framework, and to provide the factual foundation for the lost-profits damages theory advanced by OWS's damages expert, Dr. Lawrence Keating of Meridian Economic Consulting Group, LLC.
Core Finding. Lumicore's three accused product lines — the LumiLink 400G-ZR+, the LumiLink 800G-DR8, and the LumiEdge 1600G-LR — directly compete with, and materially overlap against, OWS's OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families across the same hyperscale data-center and telecommunications customer segments. The competitive overlap is not incidental or peripheral; rather, the accused products are Lumicore's core revenue-generating product lines, and they target the identical end-use applications, qualify at the same customer accounts, and compete on the same performance specifications as OWS's corresponding products.
Revenue at Risk. If a permanent injunction is granted enjoining Lumicore from making, using, selling, offering to sell, or importing the accused products within the United States, approximately 42% of Lumicore's total product revenue would be immediately at risk. This figure is based on FY 2023 accused-product revenue of $264.9 million out of Lumicore's total estimated FY 2023 revenue of $312.6 million. The 42% figure reflects a conservative estimate that accounts for Lumicore's non-accused product lines and services revenue; the accused-product share as a raw percentage of total revenue is substantially higher — approximately 84.7% — but some Lumicore revenue derives from non-module service contracts and legacy products not at issue in this litigation. The adjusted 42% figure applies forward-looking normalization assumptions, as detailed in Section V below, and is the figure used in OWS's injunction analysis memorandum (Document 108).
Customer Overlap. Seven major hyperscale data-center operators purchase transceiver modules from both OWS and Lumicore, creating direct head-to-head competition and measurable customer-diversion risk. These seven dual-source customers represent a significant share of the U.S. hyperscale transceiver market and are among the most strategically important accounts for both companies. OWS and Lumicore compete at twelve of the top twenty hyperscale data-center operators in the United States, but the seven dual-source customers are particularly significant because they have qualified and are actively procuring competing products from both companies at the same speed tiers.
Price Erosion. Average selling prices for 400G-ZR transceiver modules declined 18.7% from Q3 2022 — when Lumicore launched the LumiLink 400G-ZR+ — through Q4 2023. This decline is attributable in significant part to Lumicore's market entry with infringing products priced aggressively below OWS's established pricing, which forced OWS and other market participants to reduce prices to retain customer accounts. The price erosion has caused harm to OWS that extends beyond lost unit volumes and has permanently altered customer pricing expectations in the 400G segment.
Relevance to Case. This analysis directly supports the following elements of OWS's case:
(a) Permanent Injunction — Cascade Holdings Factors. The competitive overlap, customer diversion, and price erosion documented herein support OWS's showing of irreparable harm (Factor 1), the inadequacy of monetary remedies (Factor 2), and the balance of hardships favoring OWS (Factor 3).
(b) Lost-Profits Damages — Panduit Factor Analysis. The market-share displacement analysis, customer-overlap data, and absence of acceptable non-infringing substitutes support Dr. Keating's lost-profits theory under the framework of Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978).
(c) Willful Infringement. Lumicore's decision to launch the LumiEdge 1600G-LR in Q4 2023 — after receiving two licensing letters from FairPoint Licensing Group, LLC and after declining to negotiate a license — supports OWS's willful infringement theory and the request for enhanced damages under 35 U.S.C. § 284.
Lumicore Redesign Timeline. Lumicore has estimated that a redesign to work around the asserted patents would take 18 to 24 months. During this redesign period, Lumicore would be unable to serve customer demand for the accused products, resulting in a significant supply gap and potential permanent loss of customer design-in positions. OWS's analysis indicates that this supply gap would redirect customer demand to OWS and other non-infringing suppliers, partially mitigating but not eliminating the irreparable harm OWS has already suffered.
II. SCOPE AND METHODOLOGY
A. Scope of Analysis
This analysis covers the U.S. silicon-photonics transceiver module market for data-center interconnect ("DCI") applications, with particular focus on the 400G, 800G, and 1600G speed tiers — the three speed tiers at which the accused Lumicore products and the corresponding OWS competing products are offered and sold. The geographic scope is limited to the United States, consistent with the territorial reach of the asserted U.S. patents and the relief sought in this litigation.
The time period covered by this analysis extends from Q3 2022, when Lumicore launched the first accused product (the LumiLink 400G-ZR+), through Q4 2023, which represents the most recent full fiscal year for which financial data is available from both OWS and Lumicore. Where appropriate, the analysis includes forward projections through Q4 2025, reflecting the projected trial date of February 2, 2026 and the need to quantify the ongoing and escalating harm to OWS through the trial period.
The accused Lumicore products analyzed in this report are as follows:
(1) LumiLink 400G-ZR+ — launched Q3 2022; a 400G coherent transceiver module for metro and long-haul DCI applications; accused of infringing U.S. Patent No. 10,234,847 (the "'847 Patent"), U.S. Patent No. 10,891,193 (the "'193 Patent"), and U.S. Patent No. 9,678,562 (the "'562 Patent").
(2) LumiLink 800G-DR8 — launched Q1 2023; an 800G intensity-modulation/direct-detection (IM/DD) transceiver module for intra-data-center applications; accused of infringing all four asserted patents: the '847, '193, '562, and '015 Patents (U.S. Patent No. 11,402,015).
(3) LumiEdge 1600G-LR — launched Q4 2023; a 1600G coherent transceiver module for long-reach DCI applications; accused of infringing the '193 Patent and the '015 Patent.
The corresponding OWS competing products analyzed are:
(1) OWS-400ZR — OWS's flagship 400G coherent transceiver module; launched prior to Lumicore's market entry; practices the '847, '193, and '562 Patents.
(2) OWS-800XR — OWS's next-generation 800G transceiver module; practices all four asserted patents ('847, '193, '562, and '015).
(3) OWS-1600DR — OWS's most advanced transceiver module, targeting the emerging 1600G market segment; practices the '193 and '015 Patents.
B. Data Sources
The analysis presented herein draws upon the following data sources, each of which has been evaluated for reliability and relevance:
OWS Internal Financial Records. OWS's internal financial records, including product-level revenue data, gross margin information, pricing history, and customer-by-customer sales data, have been reviewed. These records were produced in discovery and form the basis for the calculation of OWS's gross margin on competing products (47.3%), which is a key input to the lost-profits calculation. All OWS financial data referenced herein is consistent with OWS's FY 2023 audited financial statements prepared by Gresham & Whitfield LLP (San Jose office), which report total OWS revenue of $487.3 million and net income of $61.4 million for FY 2023.
Lumicore discovery Productions. Lumicore's product-level financial data was produced in discovery pursuant to the Court's October 4, 2024 discovery Order (Dkt. 87). This data has been designated "Highly Confidential — Attorneys' Eyes Only" under the parties' three-tier Stipulated Protective Order (Dkt. 42). The Lumicore discovery productions include segment-level revenue data, average selling price information, customer-by-customer breakdowns, product cost data, and internal strategic planning documents. All references to Lumicore's non-public financial data in this report are subject to the confidentiality protections of the Protective Order, and this report is correspondingly designated as "Highly Confidential — Attorneys' Eyes Only."
Lumicore Public Filings. Lumicore's FY 2023 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on February 28, 2024, and publicly available via the SEC's EDGAR database and the Nasdaq exchange, provides total revenue of $312.6 million for FY 2023 along with segment-level disclosures for the accused product lines. Additional information was obtained from Lumicore's quarterly filings on Form 10-Q, its S-1 registration statement filed in connection with its March 2022 IPO, and its earnings call transcripts.
OWS FY 2023 Audited Financials. OWS's FY 2023 financial statements were audited by Gresham & Whitfield LLP (San Jose office) and reflect total revenue of $487.3 million and net income of $61.4 million. These audited financials have been produced to Lumicore in discovery and form the basis for the revenue and margin figures used throughout this analysis.
Gregory Falk Industry Expertise and Independent Market Research. Gregory Falk is an independent consultant with over 25 years of experience in the silicon-photonics industry. Mr. Falk previously served as Vice President of Engineering at Solara Optics, Inc., the predecessor company from which OWS acquired the '562 Patent (along with 11 other patents) via an Asset Purchase Agreement dated June 15, 2018, for a total consideration of $34.5 million. Mr. Falk has provided expert analysis of market dynamics, competitive positioning, and technology trends for this report, drawing upon his deep familiarity with the silicon-photonics transceiver market and his knowledge of the patented technologies at issue.
Third-Party Industry Reports and Public Announcements. The analysis incorporates data from third-party industry research firms, including publicly available market sizing data, growth forecasts, and technology roadmaps for the silicon-photonics transceiver market. Customer announcements regarding data-center deployments, vendor qualifications, and procurement activities have also been reviewed.
Deposition Testimony. Key deposition testimony has been reviewed and incorporated into the analysis, including:
(i) Dr. Sandra Michaud, Chief Technology Officer of Lumicore, deposed on November 19, 2024, who testified regarding the design and development of the accused products, Lumicore's awareness of OWS's patents, and the feasibility and timeline of a potential redesign.
(ii) Angela Reeves, Managing Director of FairPoint Licensing Group, LLC, deposed on December 10, 2024, who testified regarding the pre-suit licensing negotiations between OWS and Lumicore, including the two licensing letters sent to Lumicore (January 15, 2023 and May 15, 2023), the in-person licensing meeting in Austin, Texas on April 20, 2023, and Lumicore's declination letter of July 10, 2023.
Benchmark Semiconductor Analysis, LLC Teardown Reports. Benchmark Semiconductor Analysis, LLC, under the direction of Lead Engineer Kevin Ng, performed physical teardown and reverse-engineering analyses of all three accused Lumicore products. These teardown reports confirmed the presence of the accused structures — including the waveguide multiplexer architecture, micro-channel thermal management features, and polarization-diverse grating coupler designs — in each of the accused products. The teardown reports were delivered on December 12, 2022 (LumiLink 400G-ZR+), June 15, 2023 (LumiLink 800G-DR8), and February 9, 2024 (LumiEdge 1600G-LR).
C. Analytical Framework
The analysis employs the following analytical framework, which has been designed to support both the permanent injunction analysis and the lost-profits damages theory:
Competitive-Overlap Analysis. A product-by-product comparison of technical specifications, target applications, customer segments, and pricing has been performed for each of the three accused product tiers. This analysis establishes that the accused Lumicore products and the corresponding OWS products are direct competitors serving the same market segments, rather than products serving distinct or non-overlapping applications.
Revenue-at-Risk Calculation. The percentage of Lumicore's total revenue attributable to accused products has been calculated, with appropriate adjustments for non-module revenue streams, partial-year product launches, and forward-looking product mix changes. This calculation yields the 42% revenue-at-risk figure used in OWS's injunction analysis and the balance-of-hardships assessment.
Customer-Overlap Identification. OWS's customer list has been cross-referenced with Lumicore's customer list (obtained from Lumicore's discovery productions) to identify dual-source purchasers — i.e., hyperscale data-center operators that purchase transceiver modules from both OWS and Lumicore. This cross-referencing has identified seven major dual-source customers and a total of twelve overlapping customers among the top twenty hyperscale operators.
Price-Erosion Analysis. Average selling price ("ASP") trends have been tracked for 400G-ZR transceiver modules before and after Lumicore's Q3 2022 market entry, with causal analysis attributing the observed price decline to Lumicore's entry with aggressively priced infringing products. Similar analysis has been performed for the 800G tier where sufficient data is available.
Market-Share Displacement Assessment. The analysis provides the factual basis for the 38.2% market-share displacement figure used in Dr. Keating's damages model. This figure represents the estimated percentage of Lumicore's accused-product sales that, but for infringement, would have been captured by OWS. The displacement figure is derived from the customer-overlap data, OWS's qualification status at overlapping accounts, and an assessment of competitive dynamics in the relevant market.
III. SILICON-PHOTONICS TRANSCEIVER MARKET OVERVIEW
A. Market Definition and Size
The silicon-photonics transceiver module market encompasses pluggable and embedded optical transceiver modules that utilize silicon-photonics technology — the integration of optical components on a silicon substrate — for intra- and inter-data-center interconnect applications. These transceiver modules are used to transmit and receive high-speed data signals over optical fiber at distances ranging from approximately 500 meters (for intra-data-center "DR" applications) to 120 kilometers (for metro and long-haul "ZR" and "LR" applications). The market includes both coherent transceivers, which use advanced modulation formats (such as dual-polarization quadrature phase-shift keying, or DP-QPSK) to achieve high spectral efficiency over longer distances, and intensity-modulation/direct-detection (IM/DD) transceivers, which use simpler modulation schemes for shorter-reach applications.
The primary demand driver for silicon-photonics transceiver modules is the rapid expansion of hyperscale data centers operated by the major cloud service providers, content delivery networks, and enterprise IT companies. These hyperscale operators require enormous volumes of high-speed optical transceivers to interconnect servers, switches, and routers within their data centers and to link geographically distributed data-center campuses. The market is characterized by rapid technology transitions, with each new generation of transceivers offering higher aggregate data rates, lower power consumption per bit, and smaller form factors than the prior generation.
The U.S. addressable market for silicon-photonics transceiver modules is estimated at $4.2 billion in FY 2023, based on a synthesis of third-party industry reports and Mr. Falk's independent market research. The market is projected to grow at a compound annual growth rate ("CAGR") of approximately 22% through 2027, driven by continued data-center construction, the deployment of AI and machine-learning workloads that require massive inter-node bandwidth, and the ongoing migration from 100G and 200G interconnect speeds to 400G, 800G, and the emerging 1600G standard.
The key technology enablers that differentiate silicon-photonics transceiver modules — and that are at the heart of this litigation — include the following:
(i) Waveguide Multiplexing — the use of on-chip waveguide structures to multiplex multiple optical channels onto a single fiber, enabling higher aggregate data rates without proportional increases in fiber count. This technology is covered by the '847 Patent (U.S. Patent No. 10,234,847), which claims a specific waveguide multiplexer architecture for silicon-photonics transceivers.
(ii) Coherent Optical Transceiver Integration on Silicon — the monolithic integration of coherent optical transmitter and receiver components, including modulators, photodetectors, and digital signal processing interfaces, on a single silicon photonic integrated circuit. This technology is covered by the '193 Patent (U.S. Patent No. 10,891,193).
(iii) Thermal Management of Photonic Integrated Circuits via Micro-Channel Heat Sinks — the use of micro-channel heat sink structures integrated with or adjacent to the photonic integrated circuit to dissipate heat generated by the high-power optical and electronic components. Effective thermal management is critical at higher data rates and power densities. This technology is covered by the '562 Patent (U.S. Patent No. 9,678,562).
(iv) Polarization-Diverse Grating Couplers — the use of grating coupler structures that efficiently couple light from an optical fiber into the silicon waveguide regardless of the polarization state of the incoming light. Polarization diversity is essential for coherent transceiver architectures and for achieving consistent performance in deployed data-center environments. This technology is covered by the '015 Patent (U.S. Patent No. 11,402,015).
Each of these technology enablers addresses a distinct technical challenge in the design of high-performance silicon-photonics transceiver modules, and the combination of all four technologies in a single transceiver product represents the state of the art in the industry. As discussed in Section IV below, both OWS's competing products and Lumicore's accused products incorporate these specific technologies.
B. Market Participants
Optiwave Semiconductor Corp. ("OWS"). OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, by revenue. Founded in 2011, OWS has grown to approximately 1,250 employees and is headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. OWS holds a substantial intellectual property portfolio consisting of 142 issued U.S. patents and 58 pending U.S. patent applications, covering a broad range of silicon-photonics technologies. OWS is majority-owned (55%) by Ridgeline Capital Partners, LP, a private equity firm that acquired its stake in OWS in 2019 for $780 million. The Ridgeline investment was predicated in significant part on the strength and enforceability of OWS's patent portfolio, including the four patents asserted in this litigation. OWS's FY 2023 revenue was $487.3 million, with net income of $61.4 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. OWS's product line includes transceiver modules at the 100G, 200G, 400G, 800G, and 1600G speed tiers, with the 400G, 800G, and 1600G products (OWS-400ZR, OWS-800XR, and OWS-1600DR) being the products at issue in this litigation.
Lumicore Technologies, Inc. ("Lumicore"). Lumicore is a fast-growing entrant in the silicon-photonics transceiver market. Founded in 2015, Lumicore has approximately 870 employees and is headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore completed an initial public offering on the Nasdaq exchange in March 2022 at $24 per share. As of the date OWS filed the Complaint in this action on April 22, 2024, Lumicore's stock was trading at approximately $37 per share, giving the company a market capitalization of approximately $3.4 billion based on 91.8 million shares outstanding. Lumicore's FY 2023 total revenue was $312.6 million, as reported in its Form 10-K filed with the SEC. Lumicore also maintains a sales office and technical support center at 2700 Earl Campbell Parkway, Suite 150, Tyler, Texas 75701, which is relevant to the venue analysis in this Eastern District of Texas proceeding.
Other Market Participants. The U.S. silicon-photonics transceiver market includes several other significant participants, including three to four companies that offer transceiver modules at the relevant speed tiers. However, none of these competitors offers products that incorporate the specific combination of patented features — waveguide multiplexing, micro-channel thermal management, coherent integration on silicon, and polarization-diverse grating coupling — that are used by both OWS and Lumicore. As detailed in the separate Panduit factor analysis (Document 125), four potential non-infringing alternatives have been evaluated, and each was found to lack one or more of the key patented features. Specifically:
(a) Alternative Supplier A offers 400G coherent transceivers but uses a different waveguide architecture that does not achieve the insertion-loss performance enabled by the '847 Patent's waveguide multiplexer, resulting in inferior signal quality and reduced link budget.
(b) Alternative Supplier B offers 800G transceiver modules but relies on a legacy thermal management approach (external heat sink with thermal interface material) rather than the micro-channel heat sink design of the '562 Patent, resulting in higher thermal resistance and reduced reliability at full operating power.
(c) Alternative Supplier C offers coherent transceivers at the 400G and 800G tiers but does not implement polarization-diverse grating couplers, instead using edge-coupling technology that requires more complex and costly fiber-attachment processes and does not achieve the same coupling efficiency.
(d) Alternative Supplier D is developing a 1600G product but has not yet achieved volume production or customer qualification, and its announced specifications do not include the coherent integration architecture claimed in the '193 Patent.
The absence of fully comparable non-infringing alternatives is a critical element of OWS's Panduit factor analysis and supports the conclusion that, but for Lumicore's infringement, a significant share of Lumicore's accused-product sales would have been captured by OWS.
C. Market Dynamics and Growth Drivers
The silicon-photonics transceiver market is experiencing explosive growth driven by several converging factors. The most significant of these is the rapid expansion of hyperscale data-center infrastructure, fueled by the continued growth of cloud computing, the proliferation of artificial intelligence and machine-learning workloads, and the increasing demand for content delivery and streaming services. Hyperscale data-center operators are deploying ever-larger data centers with hundreds of thousands of servers, each requiring high-speed optical interconnects to communicate with other servers, storage systems, and network infrastructure.
The migration from lower-speed interconnects (100G and 200G) to higher-speed interconnects (400G and 800G) is well underway, and the emerging 1600G standard represents the next frontier. Each speed tier increase drives incremental transceiver demand, as operators must upgrade their optical infrastructure to match the higher bandwidth capabilities of new server and switch platforms. At the same time, the transition to higher speeds places greater demands on transceiver technology, requiring more sophisticated waveguide architectures, more effective thermal management solutions, and more efficient optical coupling designs — precisely the technologies covered by OWS's asserted patents.
The market is also characterized by increasing supply-chain concentration. Hyperscale data-center operators maintain rigorous vendor qualification processes that can take 6 to 18 months to complete, and once a transceiver supplier is qualified for a particular deployment, switching to an alternative supplier involves significant engineering, testing, and validation effort. This creates a "sticky" customer relationship dynamic, in which design-in wins generate multi-year revenue streams and design-in losses represent long-term competitive setbacks. As discussed further in Section IX.B, this dynamic means that each quarter of continued infringement by Lumicore causes compounding harm to OWS that cannot be fully remedied through monetary damages.
Finally, the demand for low-insertion-loss waveguide multiplexing and advanced thermal management solutions is increasing as photonic integrated circuits become more densely integrated at higher speed tiers. The 800G and 1600G products require significantly more optical channels, higher modulation rates, and greater power dissipation than prior-generation products, making the patented technologies at issue in this case increasingly critical to competitive performance.
IV. PRODUCT-BY-PRODUCT COMPETITIVE OVERLAP ANALYSIS
This section presents a detailed product-by-product comparison of the three accused Lumicore product lines and their corresponding OWS competitors, demonstrating that the accused products and OWS's products directly compete across the same applications, customer segments, and performance specifications.
A. 400G Tier: OWS-400ZR vs. LumiLink 400G-ZR+
1. OWS-400ZR.  The OWS-400ZR is OWS's flagship 400G coherent transceiver module, designed for metro and long-haul data-center interconnect applications at distances up to 120 kilometers over single-mode fiber. The OWS-400ZR was launched prior to Lumicore's entry into the 400G coherent transceiver market and has been qualified and deployed at multiple Tier 1 hyperscale data-center operators in the United States. The OWS-400ZR practices the '847 Patent (waveguide multiplexer architecture), the '193 Patent (coherent optical transceiver integration on silicon), and the '562 Patent (micro-channel heat sink thermal management), incorporating each of the claimed structures as detailed in OWS's claim charts (Documents 14–16).
The OWS-400ZR delivers 400 Gbps aggregate data rate using a DP-QPSK coherent modulation format, packaged in an industry-standard QSFP-DD form factor. The module achieves low optical insertion loss through its proprietary waveguide multiplexer design, which is the subject of the '847 Patent, and maintains reliable operation across the full industrial temperature range through the micro-channel heat sink structure claimed in the '562 Patent. The OWS-400ZR has been widely recognized in the industry for its combination of high performance, compact form factor, and thermal reliability.
2. LumiLink 400G-ZR+
The LumiLink 400G-ZR+ is the first of Lumicore's three accused products. It was launched in Q3 2022 and is accused of infringing the '847 Patent, the '193 Patent, and the '562 Patent. According to Lumicore's FY 2023 financial data produced in discovery, the LumiLink 400G-ZR+ generated revenue of $94.8 million in FY 2023.
The LumiLink 400G-ZR+ is a 400G coherent transceiver module targeting the same metro and long-haul DCI applications as the OWS-400ZR. It uses a DP-QPSK modulation format, is packaged in a QSFP-DD form factor, and claims optical reach of up to 120 kilometers over single-mode fiber — specifications that are materially identical to those of the OWS-400ZR. Benchmark Semiconductor Analysis, LLC performed a physical teardown of the LumiLink 400G-ZR+ under the direction of Lead Engineer Kevin Ng, with the teardown report delivered on December 12, 2022. The teardown confirmed the use of waveguide multiplexer structures that correspond to the accused structures described in OWS's claim charts for the '847 Patent, as well as the presence of micro-channel heat sink features corresponding to the accused structures under the '562 Patent and the coherent integration architecture accused under the '193 Patent.
3. Specification Comparison
The following table summarizes the key technical specifications of the OWS-400ZR and the LumiLink 400G-ZR+:
As the table illustrates, the two products are functionally equivalent across every major performance specification, differing only in that the OWS-400ZR practices the asserted patents with authorization while the LumiLink 400G-ZR+ uses those same patented technologies without a license.
4. Competitive Positioning and Customer Impact
Both the OWS-400ZR and the LumiLink 400G-ZR+ target the same hyperscale DCI application. Prior to Lumicore's Q3 2022 launch of the LumiLink 400G-ZR+, OWS was one of a limited number of qualified suppliers for 400G coherent transceivers at the Tier 1 hyperscale operators. Lumicore's entry with a product that offers comparable performance at lower prices — made possible in part by Lumicore's avoidance of the R&D and licensing costs associated with the patented technologies — introduced significant competitive pressure that directly eroded OWS's pricing power and customer relationships.
The customer overlap at the 400G tier is substantial. As detailed in Section VI, both products are qualified at multiple overlapping hyperscale data-center operators, and competitive bidding records obtained in discovery show that customers have used the LumiLink 400G-ZR+ as leverage to negotiate lower prices from OWS for the OWS-400ZR.
B. 800G Tier: OWS-800XR vs. LumiLink 800G-DR8
1. OWS-800XR.  The OWS-800XR is OWS's next-generation 800G transceiver module, designed for intra-data-center applications at distances up to 2 kilometers over single-mode fiber. The OWS-800XR uses an 8×100G direct-detect architecture and is packaged in an OSFP form factor. The OWS-800XR practices all four of the asserted patents: the '847 Patent (waveguide multiplexer), the '193 Patent (silicon photonic integration), the '562 Patent (micro-channel thermal management), and the '015 Patent (polarization-diverse grating coupler). This product represents OWS's highest-growth product line and is the cornerstone of OWS's strategy for the rapidly expanding 800G market segment.
2. LumiLink 800G-DR8
The LumiLink 800G-DR8 is the second of Lumicore's accused products, launched in Q1 2023 — approximately six months after Lumicore received the first FairPoint licensing letter on January 15, 2023. It is accused of infringing all four asserted patents ('847, '193, '562, and '015). The LumiLink 800G-DR8 is Lumicore's highest-revenue accused product, generating FY 2023 revenue of $128.4 million.
The LumiLink 800G-DR8 uses an 8×100G DR architecture in an OSFP form factor, targeting the same intra-data-center applications as the OWS-800XR. The product is designed for distances up to 2 kilometers over single-mode fiber and incorporates silicon photonic integration, waveguide multiplexing, micro-channel thermal management, and polarization-diverse grating coupler technology.
Benchmark Semiconductor Analysis, LLC performed a follow-on teardown of the LumiLink 800G-DR8 in June 2023, confirming the presence of all four accused structures. Of particular significance, the teardown confirmed the presence of a polarization-diverse grating coupler structure that corresponds to the claims of the '015 Patent — a feature that is absent from the products of the other market participants identified in the Panduit factor analysis.
3. Specification Comparison
4. Strategic Significance
The 800G product tier represents the highest-growth segment in the silicon-photonics transceiver market and accounts for the largest share of both OWS's and Lumicore's forward-looking revenue. Industry analysts project that 800G transceiver shipments will grow at a CAGR of approximately 35% through 2027, driven by the deployment of new AI/ML training clusters that require massive bandwidth between GPU servers within a data center.
The competitive dynamics at the 800G tier are particularly intense because hyperscale operators are in the process of qualifying suppliers for new 800G deployments, meaning that design-in decisions being made now will determine revenue allocation for the next three to five years. Lumicore's ability to compete for these design-in wins with an infringing product is causing ongoing and compounding harm to OWS.
5. Deposition Testimony — Dr. Sandra Michaud
Dr. Sandra Michaud, Lumicore's Chief Technology Officer, was deposed on November 19, 2024. During her deposition, Dr. Michaud made several admissions relevant to the competitive overlap at the 800G tier:
(a) Dr. Michaud admitted that during the design phase of the LumiLink 800G-DR8, she personally reviewed OWS's published patent application No. 2018/0123456, which corresponds to the '193 Patent. She testified that the published application was "relevant to the design approach" being considered for the LumiLink 800G product.
(b) When asked to identify specific non-infringing design alternatives for the 800G product's coherent integration architecture, Dr. Michaud was unable to do so, testifying that the LumiLink team had "evaluated multiple approaches" but that the approach ultimately selected was "the most technically viable" for achieving the required performance specifications.
(c) Dr. Michaud estimated that a redesign of the LumiLink 800G-DR8 to work around the asserted patents would take "at least 18 months, and more likely closer to 24 months," due to the complexity of re-architecting the photonic integrated circuit and the need for extensive reliability qualification testing.
This testimony is significant for multiple reasons: it supports OWS's willful infringement theory (Lumicore's engineers reviewed OWS's patent applications during the design process), it undermines any argument that non-infringing alternatives were readily available, and it establishes the substantial redesign timeline that would result from an injunction.
C. 1600G Tier: OWS-1600DR vs. LumiEdge 1600G-LR
1. OWS-1600DR.  The OWS-1600DR is OWS's most advanced transceiver module, targeting the emerging 1600G long-reach DCI market. The OWS-1600DR uses a coherent transceiver architecture with advanced modulation formats to achieve 1600 Gbps aggregate data rate over distances up to 80 kilometers. The product practices the '193 Patent (coherent integration on silicon) and the '015 Patent (polarization-diverse grating coupler). The OWS-1600DR represents OWS's technology leadership position and is a key competitive differentiator in the market.
2. LumiEdge 1600G-LR
The LumiEdge 1600G-LR is Lumicore's newest accused product, launched in Q4 2023. This launch date is critically significant to the willful infringement analysis: the LumiEdge 1600G-LR was launched after Lumicore had received both licensing letters from FairPoint Licensing Group, LLC (dated January 15, 2023 and May 15, 2023), after the in-person licensing meeting in Austin, Texas on April 20, 2023, and after Lumicore formally declined to negotiate a license in its July 10, 2023 response letter. In other words, Lumicore chose to introduce a new product incorporating the patented technologies with full knowledge and notice of OWS's patent rights, and after affirmatively declining the opportunity to obtain a license.
The LumiEdge 1600G-LR is accused of infringing the '193 Patent and the '015 Patent. It generated FY 2023 revenue of $41.7 million — a figure that reflects only one quarter of sales, as the product launched in Q4 2023. Annualized, the LumiEdge 1600G-LR is on a revenue run-rate well in excess of $100 million, making it a significant and growing contributor to Lumicore's overall revenue.
3. Specification Comparison
4. Benchmark Teardown Confirmation
Benchmark Semiconductor Analysis, LLC performed a teardown of the LumiEdge 1600G-LR in February 2024, with the report delivered on February 9, 2024. The teardown confirmed the presence of the accused coherent integration architecture corresponding to the '193 Patent and the polarization-diverse grating coupler structure corresponding to the '015 Patent. The teardown report has been provided to OWS's technical expert for incorporation into the infringement analysis (Document 97).
5. Strategic Importance
The 1600G segment represents an emerging market with high strategic importance for design-in wins at hyperscale operators. As operators begin planning their next-generation data-center deployments, the selection of 1600G transceiver suppliers will determine competitive positioning for several years. The fact that Lumicore is competing for these design-in wins with an infringing product — launched with full knowledge of OWS's patent rights — threatens to cause lasting harm to OWS's competitive position that will be extremely difficult to reverse, even with an eventual injunction.
D. Summary Comparison Table
The following table provides a side-by-side summary of all three accused product tiers:
The data in the summary table confirms that the competitive overlap between OWS and Lumicore extends across all three speed tiers and all three accused product lines. Lumicore's accused products are not peripheral or tangential to its business — they are its core products, generating the vast majority of its revenue, and they directly compete against OWS's corresponding products for the same customers and applications.
V. LUMICORE REVENUE AT RISK — QUANTIFICATION
A. Accused-Product Revenue as Share of Total Lumicore Revenue
Lumicore's total estimated FY 2023 revenue was $312.6 million, as reported in its Form 10-K filing on the Nasdaq exchange. This figure encompasses all of Lumicore's revenue streams, including revenue from the three accused product lines, revenue from non-accused legacy products (such as earlier-generation 100G and 200G transceiver modules), and revenue from non-module services (such as technical support contracts, engineering services, and design consulting).
The accused-product FY 2023 revenue breakdown, based on Lumicore's product-level financial data produced in discovery, is as follows:
The total accused-product revenue of $264.9 million represents approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million ($264.9M ÷ $312.6M = 84.7%). This raw percentage underscores the overwhelming dominance of the accused product lines within Lumicore's overall business. The remaining $47.7 million in FY 2023 revenue ($312.6M − $264.9M) is attributable to Lumicore's non-accused legacy products and non-module services.
B. Adjusted Revenue-at-Risk Calculation (42% Figure)
The 42% revenue-at-risk figure used in OWS's injunction analysis reflects the proportion of Lumicore's total product revenue that would be immediately at risk in the event of a permanent injunction, after applying the following adjustments and normalization factors:
Non-Module Revenue Adjustment. Lumicore's total revenue includes revenue from non-module products and services that are not covered by the accused product lines and would not be directly affected by an injunction limited to the accused transceiver modules. These non-module revenue streams include technical support contracts, engineering consulting services, and other ancillary revenue. Excluding these non-module revenue streams reduces the denominator against which the accused-product revenue is measured.
Partial-Year Adjustment. The LumiEdge 1600G-LR was launched in Q4 2023 and thus generated only one quarter of revenue in FY 2023. Its FY 2023 revenue of $41.7 million substantially understates the product's annualized revenue run-rate. However, for purposes of a conservative revenue-at-risk estimate, the analysis uses actual (not annualized) FY 2023 revenue figures.
Forward-Looking Normalization. The 42% figure incorporates forward-looking adjustments to account for Lumicore's projected product mix over the next several quarters. Lumicore has announced plans to introduce new non-accused product lines in the 200G and coherent 400G-OpenZR+ segments, which — if successfully launched — would dilute the accused products' share of total revenue. Additionally, Lumicore's non-module services revenue is projected to grow as a percentage of total revenue. These forward-looking normalization factors reduce the revenue-at-risk percentage from the raw 84.7% figure.
Conservative Assumption Regarding Customer Retention. The 42% figure also reflects a conservative assumption that Lumicore could retain some customer relationships by offering non-accused alternative products, even in the event of an injunction on the three accused product lines. However, as noted in Section III.B above, no fully comparable non-infringing alternatives currently exist at the relevant performance tiers, and Lumicore's non-accused products do not offer the same combination of patented features that customers require. The assumption of partial customer retention through non-accused products is therefore generous to Lumicore and may overstate Lumicore's ability to mitigate the revenue impact of an injunction.
Resulting Calculation. The 42% revenue-at-risk figure represents a conservatively adjusted proportion that accounts for all of the foregoing factors. It is used in OWS's injunction analysis as the baseline estimate of the percentage of Lumicore's business that would be directly affected by a permanent injunction. The raw accused-product percentage of 84.7% represents the upper bound and is more reflective of the current state of Lumicore's product portfolio as of FY 2023.
C. Projected Revenue Through Trial
Dr. Lawrence Keating of Meridian Economic Consulting Group, LLC (Chicago, Illinois) has prepared a preliminary damages analysis that includes projections of accused-product revenue through the anticipated trial date. Dr. Keating's analysis projects the following:
(i) Total accused-product revenue for the infringement period Q3 2022 – Q1 2024: approximately $378.2 million. This figure represents actual revenue data for FY 2023 ($264.9 million) plus estimated revenue for Q3 and Q4 2022 (the initial two quarters of the LumiLink 400G-ZR+ launch) and Q1 2024.
(ii) Projected total accused-product revenue for the period Q3 2022 – Q4 2025 (through the anticipated trial date of February 2, 2026): approximately $714.6 million. This projection incorporates the growth trajectory of the accused product lines, the annualization of LumiEdge 1600G-LR revenue, and market growth assumptions consistent with the 22% CAGR discussed in Section III.A.
The projected $714.6 million in total accused-product revenue through trial forms the revenue base for the lost-profits calculation described in Section VIII. The growth trajectory of the accused products — with revenues accelerating in each successive quarter — underscores the expanding scope of irreparable harm to OWS with each passing quarter. Every quarter that Lumicore continues to sell infringing products at scale, OWS loses additional customer accounts, design-in positions, and pricing leverage that cannot be retroactively restored.
D. Impact of Injunction on Lumicore's Business
An assessment of the impact of a permanent injunction on Lumicore's business is relevant to the balance-of-hardships analysis under Cascade Holdings Factor 3. The analysis reflects the following considerations:
Redesign Timeline. Lumicore has estimated, through the deposition testimony of Dr. Sandra Michaud and in response to interrogatories, that a product redesign to work around the asserted patents would require 18 to 24 months. This estimate encompasses the time required to re-architect the photonic integrated circuit, design new waveguide, thermal management, and grating coupler structures that do not infringe the asserted patents, fabricate and test prototype devices, conduct reliability qualification testing, and obtain customer re-qualification. During this redesign period, Lumicore would be unable to manufacture, sell, or offer to sell the accused products in their current form.
Supply Gap. During the 18- to 24-month redesign period, Lumicore would be unable to serve customer demand for the accused products. This supply gap would create significant disruption for Lumicore's customer relationships, particularly at the hyperscale operators that have qualified and are actively deploying the accused products. However, as discussed below, this disruption is self-inflicted and does not weigh against an injunction.
Market Opportunity for OWS and Others. OWS's analysis indicates that Lumicore's inability to supply 400G, 800G, and 1600G transceiver modules for 18 to 24 months would shift customer demand to OWS and other non-infringing suppliers. OWS has the manufacturing capacity, technical capability, and customer relationships to capture a significant share of the redirected demand, which would partially offset the ongoing harm OWS has suffered during the infringement period.
Financial Context. Lumicore's market capitalization as of the April 22, 2024 filing date was approximately $3.4 billion, based on 91.8 million shares outstanding at an approximate trading price of $37 per share. An injunction affecting 42% of product revenue — or potentially as much as 84.7% of FY 2023 revenue — could materially impact Lumicore's financial performance, stock price, and shareholder value. While this impact is significant, it is important to note that Lumicore entered the market and built its business on the foundation of technologies that it had no license to use, and it continued to introduce new infringing products even after receiving explicit notice of OWS's patent rights. The hardship Lumicore would face from an injunction is therefore entirely self-inflicted and does not support a finding that the balance of hardships favors denying injunctive relief. See Camberwell & Co. v. Northgate & Co. Elecs. Co., 809 F.3d 633, 647 (Fed. Cir. 2015) (hardship resulting from intentional infringement is self-imposed and does not weigh against injunction).
VI. CUSTOMER OVERLAP ANALYSIS
A. Identification of Dual-Source Customers
A central element of OWS's irreparable harm showing is the identification of customers that purchase transceiver modules from both OWS and Lumicore, creating direct head-to-head competition and measurable customer-diversion risk. To identify these dual-source customers, OWS's customer database was cross-referenced with Lumicore's customer data produced in discovery.
Lumicore's customer-level data was produced pursuant to the Court's discovery Order and is designated "Highly Confidential — Attorneys' Eyes Only" under the parties' three-tier Stipulated Protective Order (Dkt. 42). The Protective Order establishes three tiers of confidentiality: (1) "Confidential," (2) "Highly Confidential — Attorneys' Eyes Only" ("AEO"), and (3) "Highly Confidential — Source Code." Lumicore's customer-by-customer revenue and procurement data falls within the AEO tier, and all references to specific Lumicore customer data in this report are subject to the corresponding restrictions. Consistent with the Protective Order, customer identities in this report are presented using anonymized designations.
Cross-Referencing Results. The cross-referencing analysis revealed that OWS and Lumicore compete head-to-head at 12 of the top 20 hyperscale data-center operators in the United States. This represents a substantial degree of competitive overlap and confirms that OWS and Lumicore are direct competitors for the highest-value customer accounts in the market.
Of these 12 overlapping customers, 7 major hyperscale customers purchase transceiver modules from both OWS and Lumicore at one or more speed tiers. These seven dual-source customers are of particular significance because they have qualified products from both companies and are actively allocating procurement spend between OWS and Lumicore, creating the most direct form of competitive overlap and the greatest risk of customer diversion.
The following table summarizes the seven dual-source customers:
As the table illustrates, all seven dual-source customers have qualified products from both OWS and Lumicore at the same speed tier, meaning that the two companies' products are directly interchangeable from the customer's perspective. This creates the conditions for active price competition, procurement-share shifting, and customer diversion — all of which OWS has experienced since Lumicore's market entry with the accused products.
The remaining five overlapping customers (of the 12 total) have qualified products from both companies but are not currently purchasing from both at the same speed tier — for example, a customer may be purchasing OWS's 800G product and Lumicore's 400G product but has not yet dual-qualified at the same tier. These customers represent potential future diversion risk as they evaluate suppliers for upcoming speed-tier upgrades.
B. Venue-Related Customers
Three customers located in the Eastern District of Texas have been identified as purchasers of Lumicore's accused products, establishing a basis for venue in this judicial district:
(1) Pinnacle Data Systems, LLC, located at 1800 Judson Road, Longview, Texas 75601. Pinnacle operates a regional data-center facility and has purchased LumiLink 400G-ZR+ modules from Lumicore for deployment in its Longview facility.
(2) Frontier Cloud Services, Inc., located at 400 East Houston Street, marshall, Texas 75670. Frontier operates a cloud services platform from its marshall data center and has purchased both LumiLink 400G-ZR+ and LumiLink 800G-DR8 modules from Lumicore.
(3) CrossPoint Networking Corp., located at 7500 Dallas Parkway, Suite 200, Plano, Texas 75024 (case management transferred to Tyler Division). CrossPoint is a network infrastructure company that has purchased LumiLink 800G-DR8 modules from Lumicore for deployment in customer data centers.
In addition to these customer locations, Lumicore maintains a sales office and technical support center at 2700 Earl Campbell Parkway, Suite 150, Tyler, Texas 75701. This facility serves as a regional base for Lumicore's sales and customer-support activities in the Eastern District of Texas and surrounding areas.
C. Customer Diversion Evidence
The customer-overlap data presented above is corroborated by specific evidence of customer diversion — instances in which OWS has lost sales, design-in opportunities, or procurement share to Lumicore's accused products at overlapping customer accounts. This evidence includes the following categories:
OWS Sales Personnel Testimony. OWS's internal sales records and communications, reviewed in connection with this analysis, document multiple instances of OWS losing competitive bids, design-in opportunities, or existing purchase-order volumes to Lumicore's accused products. Karen Whitfield, OWS's Vice President of Sales, and three regional sales directors have provided information regarding specific customer accounts where OWS was the incumbent or leading supplier prior to Lumicore's entry and where Lumicore subsequently won a portion or all of the customer's transceiver procurement. Declarations from Ms. Whitfield and the regional sales directors are being prepared for trial per the Document 113 template.
Competitive Bidding Records. Competitive bidding records obtained from Lumicore's discovery productions and from customer procurement documents show that Lumicore systematically undercut OWS's pricing with the accused products. In multiple instances, Lumicore priced the LumiLink 400G-ZR+ at 10 to 15% below OWS's pre-entry OWS-400ZR pricing, and customers explicitly cited Lumicore's lower pricing as the basis for shifting procurement volume away from OWS.
Design-In Losses. In the silicon-photonics transceiver market, "design-in" wins — where a customer qualifies and commits to a supplier's product for a specific data-center deployment — are the primary competitive battleground, because a design-in win typically locks in a multi-year revenue stream for the winning supplier. OWS has documented specific design-in losses to Lumicore's accused products at several of the seven dual-source customers during the infringement period (Q3 2022 to the present). These design-in losses represent long-term competitive harm because, once a design-in is lost, the switching costs and re-qualification requirements make it extremely difficult and costly for OWS to recapture the account for the duration of the deployment cycle, which typically spans three to five years.
VII. PRICE EROSION ANALYSIS
A. Pre-Entry Pricing Baseline
Prior to Lumicore's launch of the LumiLink 400G-ZR+ in Q3 2022, OWS enjoyed strong pricing power in the 400G coherent transceiver segment. OWS's average selling price for OWS-400ZR modules during the period from Q1 2022 through Q2 2022 — the two quarters immediately preceding Lumicore's entry — represented the pre-entry baseline against which post-entry price erosion is measured.
During this baseline period, OWS was one of a limited number of qualified suppliers of 400G coherent transceivers for hyperscale DCI applications. The supply-constrained nature of the market allowed OWS to maintain stable pricing and healthy gross margins. OWS's gross margin on the OWS-400ZR during the baseline period was consistent with its overall product gross margin of 47.3%, reflecting the premium pricing that customers were willing to pay for the performance advantages enabled by the patented technologies.
The pricing dynamics in the 400G segment during the baseline period were characterized by relatively stable ASPs, with modest quarter-over-quarter fluctuations driven primarily by volume-based tiered pricing arrangements with individual customers. There was no significant downward pressure on pricing during this period, as the limited number of qualified suppliers and the strong demand from hyperscale operators supported pricing stability.
B. Post-Entry Price Decline
The market dynamics changed markedly following Lumicore's launch of the LumiLink 400G-ZR+ in Q3 2022. From Q3 2022 through Q4 2023, the average selling price of 400G-ZR transceiver modules in the market declined by 18.7%. This decline was significantly more rapid and more pronounced than the normal technology-driven ASP erosion that characterizes the semiconductor industry, and it occurred during a period of strong and growing demand for 400G transceivers — a market condition that would ordinarily support stable or even increasing prices.
Causal Analysis. The 18.7% price decline is attributable in significant part to Lumicore's entry into the market with the lower-priced LumiLink 400G-ZR+, which uses patented OWS technology without a license and therefore does not bear the R&D investment costs and licensing expenses associated with the development and authorized use of those technologies. Lumicore's pricing strategy for the LumiLink 400G-ZR+ was to enter the market at a significant discount to the incumbent pricing established by OWS and other authorized suppliers, creating immediate downward pressure on market ASPs.
Customer-Level Pricing Data. Customer-by-customer pricing data obtained from Lumicore's discovery productions (designated AEO) demonstrates the mechanism by which Lumicore's entry drove price erosion. At multiple overlapping customer accounts, customers that had been purchasing OWS-400ZR modules at established pricing levels used Lumicore's lower-priced competing product as leverage to negotiate reduced prices from OWS. Internal OWS sales communications document instances in which OWS sales personnel were informed by customer procurement organizations that Lumicore was offering the LumiLink 400G-ZR+ at 10 to 15% below OWS's then-current pricing, and that OWS would need to match or approach Lumicore's pricing to retain the account.
Competitive Bid Data. Competitive bid records from discovery productions further corroborate the pricing dynamic. In formal procurement processes conducted by several of the seven dual-source customers identified in Section VI, Lumicore consistently submitted bids for the LumiLink 400G-ZR+ at prices 10 to 15% below OWS's pre-entry OWS-400ZR pricing. In several instances, OWS was forced to reduce its bid prices to remain competitive, and in other instances, OWS lost the bid entirely to Lumicore's lower-priced accused product.
Detailed ASP Trend Data. The quarter-by-quarter ASP trend data for 400G-ZR transceiver modules, from Q1 2022 through Q4 2023, is presented in Appendix D in chart form. The chart clearly shows the inflection point at Q3 2022, coinciding with Lumicore's market entry, after which ASPs declined steeply and continuously for five consecutive quarters. The 18.7% total decline from Q3 2022 to Q4 2023 represents an annualized decline rate of approximately 14%, which is well in excess of the historical norm for this product category and is inconsistent with normal technology-maturation price curves.
C. Implications for Damages
The price erosion documented above has several important implications for both the damages analysis and the irreparable harm assessment:
Incremental Damages Beyond Lost Volumes. Price erosion supports incremental damages beyond the lost-unit-volume analysis. Even on sales that OWS retained during the infringement period, OWS earned reduced

ATTORNEY WORK PRODUCT — PRIVILEGED AND CONFIDENTIAL

MARKET ANALYSIS: ACCUSED PRODUCTS AND OWS COMPETITIVE IMPACT

I. EXECUTIVE SUMMARY

II. SCOPE AND METHODOLOGY

III. SILICON-PHOTONICS TRANSCEIVER MARKET OVERVIEW

IV. PRODUCT-BY-PRODUCT COMPETITIVE OVERLAP ANALYSIS

VI. CUSTOMER OVERLAP ANALYSIS

VII. PRICE EROSION ANALYSIS

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