1014-00004 · Hawthorne Vega & Cruz LLP · Settlement & ADR

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CONFIDENTIAL — SUBJECT TO FED. R. EVID. 408 — SETTLEMENT COMMUNICATION

DRAFT — DATE TO BE INSERTED UPON AUTHORIZATION TO SEND

CALDERWOOD & HARKNESS LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071

VIA EMAIL AND FEDEX

Catherine "Kate" Rourke, Esq. Partner Hawthorne Vega & Cruz LLP 600 Congress Avenue, Suite 2400 Austin, TX 78701

Re: Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG (E.D. Tex.) — Proposal for Mediation

cc: Rebecca Tanaka, General Counsel, Optiwave Semiconductor Corp. James "Jim" Callahan, Whitmore & Callahan LLP (local counsel)

Dear Kate:

I write on behalf of our client, Optiwave Semiconductor Corp. ("OWS"), in my capacity as the responsible litigation partner at Calderwood & Harkness LLP in the above-referenced action, Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG, currently pending before the Honorable James R. Gilstrap in the United States District Court for the Eastern District of Texas, marshall Division.

The purpose of this letter is to propose that the parties engage in mediation — either under the Court's Alternative Dispute Resolution program or by private agreement — in a good-faith effort to explore whether a mutually acceptable resolution of this dispute can be achieved. As I discuss in greater detail below, the current procedural posture of this case, the maturity of the factual record, and the significant costs that both parties will continue to incur through expert discovery, dispositive motions, and trial make this an opportune juncture for a structured settlement discussion facilitated by an experienced neutral.

We recognize, of course, that the decision to mediate rests with your client, and we approach this proposal with a genuine desire to find common ground while preserving the rights and positions of both sides. I would welcome the opportunity to discuss this proposal with you at your earliest convenience.

I. Background and Posture of the Case

A. Nature of the Dispute

As you are aware, OWS filed this action on April 22, 2024, asserting infringement of four United States utility patents: U.S. Patent No. 10,234,847 (the "'847 Patent"), U.S. Patent No. 10,891,193 (the "'193 Patent"), U.S. Patent No. 9,678,562 (the "'562 Patent"), and U.S. Patent No. 11,402,015 (the "'015 Patent"). These patents cover a range of innovations in silicon photonics transceiver and waveguide multiplexing technologies — technologies that are at the core of next-generation optical interconnect solutions for hyperscale data center applications and that represent the product of years of substantial investment in research and development by OWS and its engineering teams.

The Complaint asserts seven counts against Lumicore Technologies, Inc. ("Lumicore"): four counts of direct patent infringement under 35 U.S.C. § 271(a), one count of induced infringement under 35 U.S.C. § 271(b), one count of contributory infringement under 35 U.S.C. § 271(c), and one count of willful infringement with a request for enhanced damages pursuant to 35 U.S.C. § 284. OWS's allegations of willfulness are grounded in Lumicore's actual knowledge of OWS's patent portfolio, which was specifically brought to Lumicore's attention through extensive pre-suit licensing correspondence and an in-person meeting, as discussed further below.

Lumicore filed its Answer and Counterclaims on June 17, 2024. Lumicore asserts defenses of non-infringement with respect to all four asserted patents, invalidity under 35 U.S.C. §§ 102 and 103, and unenforceability based on a theory of inequitable conduct. Lumicore also seeks a declaratory judgment of non-infringement. The substantive disputes between the parties are thus well-joined and the positions on both sides are thoroughly documented in the pleadings, contentions, and claim construction briefing.

B. Accused Products

The accused instrumentalities in this action encompass three of Lumicore's principal transceiver product lines: the LumiLink 400G-ZR+, the LumiLink 800G-DR8, and the LumiEdge 1600G-LR transceiver modules. These products are among Lumicore's highest-revenue offerings and are sold to major hyperscale cloud providers, telecommunications carriers, and enterprise data center operators.

The financial significance of this case is substantial. Based on publicly available financial filings and information produced in discovery, combined accused-product revenue for fiscal year 2023 alone was approximately $264.9 million. OWS's damages experts have estimated total projected accused-product revenue for the relevant period — spanning from the third quarter of 2022 through the fourth quarter of 2025 — at approximately $714.6 million. OWS seeks damages of approximately $210 million, encompassing lost profits on diverted sales, reasonable royalties on sales for which lost profits are not recoverable, and enhanced damages for Lumicore's willful infringement. OWS also seeks a permanent injunction against further infringement.

The magnitude of the damages at stake, combined with the injunctive relief sought, underscores both the seriousness of this dispute and the potential value of a negotiated resolution that provides certainty and commercial flexibility for both parties.

C. Pre-Suit Licensing History

This dispute did not arise in a vacuum. Before filing suit, OWS made extensive and sustained efforts to resolve this matter through licensing negotiations. Through its licensing agent, FairPoint Licensing Group, LLC, OWS initiated pre-suit outreach to Lumicore beginning with a detailed licensing letter sent on January 15, 2023, which identified each of the four asserted patents, described the relevant claims, and provided a preliminary claim chart mapping those claims to Lumicore's LumiLink and LumiEdge product lines.

Following that initial correspondence, OWS sent a supplemental licensing letter on May 15, 2023, providing additional technical detail and updated claim charts reflecting Lumicore's most recently released product specifications. Between those two written communications, the parties participated in an in-person meeting on April 20, 2023, in Austin, Texas, at which representatives of FairPoint and OWS's licensing team presented the patent portfolio and discussed potential licensing terms with Lumicore's intellectual property counsel and members of its engineering staff.

Despite these good-faith efforts, Lumicore ultimately declined to take a license. In a letter dated July 10, 2023, Lumicore's then-outside counsel informed FairPoint that Lumicore had obtained "competent legal opinions" concluding that its products do not infringe OWS's patents and that Lumicore did not intend to pursue a license. No further substantive engagement occurred before suit was filed.

The parties' substantive disagreements are therefore well-documented and their respective positions well-crystallized. The pre-suit licensing history also informs OWS's willfulness allegations and its contention that Lumicore had actual knowledge of OWS's patent rights and continued its infringing activities with full awareness of the risk.

D. Current Procedural Status

This case has progressed through a substantial portion of the pre-trial schedule established in the Scheduling Order issued on August 12, 2024. The principal milestones completed to date include the following:

• Infringement Contentions were served by OWS on September 16, 2024, and Invalidity Contentions were served by Lumicore on October 14, 2024.

• The parties filed their Joint Claim Construction Statement on October 28, 2024, identifying fourteen (14) disputed claim terms for construction by the Court.

• The parties have completed a full round of claim construction briefing: opening claim construction briefs were filed on November 15, 2024; responsive briefs were filed on December 6, 2024; reply briefs were filed on December 20, 2024; and sur-reply briefs were filed on January 10, 2025. The parties also filed their Joint Claim Construction Chart (final) on January 15, 2025.

• Multiple fact depositions have been completed, including depositions of key witnesses on both sides: Dr. Sandra Michaud (OWS, named inventor on the '847 and '193 Patents), Raymond Bautista (Lumicore, General Counsel), Angela Reeves (Lumicore, VP of Product Engineering), Kevin Ng (Lumicore, Director of Photonics Design), and Dr. Jian-Wei Huang (OWS, Director of Licensing and Standards).

• Significant document productions have been exchanged. OWS has produced approximately 182,000 documents comprising approximately 1.4 million pages. Lumicore has produced approximately 147,000 documents comprising approximately 980,000 pages. Substantial review and analysis of these productions is ongoing.

• discovery disputes remain pending, including OWS's Motion to Compel production of Lumicore's opinion-of-counsel letters (D.E. 38), which is directly relevant to the willfulness and enhanced damages claims.

Looking ahead, the following key deadlines and events remain on the case calendar:

• Markman hearing scheduled for March 14, 2025

• Fact discovery closes on May 1, 2025

• Plaintiff's expert reports due June 15, 2025

• Defendant's rebuttal expert reports due July 15, 2025

• Jury trial set for February 2, 2026 (estimated duration of 7–10 days)

In sum, both parties now possess a thorough understanding of the merits and risks of this case. The factual record is extensive. The claim construction positions have been fully briefed. The Court's ruling on claim construction — often the most consequential event in patent litigation — is imminent. This makes the present juncture an exceptionally opportune time for the parties to engage in mediation, before incurring the substantial additional costs associated with expert discovery, dispositive motions practice, Daubert challenges, and trial preparation.

II. Proposal for Mediation

A. Rationale for Mediation at This Stage

OWS believes that the current posture of this case is ideally suited for a productive mediation. Several considerations support this view.

First, the parties have completed extensive claim construction briefing and the Markman hearing is scheduled for March 14, 2025. Following the Court's claim construction order, the contours of both the infringement and invalidity issues will be significantly clearer. It is well recognized that claim construction rulings frequently prove dispositive — or at least highly influential — with respect to key questions of infringement and validity. A mediation session timed shortly after the Markman ruling would allow both parties to evaluate their respective positions with the benefit of the Court's constructions and to make informed assessments of the likely outcome of the remaining phases of litigation.

Second, if the parties prefer to engage even before the Markman hearing, a pre-hearing mediation could nonetheless be productive given the extensive record already developed. Both sides have identified and briefed their respective claim construction positions and have a clear understanding of how the disputed terms affect the merits. A skilled mediator could help the parties evaluate the range of plausible construction outcomes and their implications.

Third, and critically, both sides have already incurred — and will continue to incur — very significant litigation costs. Calderwood & Harkness's fees and costs through January 2025 alone exceed $3.2 million, against a total approved litigation budget of $18.5 million through trial and post-trial proceedings. While I am not privy to Lumicore's litigation expenditures, they are undoubtedly comparable given the scope of discovery and briefing completed to date. The remaining phases of this litigation — expert reports, expert depositions, summary judgment and Daubert motions, pretrial preparation, and a 7–10 day jury trial — will require substantial additional investment by both sides. A mediated resolution, if achievable, would avoid a material portion of those future costs.

Fourth, a negotiated resolution could avoid the business disruption that continued litigation imposes on both companies. OWS is a practicing entity — the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, with fiscal year 2023 revenue of approximately $487.3 million — and a settlement that includes a prospective licensing arrangement could serve both parties' commercial interests by providing certainty and enabling both companies to plan their product roadmaps without the cloud of pending litigation.

Finally, Lumicore, as a publicly traded company on the Nasdaq with a market capitalization of approximately $3.4 billion, also has an institutional interest in resolving litigation uncertainty that may affect shareholder value, analyst coverage, and the company's ability to pursue strategic transactions without the overhang of a pending $210 million patent case. A mediated outcome would provide the certainty that a trial verdict — subject as it always is to post-trial motions and appeal — cannot.

For all of these reasons, OWS believes that a mediation at this stage would be a constructive and efficient use of the parties' resources.

B. Proposed Timing

OWS proposes that mediation take place within thirty (30) to sixty (60) days following the Court's claim construction ruling, which is expected to issue shortly after the March 14, 2025 Markman hearing. Based on Judge Gilstrap's typical practice, this would place the mediation approximately in April or May 2025 — a window that falls before the close of fact discovery on May 1, 2025 (or shortly thereafter), and well in advance of the June 15, 2025 deadline for OWS's expert reports.

This timing has significant practical advantages. It allows the parties to evaluate the case in light of the Court's claim constructions while preserving the opportunity to resolve the dispute before the onset of the most costly remaining phase of litigation — expert discovery and dispositive motions.

In the alternative, if your client prefers an earlier session, OWS is willing to participate in mediation as early as February or early March 2025, prior to the Markman hearing. While a pre-Markman mediation necessarily involves greater uncertainty regarding claim construction outcomes, the extensive record developed to date may provide a sufficient foundation for productive discussions.

OWS is flexible on scheduling and is willing to accommodate Lumicore's and its counsel's calendar to the greatest extent practicable. I am confident that we can identify a date that works for all participants.

C. Proposed Format and Duration

OWS proposes a full-day mediation session, with the option for a second day if the parties are making progress and the mediator believes that additional time would be productive. In our experience, complex patent disputes of this nature — involving multiple patents, significant damages, and injunctive relief — benefit from the sustained engagement that a full day (or more) of facilitated discussion provides.

OWS has a strong preference for an in-person mediation. We suggest Dallas, Texas or Austin, Texas as convenient neutral locations for all parties, given the Eastern District of Texas venue and Lumicore's Austin headquarters. Both cities offer ample conference and mediation facilities, and each of the proposed mediators discussed below maintains offices in or near these locations.

As an alternative, OWS would be amenable to a hybrid format in which the mediator and the principals with settlement authority attend in person, with supporting team members — including technical advisors, damages experts, and additional counsel — available by videoconference. This approach can reduce travel costs while preserving the benefits of face-to-face engagement among the key decision-makers.

With respect to mediation submissions, OWS proposes that each party prepare a confidential mediation brief to be submitted to the mediator only — not exchanged with opposing counsel — in advance of the session. We suggest that these briefs be due ten (10) business days before the mediation date to give the mediator adequate time for preparation.

Finally, OWS considers it essential that decision-makers with full settlement authority attend the mediation on behalf of both parties. For OWS, this would include Rebecca Tanaka, General Counsel of OWS, and a representative of Ridgeline Capital Partners, LP, as OWS's majority shareholder and a necessary participant in any settlement authorization process. OWS requests that Lumicore similarly send Raymond Bautista, General Counsel, and an appropriate C-suite officer or board designee with authority to bind Lumicore to a settlement agreement. The presence of authorized decision-makers is, in our view, indispensable to a meaningful mediation.

III. Proposed Mediators

OWS proposes three highly qualified mediators, any one of whom we believe would be an excellent choice to facilitate a resolution of this dispute. We are, of course, willing to consider alternative candidates that Lumicore may wish to propose.

A. Retired Judge Harold K. Devereaux — JAMS, Dallas, Texas

Judge Harold K. Devereaux (Ret.) is a former United States District Judge with extensive experience mediating complex patent disputes, including numerous cases originating in the Eastern District of Texas and the Western District of Texas. Judge Devereaux possesses deep familiarity with patent claim construction, damages methodologies (including both lost profits and reasonable royalty analyses under Georgia-Pacific and its progeny), and the standards governing permanent injunctive relief under Northgate Group v. MercExchange, L.L.C., 547 U.S. 388 (2006). He has mediated numerous disputes involving semiconductor and high-technology intellectual property, and his reputation for thoroughness, fairness, and effectiveness is well established in the patent bar. Judge Devereaux is available through the JAMS Dallas office.

OWS's first preference is Judge Devereaux. We believe his judicial background and specific expertise in the Eastern District of Texas patent docket make him uniquely well suited to assist the parties in this matter.

B. Patricia Nolan-Ferris — ADR Services International, Austin, Texas

Patricia Nolan-Ferris is a nationally recognized patent mediator and arbitrator who has facilitated the resolution of scores of complex intellectual property disputes over the course of her distinguished career. Before transitioning to full-time ADR practice, Ms. Nolan-Ferris was a leading intellectual property litigator with over twenty-five years of experience in patent infringement cases involving high-technology products, including semiconductors, optical networking components, and telecommunications systems. She specializes in complex, multi-patent disputes with significant damages at issue and is known for her ability to help parties bridge substantial valuation gaps. Ms. Nolan-Ferris is based in Austin, Texas, which would be convenient for all parties and their counsel. She is available through ADR Services International.

C. Carl Weingarten — Judicial Arbitration Associates, Houston, Texas

Carl Weingarten is an experienced mediator of technology and intellectual property disputes. Mr. Weingarten served for many years as the managing partner of a major intellectual property litigation practice before transitioning to full-time ADR work. He has successfully mediated cases involving silicon-photonics technology, semiconductor fabrication processes, telecommunications infrastructure, and a range of other high-technology subject matters. His technical fluency and litigation experience allow him to engage deeply with the merits and to provide realistic assessments that facilitate productive negotiations. Mr. Weingarten is available through Judicial Arbitration Associates, Houston office.

D. Invitation for Lumicore's Input

OWS would welcome additional mediator candidates from Lumicore and its counsel. We are willing to agree on a single mediator from among the parties' combined proposals, or, if that proves difficult, to employ a strike-and-rank method in which each party ranks the candidates in order of preference and the mediator with the highest combined ranking is selected.

In the event the parties are unable to agree on a mediator through direct negotiation, OWS is willing to request a referral from the Court pursuant to the Eastern District of Texas ADR program, which provides a mechanism for court-assisted selection of a neutral.

IV. Costs and Logistics

OWS proposes that the mediator's fees and expenses be shared equally between OWS and Lumicore. Each party would bear its own attorneys' fees and costs associated with mediation preparation and attendance, including travel, expert consultation, and related expenses. This cost-sharing arrangement is standard in mediations of this type and ensures that neither party bears a disproportionate share of the cost of the neutral's services.

OWS further proposes that the parties enter into a mediation confidentiality agreement governing the mediation proceedings, or, in the alternative, that the parties rely on the applicable mediation privilege under Texas law and the protections afforded by Federal Rule of Evidence 408, which renders settlement communications inadmissible to prove liability or the amount of a disputed claim. A written confidentiality agreement would provide additional assurance to both parties that the substance of the mediation discussions will remain privileged and confidential, thereby encouraging candid and open dialogue.

Finally, OWS offers to work collaboratively with Hawthorne Vega & Cruz to prepare a joint mediation submission letter to the selected mediator outlining the case background, the key disputed issues, the current procedural posture, and any other information the mediator may find helpful in preparing for the session. This joint submission would be in addition to each party's separate confidential mediation brief.

V. Court's ADR Program

The Eastern District of Texas local rules and Judge Gilstrap's standing orders actively encourage parties in patent cases to explore alternative dispute resolution as a means of achieving efficient and cost-effective resolutions. Mediation is specifically contemplated as an appropriate ADR mechanism under the Court's program.

If Lumicore agrees to mediation, the parties can jointly notify the Court of their intention to mediate and, if appropriate, seek a brief continuance of upcoming deadlines to facilitate the mediation process. OWS does not believe a continuance will be necessary if mediation is timed as proposed — that is, within thirty to sixty days following the Markman ruling — as the mediation would occur within the existing discovery schedule. However, OWS is open to discussing schedule modifications if the parties mutually agree that a brief adjustment would promote a more productive mediation.

Alternatively, if the parties agree to proceed with a private mediation outside the Court's ADR program, no formal court filing is required, although a notice of mediation may be appropriate as a matter of courtesy to the Court and to inform the Court that the parties are actively pursuing resolution.

VI. OWS's Good-Faith Commitment

OWS is making this proposal in good faith and with the genuine desire to explore a mutually beneficial resolution of this dispute. OWS has consistently demonstrated its willingness to engage constructively with Lumicore, as reflected in FairPoint Licensing Group's extensive pre-suit licensing outreach, including the January 15, 2023 and May 15, 2023 licensing letters and the April 20, 2023 in-person meeting in Austin. OWS's preference — then and now — has always been to resolve this matter through a negotiated licensing arrangement that recognizes the value of OWS's patented innovations while allowing both companies to continue competing in the marketplace.

OWS approaches any mediation with the clear understanding that all discussions will be confidential, without prejudice, and subject to the protections of Federal Rule of Evidence 408. Nothing said or offered during the mediation will be used by either party in subsequent proceedings, and neither party's willingness to mediate or any positions taken during mediation will be construed as an admission of liability, an acknowledgment of weakness, or a concession on any issue.

To be direct: this proposal is not made from a position of weakness. OWS has strong confidence in its infringement case across all four asserted patents, in the validity of its patent claims, and in its damages theories. OWS's technical and financial experts have conducted extensive analyses supporting its claims, and OWS is fully prepared to take this case to trial and to seek a jury verdict, enhanced damages, and injunctive relief. That said, OWS recognizes that mediation can offer benefits — including speed, certainty, reduced cost, and the possibility of a forward-looking commercial arrangement — that even a favorable trial verdict cannot replicate. It is in that spirit that this proposal is made.

VII. Request for Response

OWS respectfully requests that you discuss this proposal with your client, Lumicore Technologies, Inc., including CEO Thomas Kessler and General Counsel Raymond Bautista, and provide a substantive response within twenty-one (21) calendar days of the date of this letter.

I am available to discuss this proposal by telephone or in person at your convenience. Please do not hesitate to contact me directly at the number and email address below. Additionally, Wendy Schultz, Lead Associate on the OWS matter at Calderwood & Harkness, is authorized to coordinate logistics and scheduling matters and may be reached at the same address.

Alan Ngo Calderwood & Harkness LLP 350 South Grand Avenue, 48th Floor Los Angeles, CA 90071 Direct: (213) 680-4200

Email: ango@calderwoodharkness.com

I look forward to hearing from you and hope that we can identify a path forward that serves both parties' interests.

VIII. Reservation of Rights

Nothing in this letter, and nothing in any mediation that may result from this proposal, constitutes or shall be construed as a waiver of any claims, defenses, rights, or remedies of OWS, including but not limited to:

• OWS's claims for enhanced damages for willful infringement under 35 U.S.C. § 284;

• OWS's request for a permanent injunction under 35 U.S.C. § 283;

• All rights and remedies available to OWS under 35 U.S.C. §§ 271, 283, 284, and 285, including the right to seek an award of attorneys' fees in exceptional cases;

• All claims, counterclaim defenses, and affirmative defenses asserted or available to OWS in the pleadings and throughout these proceedings.

OWS will continue to prosecute this action vigorously pending and notwithstanding any mediation proceedings. All deadlines established in the Scheduling Order issued August 12, 2024 (D.E. 22), including all discovery deadlines, pretrial deadlines, and the trial setting, remain in full force and effect. OWS does not seek any modification or extension of those deadlines as a result of this proposal, unless the parties mutually agree otherwise in connection with a mediation.

IX. Closing

I appreciate your time in reviewing this proposal and hope that both OWS and Lumicore can find a constructive path forward through mediation. The litigation process is well underway, the record is mature, and the parties are well positioned to evaluate their respective risks and opportunities. I believe a mediation at this juncture offers the best opportunity for a resolution that serves the commercial interests of both companies.

I look forward to your response.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Alan Ngo Partner

350 South Grand Avenue, 48th Floor Los Angeles, CA 90071 Direct: (213) 680-4200

Email: ango@calderwoodharkness.com

cc:

Rebecca Tanaka, General Counsel Optiwave Semiconductor Corp. 4810 Bayside Technology Parkway, Suite 300 Santa Clara, CA 95054

James "Jim" Callahan Whitmore & Callahan LLP 110 North College Avenue, Suite 800 Tyler, TX 75702

Marcus Delgado, Partner (billing partner) Calderwood & Harkness LLP

— INTERNAL NOTATIONS — DO NOT TRANSMIT —

DRAFT — CONTINGENCY — NOT YET AUTHORIZED FOR TRANSMISSION

This letter is to be sent only upon authorization by Alan Ngo following consultation with Rebecca Tanaka and Franklin Osei. Timing decision is contingent on: (1) whether the Court orders ADR; (2) outcome of settlement authority discussions with OWS Board and Ridgeline Capital Partners, LP; and (3) post-Markman posture assessment. See also Settlement Authority Memorandum (Doc. 154) and Mediation Position Statement (Doc. 156) for supporting analysis. — WS

Drafting Credits: Prepared by: Wendy Schultz, Lead Associate Reviewed by: Alan Ngo, Partner Date of last revision: [TO BE INSERTED]

CONFIDENTIAL — SUBJECT TO FED. R. EVID. 408 — SETTLEMENT COMMUNICATION
DRAFT — DATE TO BE INSERTED UPON AUTHORIZATION TO SEND
CALDERWOOD & HARKNESS LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071
VIA EMAIL AND FEDEX
Catherine "Kate" Rourke, Esq. Partner Hawthorne Vega & Cruz LLP 600 Congress Avenue, Suite 2400 Austin, TX 78701
Re: Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG (E.D. Tex.) — Proposal for Mediation
cc: Rebecca Tanaka, General Counsel, Optiwave Semiconductor Corp. James "Jim" Callahan, Whitmore & Callahan LLP (local counsel)
Dear Kate:
I write on behalf of our client, Optiwave Semiconductor Corp. ("OWS"), in my capacity as the responsible litigation partner at Calderwood & Harkness LLP in the above-referenced action, Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc., Case No. 2:24-cv-00319-JRG, currently pending before the Honorable James R. Gilstrap in the United States District Court for the Eastern District of Texas, marshall Division.
The purpose of this letter is to propose that the parties engage in mediation — either under the Court's Alternative Dispute Resolution program or by private agreement — in a good-faith effort to explore whether a mutually acceptable resolution of this dispute can be achieved. As I discuss in greater detail below, the current procedural posture of this case, the maturity of the factual record, and the significant costs that both parties will continue to incur through expert discovery, dispositive motions, and trial make this an opportune juncture for a structured settlement discussion facilitated by an experienced neutral.
We recognize, of course, that the decision to mediate rests with your client, and we approach this proposal with a genuine desire to find common ground while preserving the rights and positions of both sides. I would welcome the opportunity to discuss this proposal with you at your earliest convenience.
I. Background and Posture of the Case
A. Nature of the Dispute
As you are aware, OWS filed this action on April 22, 2024, asserting infringement of four United States utility patents: U.S. Patent No. 10,234,847 (the "'847 Patent"), U.S. Patent No. 10,891,193 (the "'193 Patent"), U.S. Patent No. 9,678,562 (the "'562 Patent"), and U.S. Patent No. 11,402,015 (the "'015 Patent"). These patents cover a range of innovations in silicon photonics transceiver and waveguide multiplexing technologies — technologies that are at the core of next-generation optical interconnect solutions for hyperscale data center applications and that represent the product of years of substantial investment in research and development by OWS and its engineering teams.
The Complaint asserts seven counts against Lumicore Technologies, Inc. ("Lumicore"): four counts of direct patent infringement under 35 U.S.C. § 271(a), one count of induced infringement under 35 U.S.C. § 271(b), one count of contributory infringement under 35 U.S.C. § 271(c), and one count of willful infringement with a request for enhanced damages pursuant to 35 U.S.C. § 284. OWS's allegations of willfulness are grounded in Lumicore's actual knowledge of OWS's patent portfolio, which was specifically brought to Lumicore's attention through extensive pre-suit licensing correspondence and an in-person meeting, as discussed further below.
Lumicore filed its Answer and Counterclaims on June 17, 2024. Lumicore asserts defenses of non-infringement with respect to all four asserted patents, invalidity under 35 U.S.C. §§ 102 and 103, and unenforceability based on a theory of inequitable conduct. Lumicore also seeks a declaratory judgment of non-infringement. The substantive disputes between the parties are thus well-joined and the positions on both sides are thoroughly documented in the pleadings, contentions, and claim construction briefing.
B. Accused Products
The accused instrumentalities in this action encompass three of Lumicore's principal transceiver product lines: the LumiLink 400G-ZR+, the LumiLink 800G-DR8, and the LumiEdge 1600G-LR transceiver modules. These products are among Lumicore's highest-revenue offerings and are sold to major hyperscale cloud providers, telecommunications carriers, and enterprise data center operators.
The financial significance of this case is substantial. Based on publicly available financial filings and information produced in discovery, combined accused-product revenue for fiscal year 2023 alone was approximately $264.9 million. OWS's damages experts have estimated total projected accused-product revenue for the relevant period — spanning from the third quarter of 2022 through the fourth quarter of 2025 — at approximately $714.6 million. OWS seeks damages of approximately $210 million, encompassing lost profits on diverted sales, reasonable royalties on sales for which lost profits are not recoverable, and enhanced damages for Lumicore's willful infringement. OWS also seeks a permanent injunction against further infringement.
The magnitude of the damages at stake, combined with the injunctive relief sought, underscores both the seriousness of this dispute and the potential value of a negotiated resolution that provides certainty and commercial flexibility for both parties.
C. Pre-Suit Licensing History
This dispute did not arise in a vacuum. Before filing suit, OWS made extensive and sustained efforts to resolve this matter through licensing negotiations. Through its licensing agent, FairPoint Licensing Group, LLC, OWS initiated pre-suit outreach to Lumicore beginning with a detailed licensing letter sent on January 15, 2023, which identified each of the four asserted patents, described the relevant claims, and provided a preliminary claim chart mapping those claims to Lumicore's LumiLink and LumiEdge product lines.
Following that initial correspondence, OWS sent a supplemental licensing letter on May 15, 2023, providing additional technical detail and updated claim charts reflecting Lumicore's most recently released product specifications. Between those two written communications, the parties participated in an in-person meeting on April 20, 2023, in Austin, Texas, at which representatives of FairPoint and OWS's licensing team presented the patent portfolio and discussed potential licensing terms with Lumicore's intellectual property counsel and members of its engineering staff.
Despite these good-faith efforts, Lumicore ultimately declined to take a license. In a letter dated July 10, 2023, Lumicore's then-outside counsel informed FairPoint that Lumicore had obtained "competent legal opinions" concluding that its products do not infringe OWS's patents and that Lumicore did not intend to pursue a license. No further substantive engagement occurred before suit was filed.
The parties' substantive disagreements are therefore well-documented and their respective positions well-crystallized. The pre-suit licensing history also informs OWS's willfulness allegations and its contention that Lumicore had actual knowledge of OWS's patent rights and continued its infringing activities with full awareness of the risk.
D. Current Procedural Status
This case has progressed through a substantial portion of the pre-trial schedule established in the Scheduling Order issued on August 12, 2024. The principal milestones completed to date include the following:
• Infringement Contentions were served by OWS on September 16, 2024, and Invalidity Contentions were served by Lumicore on October 14, 2024.
• The parties filed their Joint Claim Construction Statement on October 28, 2024, identifying fourteen (14) disputed claim terms for construction by the Court.
• The parties have completed a full round of claim construction briefing: opening claim construction briefs were filed on November 15, 2024; responsive briefs were filed on December 6, 2024; reply briefs were filed on December 20, 2024; and sur-reply briefs were filed on January 10, 2025. The parties also filed their Joint Claim Construction Chart (final) on January 15, 2025.
• Multiple fact depositions have been completed, including depositions of key witnesses on both sides: Dr. Sandra Michaud (OWS, named inventor on the '847 and '193 Patents), Raymond Bautista (Lumicore, General Counsel), Angela Reeves (Lumicore, VP of Product Engineering), Kevin Ng (Lumicore, Director of Photonics Design), and Dr. Jian-Wei Huang (OWS, Director of Licensing and Standards).
• Significant document productions have been exchanged. OWS has produced approximately 182,000 documents comprising approximately 1.4 million pages. Lumicore has produced approximately 147,000 documents comprising approximately 980,000 pages. Substantial review and analysis of these productions is ongoing.
• discovery disputes remain pending, including OWS's Motion to Compel production of Lumicore's opinion-of-counsel letters (D.E. 38), which is directly relevant to the willfulness and enhanced damages claims.
Looking ahead, the following key deadlines and events remain on the case calendar:
• Markman hearing scheduled for March 14, 2025
• Fact discovery closes on May 1, 2025
• Plaintiff's expert reports due June 15, 2025
• Defendant's rebuttal expert reports due July 15, 2025
• Jury trial set for February 2, 2026 (estimated duration of 7–10 days)
In sum, both parties now possess a thorough understanding of the merits and risks of this case. The factual record is extensive. The claim construction positions have been fully briefed. The Court's ruling on claim construction — often the most consequential event in patent litigation — is imminent. This makes the present juncture an exceptionally opportune time for the parties to engage in mediation, before incurring the substantial additional costs associated with expert discovery, dispositive motions practice, Daubert challenges, and trial preparation.
II. Proposal for Mediation
A. Rationale for Mediation at This Stage
OWS believes that the current posture of this case is ideally suited for a productive mediation. Several considerations support this view.
First, the parties have completed extensive claim construction briefing and the Markman hearing is scheduled for March 14, 2025. Following the Court's claim construction order, the contours of both the infringement and invalidity issues will be significantly clearer. It is well recognized that claim construction rulings frequently prove dispositive — or at least highly influential — with respect to key questions of infringement and validity. A mediation session timed shortly after the Markman ruling would allow both parties to evaluate their respective positions with the benefit of the Court's constructions and to make informed assessments of the likely outcome of the remaining phases of litigation.
Second, if the parties prefer to engage even before the Markman hearing, a pre-hearing mediation could nonetheless be productive given the extensive record already developed. Both sides have identified and briefed their respective claim construction positions and have a clear understanding of how the disputed terms affect the merits. A skilled mediator could help the parties evaluate the range of plausible construction outcomes and their implications.
Third, and critically, both sides have already incurred — and will continue to incur — very significant litigation costs. Calderwood & Harkness's fees and costs through January 2025 alone exceed $3.2 million, against a total approved litigation budget of $18.5 million through trial and post-trial proceedings. While I am not privy to Lumicore's litigation expenditures, they are undoubtedly comparable given the scope of discovery and briefing completed to date. The remaining phases of this litigation — expert reports, expert depositions, summary judgment and Daubert motions, pretrial preparation, and a 7–10 day jury trial — will require substantial additional investment by both sides. A mediated resolution, if achievable, would avoid a material portion of those future costs.
Fourth, a negotiated resolution could avoid the business disruption that continued litigation imposes on both companies. OWS is a practicing entity — the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, with fiscal year 2023 revenue of approximately $487.3 million — and a settlement that includes a prospective licensing arrangement could serve both parties' commercial interests by providing certainty and enabling both companies to plan their product roadmaps without the cloud of pending litigation.
Finally, Lumicore, as a publicly traded company on the Nasdaq with a market capitalization of approximately $3.4 billion, also has an institutional interest in resolving litigation uncertainty that may affect shareholder value, analyst coverage, and the company's ability to pursue strategic transactions without the overhang of a pending $210 million patent case. A mediated outcome would provide the certainty that a trial verdict — subject as it always is to post-trial motions and appeal — cannot.
For all of these reasons, OWS believes that a mediation at this stage would be a constructive and efficient use of the parties' resources.
B. Proposed Timing
OWS proposes that mediation take place within thirty (30) to sixty (60) days following the Court's claim construction ruling, which is expected to issue shortly after the March 14, 2025 Markman hearing. Based on Judge Gilstrap's typical practice, this would place the mediation approximately in April or May 2025 — a window that falls before the close of fact discovery on May 1, 2025 (or shortly thereafter), and well in advance of the June 15, 2025 deadline for OWS's expert reports.
This timing has significant practical advantages. It allows the parties to evaluate the case in light of the Court's claim constructions while preserving the opportunity to resolve the dispute before the onset of the most costly remaining phase of litigation — expert discovery and dispositive motions.
In the alternative, if your client prefers an earlier session, OWS is willing to participate in mediation as early as February or early March 2025, prior to the Markman hearing. While a pre-Markman mediation necessarily involves greater uncertainty regarding claim construction outcomes, the extensive record developed to date may provide a sufficient foundation for productive discussions.
OWS is flexible on scheduling and is willing to accommodate Lumicore's and its counsel's calendar to the greatest extent practicable. I am confident that we can identify a date that works for all participants.
C. Proposed Format and Duration
OWS proposes a full-day mediation session, with the option for a second day if the parties are making progress and the mediator believes that additional time would be productive. In our experience, complex patent disputes of this nature — involving multiple patents, significant damages, and injunctive relief — benefit from the sustained engagement that a full day (or more) of facilitated discussion provides.
OWS has a strong preference for an in-person mediation. We suggest Dallas, Texas or Austin, Texas as convenient neutral locations for all parties, given the Eastern District of Texas venue and Lumicore's Austin headquarters. Both cities offer ample conference and mediation facilities, and each of the proposed mediators discussed below maintains offices in or near these locations.
As an alternative, OWS would be amenable to a hybrid format in which the mediator and the principals with settlement authority attend in person, with supporting team members — including technical advisors, damages experts, and additional counsel — available by videoconference. This approach can reduce travel costs while preserving the benefits of face-to-face engagement among the key decision-makers.
With respect to mediation submissions, OWS proposes that each party prepare a confidential mediation brief to be submitted to the mediator only — not exchanged with opposing counsel — in advance of the session. We suggest that these briefs be due ten (10) business days before the mediation date to give the mediator adequate time for preparation.
Finally, OWS considers it essential that decision-makers with full settlement authority attend the mediation on behalf of both parties. For OWS, this would include Rebecca Tanaka, General Counsel of OWS, and a representative of Ridgeline Capital Partners, LP, as OWS's majority shareholder and a necessary participant in any settlement authorization process. OWS requests that Lumicore similarly send Raymond Bautista, General Counsel, and an appropriate C-suite officer or board designee with authority to bind Lumicore to a settlement agreement. The presence of authorized decision-makers is, in our view, indispensable to a meaningful mediation.
III. Proposed Mediators
OWS proposes three highly qualified mediators, any one of whom we believe would be an excellent choice to facilitate a resolution of this dispute. We are, of course, willing to consider alternative candidates that Lumicore may wish to propose.
A. Retired Judge Harold K. Devereaux — JAMS, Dallas, Texas
Judge Harold K. Devereaux (Ret.) is a former United States District Judge with extensive experience mediating complex patent disputes, including numerous cases originating in the Eastern District of Texas and the Western District of Texas. Judge Devereaux possesses deep familiarity with patent claim construction, damages methodologies (including both lost profits and reasonable royalty analyses under Georgia-Pacific and its progeny), and the standards governing permanent injunctive relief under Northgate Group v. MercExchange, L.L.C., 547 U.S. 388 (2006). He has mediated numerous disputes involving semiconductor and high-technology intellectual property, and his reputation for thoroughness, fairness, and effectiveness is well established in the patent bar. Judge Devereaux is available through the JAMS Dallas office.
OWS's first preference is Judge Devereaux. We believe his judicial background and specific expertise in the Eastern District of Texas patent docket make him uniquely well suited to assist the parties in this matter.
B. Patricia Nolan-Ferris — ADR Services International, Austin, Texas
Patricia Nolan-Ferris is a nationally recognized patent mediator and arbitrator who has facilitated the resolution of scores of complex intellectual property disputes over the course of her distinguished career. Before transitioning to full-time ADR practice, Ms. Nolan-Ferris was a leading intellectual property litigator with over twenty-five years of experience in patent infringement cases involving high-technology products, including semiconductors, optical networking components, and telecommunications systems. She specializes in complex, multi-patent disputes with significant damages at issue and is known for her ability to help parties bridge substantial valuation gaps. Ms. Nolan-Ferris is based in Austin, Texas, which would be convenient for all parties and their counsel. She is available through ADR Services International.
C. Carl Weingarten — Judicial Arbitration Associates, Houston, Texas
Carl Weingarten is an experienced mediator of technology and intellectual property disputes. Mr. Weingarten served for many years as the managing partner of a major intellectual property litigation practice before transitioning to full-time ADR work. He has successfully mediated cases involving silicon-photonics technology, semiconductor fabrication processes, telecommunications infrastructure, and a range of other high-technology subject matters. His technical fluency and litigation experience allow him to engage deeply with the merits and to provide realistic assessments that facilitate productive negotiations. Mr. Weingarten is available through Judicial Arbitration Associates, Houston office.
D. Invitation for Lumicore's Input
OWS would welcome additional mediator candidates from Lumicore and its counsel. We are willing to agree on a single mediator from among the parties' combined proposals, or, if that proves difficult, to employ a strike-and-rank method in which each party ranks the candidates in order of preference and the mediator with the highest combined ranking is selected.
In the event the parties are unable to agree on a mediator through direct negotiation, OWS is willing to request a referral from the Court pursuant to the Eastern District of Texas ADR program, which provides a mechanism for court-assisted selection of a neutral.
IV. Costs and Logistics
OWS proposes that the mediator's fees and expenses be shared equally between OWS and Lumicore. Each party would bear its own attorneys' fees and costs associated with mediation preparation and attendance, including travel, expert consultation, and related expenses. This cost-sharing arrangement is standard in mediations of this type and ensures that neither party bears a disproportionate share of the cost of the neutral's services.
OWS further proposes that the parties enter into a mediation confidentiality agreement governing the mediation proceedings, or, in the alternative, that the parties rely on the applicable mediation privilege under Texas law and the protections afforded by Federal Rule of Evidence 408, which renders settlement communications inadmissible to prove liability or the amount of a disputed claim. A written confidentiality agreement would provide additional assurance to both parties that the substance of the mediation discussions will remain privileged and confidential, thereby encouraging candid and open dialogue.
Finally, OWS offers to work collaboratively with Hawthorne Vega & Cruz to prepare a joint mediation submission letter to the selected mediator outlining the case background, the key disputed issues, the current procedural posture, and any other information the mediator may find helpful in preparing for the session. This joint submission would be in addition to each party's separate confidential mediation brief.
V. Court's ADR Program
The Eastern District of Texas local rules and Judge Gilstrap's standing orders actively encourage parties in patent cases to explore alternative dispute resolution as a means of achieving efficient and cost-effective resolutions. Mediation is specifically contemplated as an appropriate ADR mechanism under the Court's program.
If Lumicore agrees to mediation, the parties can jointly notify the Court of their intention to mediate and, if appropriate, seek a brief continuance of upcoming deadlines to facilitate the mediation process. OWS does not believe a continuance will be necessary if mediation is timed as proposed — that is, within thirty to sixty days following the Markman ruling — as the mediation would occur within the existing discovery schedule. However, OWS is open to discussing schedule modifications if the parties mutually agree that a brief adjustment would promote a more productive mediation.
Alternatively, if the parties agree to proceed with a private mediation outside the Court's ADR program, no formal court filing is required, although a notice of mediation may be appropriate as a matter of courtesy to the Court and to inform the Court that the parties are actively pursuing resolution.
VI. OWS's Good-Faith Commitment
OWS is making this proposal in good faith and with the genuine desire to explore a mutually beneficial resolution of this dispute. OWS has consistently demonstrated its willingness to engage constructively with Lumicore, as reflected in FairPoint Licensing Group's extensive pre-suit licensing outreach, including the January 15, 2023 and May 15, 2023 licensing letters and the April 20, 2023 in-person meeting in Austin. OWS's preference — then and now — has always been to resolve this matter through a negotiated licensing arrangement that recognizes the value of OWS's patented innovations while allowing both companies to continue competing in the marketplace.
OWS approaches any mediation with the clear understanding that all discussions will be confidential, without prejudice, and subject to the protections of Federal Rule of Evidence 408. Nothing said or offered during the mediation will be used by either party in subsequent proceedings, and neither party's willingness to mediate or any positions taken during mediation will be construed as an admission of liability, an acknowledgment of weakness, or a concession on any issue.
To be direct: this proposal is not made from a position of weakness. OWS has strong confidence in its infringement case across all four asserted patents, in the validity of its patent claims, and in its damages theories. OWS's technical and financial experts have conducted extensive analyses supporting its claims, and OWS is fully prepared to take this case to trial and to seek a jury verdict, enhanced damages, and injunctive relief. That said, OWS recognizes that mediation can offer benefits — including speed, certainty, reduced cost, and the possibility of a forward-looking commercial arrangement — that even a favorable trial verdict cannot replicate. It is in that spirit that this proposal is made.
VII. Request for Response
OWS respectfully requests that you discuss this proposal with your client, Lumicore Technologies, Inc., including CEO Thomas Kessler and General Counsel Raymond Bautista, and provide a substantive response within twenty-one (21) calendar days of the date of this letter.
I am available to discuss this proposal by telephone or in person at your convenience. Please do not hesitate to contact me directly at the number and email address below. Additionally, Wendy Schultz, Lead Associate on the OWS matter at Calderwood & Harkness, is authorized to coordinate logistics and scheduling matters and may be reached at the same address.
Alan Ngo Calderwood & Harkness LLP 350 South Grand Avenue, 48th Floor Los Angeles, CA 90071 Direct: (213) 680-4200
Email: ango@calderwoodharkness.com
I look forward to hearing from you and hope that we can identify a path forward that serves both parties' interests.
VIII. Reservation of Rights
Nothing in this letter, and nothing in any mediation that may result from this proposal, constitutes or shall be construed as a waiver of any claims, defenses, rights, or remedies of OWS, including but not limited to:
• OWS's claims for enhanced damages for willful infringement under 35 U.S.C. § 284;
• OWS's request for a permanent injunction under 35 U.S.C. § 283;
• All rights and remedies available to OWS under 35 U.S.C. §§ 271, 283, 284, and 285, including the right to seek an award of attorneys' fees in exceptional cases;
• All claims, counterclaim defenses, and affirmative defenses asserted or available to OWS in the pleadings and throughout these proceedings.
OWS will continue to prosecute this action vigorously pending and notwithstanding any mediation proceedings. All deadlines established in the Scheduling Order issued August 12, 2024 (D.E. 22), including all discovery deadlines, pretrial deadlines, and the trial setting, remain in full force and effect. OWS does not seek any modification or extension of those deadlines as a result of this proposal, unless the parties mutually agree otherwise in connection with a mediation.
IX. Closing
I appreciate your time in reviewing this proposal and hope that both OWS and Lumicore can find a constructive path forward through mediation. The litigation process is well underway, the record is mature, and the parties are well positioned to evaluate their respective risks and opportunities. I believe a mediation at this juncture offers the best opportunity for a resolution that serves the commercial interests of both companies.
I look forward to your response.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Alan Ngo Partner
350 South Grand Avenue, 48th Floor Los Angeles, CA 90071 Direct: (213) 680-4200
Email: ango@calderwoodharkness.com
cc:
Rebecca Tanaka, General Counsel Optiwave Semiconductor Corp. 4810 Bayside Technology Parkway, Suite 300 Santa Clara, CA 95054
James "Jim" Callahan Whitmore & Callahan LLP 110 North College Avenue, Suite 800 Tyler, TX 75702
Marcus Delgado, Partner (billing partner) Calderwood & Harkness LLP
— INTERNAL NOTATIONS — DO NOT TRANSMIT —
DRAFT — CONTINGENCY — NOT YET AUTHORIZED FOR TRANSMISSION
This letter is to be sent only upon authorization by Alan Ngo following consultation with Rebecca Tanaka and Franklin Osei. Timing decision is contingent on: (1) whether the Court orders ADR; (2) outcome of settlement authority discussions with OWS Board and Ridgeline Capital Partners, LP; and (3) post-Markman posture assessment. See also Settlement Authority Memorandum (Doc. 154) and Mediation Position Statement (Doc. 156) for supporting analysis. — WS
Drafting Credits: Prepared by: Wendy Schultz, Lead Associate Reviewed by: Alan Ngo, Partner Date of last revision: [TO BE INSERTED]

CONFIDENTIAL — SUBJECT TO FED. R. EVID. 408 — SETTLEMENT COMMUNICATION

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