CONFIDENTIAL — PREPARED EXCLUSIVELY FOR MEDIATION PROCEEDINGS PROTECTED UNDER FED. R. EVID. 408 AND APPLICABLE MEDIATION CONFIDENTIALITY RULES NOT TO BE DISCLOSED TO THE COURT OR USED FOR ANY PURPOSE OTHER THAN SETTLEMENT DISCUSSIONS
CONFIDENTIAL MEDIATION POSITION STATEMENT OF PLAINTIFF OPTIWAVE SEMICONDUCTOR CORP.
Optiwave Semiconductor Corp. v. Lumicore Technologies, Inc. Case No. 2:24-cv-00319-JRG United States District Court for the Eastern District of Texas, marshall Division Before the Honorable James R. Gilstrap
Prepared by:
CALDERWOOD & HARKNESS LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071 Telephone: (213) 555-8200 Facsimile: (213) 555-8201
Alan Ngo, Responsible Partner Wendy Schultz, Lead Associate
Counsel for Plaintiff Optiwave Semiconductor Corp.
January 2025
DRAFT — CONTINGENCY — FOR MEDIATION USE ONLY
POTENTIAL MEDIATORS IDENTIFIED
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I. INTRODUCTION AND EXECUTIVE SUMMARY
A. Nature of the Case
This is a patent infringement action filed on April 22, 2024, by Optiwave Semiconductor Corp. ("OWS" or "Plaintiff") against Lumicore Technologies, Inc. ("Lumicore" or "Defendant"). The complaint asserts four United States utility patents covering foundational optical transceiver and waveguide multiplexing technologies that are central to the rapidly growing field of silicon-photonics data-center interconnects. These technologies are at the heart of OWS's business and represent years of research, development, and investment by OWS and its engineers.
The four asserted patents are:
• U.S. Patent No. 10,234,847 (the "'847 Patent") — directed to multi-channel silicon photonic waveguide multiplexer architectures with low insertion loss;
• U.S. Patent No. 10,891,193 (the "'193 Patent") — directed to high-bandwidth coherent optical transceiver integration on a silicon substrate;
• U.S. Patent No. 9,678,562 (the "'562 Patent") — directed to methods for thermal management of photonic integrated circuits using embedded micro-channel heat sinks; and
• U.S. Patent No. 11,402,015 (the "'015 Patent") — directed to polarization-diverse grating coupler designs for silicon photonic transceivers.
Together, these patents cover the core innovations that enable modern high-bandwidth, low-loss, thermally managed silicon-photonics transceiver modules — the very type of modules that Lumicore has been manufacturing and selling since the third quarter of 2022 without authorization from OWS.
The Complaint alleges seven counts against Lumicore: four counts of direct infringement (one per patent, 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 under 35 U.S.C. § 284. OWS seeks approximately $210 million in total damages, as well as a permanent injunction prohibiting Lumicore from continuing to manufacture, sell, offer for sale, import, or use its infringing products in the United States.
This case is assigned to the Honorable James R. Gilstrap in the Eastern District of Texas, marshall Division, and is proceeding on an aggressive schedule toward a trial date of February 2, 2026. A Markman hearing on claim construction is set for March 14, 2025, and fact discovery closes on May 1, 2025.
B. Why This Case Should Settle
OWS submits this Mediation Position Statement with the conviction that the evidence strongly supports its claims and that Lumicore faces substantial exposure at trial. At the same time, OWS recognizes that mediation offers both parties an opportunity to achieve a business resolution that avoids the significant costs, uncertainty, and distraction inherent in a jury trial and the inevitable post-trial motions and appellate proceedings that would follow.
The key reasons this case should settle are as follows:
First, OWS has compelling evidence of infringement across all four patents and all three accused product lines. Independent reverse-engineering teardowns performed by Benchmark Semiconductor Analysis, LLC confirm the presence of the accused structures in each of Lumicore's LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR product lines. OWS has served detailed claim charts mapping each asserted claim limitation to specific structures and functionalities identified in the accused products. Lumicore's own CTO, Dr. Sandra Michaud, was unable to identify specific non-infringing design alternatives during her deposition.
Second, Lumicore faces substantial financial exposure. OWS's damages demand at trial is approximately $210 million, reflecting a combination of lost profits, reasonable royalties, and a selected enhancement for willful infringement. If the Court were to apply the full treble-damages enhancement available under Section 284, Lumicore's exposure could exceed $285 million. Moreover, OWS intends to seek a permanent injunction, which — if granted — would force Lumicore to withdraw from approximately 42% of its product revenue for an estimated 18 to 24 months while it undertakes a redesign effort. The combined financial and operational impact of an adverse verdict and injunction would constitute a material adverse event for Lumicore, a Nasdaq-listed public company with a market capitalization of approximately $3.4 billion.
Third, the willfulness evidence is particularly strong. OWS provided pre-suit notice through its licensing agent, FairPoint Licensing Group, LLC, beginning on January 15, 2023 — more than fifteen months before suit was filed. Despite multiple written notices and an in-person meeting, Lumicore declined to take a license and subsequently launched the LumiEdge 1600G-LR product without conducting any formal design-around analysis. Deposition testimony confirms that Lumicore's engineering team reviewed OWS's published patent applications during the design phase of the LumiLink 400G-ZR+ product. This evidence supports not only willful infringement but also a substantial enhancement of damages.
Fourth, the case is advancing rapidly toward trial. The parties have already invested significant resources in discovery, claim construction briefing, depositions, and expert retention. The approaching Markman hearing (March 14, 2025), the close of fact discovery (May 1, 2025), and the impending IPR filing deadline (on or about May 1, 2025) all create natural inflection points at which settlement makes economic sense for both sides.
Fifth, mediation offers an opportunity for a business resolution. Both OWS and Lumicore are well-managed companies with sophisticated leadership teams that understand the value of certainty. A negotiated resolution can provide Lumicore with the certainty of a defined financial obligation and a license to continue selling its products, while providing OWS with fair compensation for the infringement that has occurred and a framework for the parties' future commercial relationship.
C. OWS's Settlement Posture
OWS approaches this mediation from a position of strength but with a genuine interest in reaching a comprehensive resolution that protects its intellectual property rights and provides fair compensation for past and ongoing infringement. OWS is not seeking to put Lumicore out of business; rather, OWS seeks to be fairly compensated for the unauthorized use of its patented technologies and to establish a framework — whether through licensing or otherwise — that respects OWS's intellectual property going forward.
OWS is prepared to discuss both monetary and forward-looking licensing terms, including the possibility of a prospective royalty-bearing license that would allow Lumicore to continue selling its products (including next-generation products) under commercially reasonable terms. OWS is also open to creative deal structures, provided that any resolution reflects the strength of OWS's case and the value of the patents at issue.
At the same time, OWS will not accept a nuisance-value settlement. The infringement evidence is too strong, the willfulness evidence too compelling, and OWS's patent portfolio too valuable to be resolved for anything less than fair compensation. As set forth in detail below, OWS's settlement expectations are grounded in the evidence and reflect a principled assessment of the case.
II. THE PARTIES
A. Optiwave Semiconductor Corp. (Plaintiff)
Optiwave Semiconductor Corp. is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. The company was founded in 2011 and currently employs approximately 1,250 people across its Santa Clara headquarters, a design center in Portland, Oregon, and field offices in major metropolitan markets throughout the United States and internationally.
OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, a rapidly growing market driven by the exponential demand for data-center bandwidth to support cloud computing, artificial intelligence, and machine learning workloads. OWS's key product families — the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families — are direct competitors to Lumicore's accused products and are sold to the same hyperscale data-center operators that purchase Lumicore's products.
For fiscal year 2023, OWS reported total revenue of $487.3 million and net income of $61.4 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. Of that total revenue, approximately $310 million was attributable to products that practice one or more of the asserted patents. OWS has invested heavily in research and development: the company's cumulative R&D expenditure over the past five fiscal years exceeds $280 million, and it maintains a team of over 200 engineers focused on silicon-photonics design and development.
OWS holds a substantial and actively managed intellectual property portfolio consisting of 142 issued U.S. patents and 58 pending U.S. patent applications. The company's IP program is overseen by its Chief Technology Officer, Dr. Jian-Wei Huang, and managed on a day-to-day basis by its in-house IP counsel in coordination with outside prosecution counsel at Cascade IP Advisors, LLC.
OWS is approximately 55% owned by Ridgeline Capital Partners, LP, a private equity firm that acquired its controlling stake in 2019 for $780 million. The Board of Directors is chaired by Franklin Osei, a Ridgeline designee. The company's senior leadership team includes:
• CEO: Dr. Priya Ramaswamy
• CTO: Dr. Jian-Wei Huang
• General Counsel: Rebecca Tanaka
• CFO: David Leitner
Importantly, OWS is a practicing entity that directly manufactures and sells products embodying each of the four asserted patents. This case is not an assertion by a non-practicing entity (NPE) or a patent assertion entity (PAE). OWS competes directly with Lumicore in the marketplace and has suffered real, tangible competitive harm as a result of Lumicore's infringement. This fact is significant for purposes of damages, injunctive relief, and the overall equities of the case.
B. Lumicore Technologies, Inc. (Defendant)
Lumicore Technologies, Inc. is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. The company was founded in 2015 and employs approximately 870 people. Lumicore is a fast-growing entrant in the silicon-photonics transceiver market, targeting both the hyperscale data-center and telecommunications segments.
Lumicore completed an initial public offering on the Nasdaq Stock Market in March 2022 at $24 per share. As of the date of this filing, Lumicore's shares are trading at approximately $37 per share, giving the company a market capitalization of approximately $3.4 billion based on approximately 91.8 million shares outstanding. For fiscal year 2023, Lumicore reported estimated total revenue of $312.6 million, of which approximately $264.9 million (approximately 84.7%) was attributable to the three accused product lines at issue in this case.
Lumicore's senior leadership team includes:
• CEO: Thomas "Tom" Kessler
• CTO: Dr. Sandra Michaud
• General Counsel: Raymond Bautista
• CFO: Janet Moreno
Lumicore is represented in this action by Hawthorne Vega & Cruz LLP, a firm with offices in Austin, Texas and New York, New York. The lead partner on the matter is Catherine "Kate" Rourke. Lumicore's local counsel in the Eastern District of Texas is Maria Garza of Trask Eddington LLP, Tyler, Texas.
C. Counsel for OWS
OWS is represented in this action by Calderwood & Harkness LLP, Los Angeles, California. The litigation team includes:
• Responsible Partner: Alan Ngo
• Billing Partner: Marcus Delgado
• Lead Associate: Wendy Schultz
• Working Associate: Omar Siddiqui
OWS's local counsel in the Eastern District of Texas is James "Jim" Callahan of Whitmore & Callahan LLP, Tyler, Texas. Mr. Callahan has practiced in the Eastern District for over twenty years and has extensive experience in patent cases before Judge Gilstrap.
III. THE ASSERTED PATENTS
A. Overview of the Patent Portfolio
The four patents asserted in this action are all United States utility patents that are valid, enforceable, and in full force and effect. All maintenance fees are current, and no reexamination or inter partes review proceedings have been instituted against any of the asserted patents.
Together, the four patents cover foundational technologies in the field of silicon photonics — the integration of optical and electronic functionalities on a silicon substrate to enable high-bandwidth, energy-efficient data-center interconnects. Specifically, the asserted patents address four critical aspects of silicon-photonics transceiver design:
1. Waveguide multiplexing ('847 Patent) — the combining of multiple optical channels onto a single waveguide path with minimal signal loss;
2. Coherent optical transceiver integration ('193 Patent) — the integration of coherent optical transceiver functionality onto a silicon substrate, enabling high-bandwidth data transmission;
3. Thermal management of photonic integrated circuits ('562 Patent) — the use of embedded micro-channel heat-sink structures to dissipate heat generated by high-power photonic ICs; and
4. Polarization-diverse grating couplers ('015 Patent) — advanced grating coupler designs that enable efficient coupling of light into silicon waveguides regardless of polarization state.
These four technologies are not peripheral or ancillary features of the accused products — they are the core innovations that make modern high-bandwidth silicon-photonics transceiver modules possible. Without these technologies, the accused products would not function at the performance levels that make them commercially viable.
Two of the patents — the '562 Patent and the '847 Patent — are in the same patent family and share a continuation relationship. Two other patents — the '193 Patent and the '015 Patent — share a common provisional application (Provisional Application No. 62/499,117, filed April 7, 2017), establishing an early priority date for the key innovations they cover.
Critically, no inter partes review (IPR) petitions have been filed against any of the asserted patents to date. The one-year filing deadline under 35 U.S.C. § 315(b), measured from service of the complaint on Lumicore, expires on or about May 1, 2025. The absence of any IPR challenge, more than eight months after service of the complaint, is itself a significant indicator of the strength of the patents. Lumicore's failure to challenge the patents at the Patent Trial and Appeal Board ("PTAB") — a forum widely recognized as more favorable to invalidity challengers than district court — speaks volumes about the weakness of its invalidity positions.
B. The '847 Patent (U.S. Patent No. 10,234,847)
The '847 Patent, titled "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss," was filed on September 14, 2016 and issued on March 19, 2019. The original and current assignee is Optiwave Semiconductor Corp.
This patent covers the core waveguide multiplexer architecture used in modern silicon-photonics transceiver modules. The claimed invention provides a multi-channel waveguide multiplexer design that achieves significantly lower insertion loss than prior-art designs, enabling more efficient signal transmission and reduced power consumption. The invention addresses a critical bottleneck in silicon-photonics transceiver design: as the number of optical channels increases (to support higher aggregate bandwidth), insertion loss at the multiplexer stage traditionally increases, degrading signal quality and limiting link reach. The '847 Patent's innovations solve this problem through a novel waveguide geometry and coupling arrangement that minimizes transition losses between channels.
The '847 Patent was prosecuted through full examination at the United States Patent and Trademark Office ("USPTO"), where it was initially rejected and subsequently allowed after the applicant distinguished the claimed invention over multiple cited references. The patent issued with 22 claims, including 4 independent claims. Claims 1, 7, 14, and 19 are asserted in this action.
C. The '193 Patent (U.S. Patent No. 10,891,193)
The '193 Patent, titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate," was filed on April 7, 2017 (claiming priority to Provisional Application No. 62/499,117, filed April 7, 2017) and issued on January 12, 2021. The original and current assignee is Optiwave Semiconductor Corp.
This patent covers the integration of coherent optical transceiver functionality on a silicon substrate — a breakthrough that enabled the development of high-bandwidth data-center interconnects operating at 400G and beyond. Prior to this invention, coherent optical transceivers were typically implemented using discrete components on indium phosphide or other III-V semiconductor substrates, making them too expensive and too large for widespread data-center deployment. The '193 Patent's innovations enabled, for the first time, the fabrication of a complete coherent transceiver on a silicon-on-insulator (SOI) platform, dramatically reducing cost and form factor while maintaining performance.
The '193 Patent was prosecuted through full examination and survived multiple office actions, including an initial rejection based on a combination of prior-art references. The patent issued with 28 claims, including 5 independent claims. Claims 1, 3, 7, 15, and 22 are asserted in this action.
D. The '562 Patent (U.S. Patent No. 9,678,562)
The '562 Patent, titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks," was filed on November 22, 2014 and issued on June 13, 2017. The patent was originally assigned to Solara Optics, Inc. and was acquired by OWS pursuant to an Asset Purchase Agreement dated June 15, 2018, along with eleven other patents, for a total purchase price of $34.5 million. The chain of title is clean and fully documented.
This patent covers embedded micro-channel heat-sink structures that are critical to the thermal management of photonic integrated circuits. As photonic ICs have become more complex and more densely integrated, thermal management has emerged as one of the most significant challenges in the field. The '562 Patent's innovations provide a method for embedding micro-channel heat-sink structures directly within the photonic IC substrate, enabling efficient heat dissipation without the need for bulky external cooling solutions. This approach allows photonic ICs to operate at higher power levels without performance degradation due to thermal effects.
The '562 Patent was prosecuted through full examination at the USPTO and issued with 18 claims, including 3 independent claims. Claims 1, 8, and 12 are asserted in this action.
E. The '015 Patent (U.S. Patent No. 11,402,015)
The '015 Patent, titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers," was filed on August 30, 2019 (claiming priority to Provisional Application No. 62/499,117, filed April 7, 2017) and issued on August 2, 2022. The original and current assignee is Optiwave Semiconductor Corp.
This patent covers advanced grating coupler designs that enable polarization diversity in silicon-photonic transceivers. In fiber-optic communication systems, the polarization state of light can vary unpredictably as it propagates through optical fiber. Traditional grating couplers are polarization-sensitive, meaning they efficiently couple only one polarization state of light, resulting in significant signal loss and degraded performance. The '015 Patent's innovations provide a polarization-diverse grating coupler that efficiently couples light regardless of its polarization state, a critical capability for high-performance transceiver modules.
The '015 Patent was prosecuted through full examination and issued with 24 claims, including 4 independent claims. Claims 1, 5, 12, and 18 are asserted in this action.
F. Prosecution History and Validity Strength
All four asserted patents were prosecuted by Cascade IP Advisors, LLC, under the supervision of Lead Prosecution Attorney Dr. Martin Chu, a registered patent attorney with a Ph.D. in electrical engineering from the Massachusetts Institute of Technology and over twenty years of experience prosecuting semiconductor and photonics patents. Each patent was subjected to the full rigor of USPTO examination, including multiple office actions, prior-art searches, and substantive rejections that were overcome through amendment and argument. Each patent was ultimately allowed by the USPTO examiner over the cited prior art, and each carries the statutory presumption of validity under 35 U.S.C. § 282.
The validity of the asserted patents is further strengthened by the absence of any inter partes review challenge. Lumicore was served with the complaint on or about April 29, 2024, giving it until approximately May 1, 2025 to file IPR petitions under the one-year bar of 35 U.S.C. § 315(b). As of the date of this submission, more than eight months have elapsed since service of the complaint, and Lumicore has not filed any IPR petitions. While Lumicore may still file before the deadline, its delay in doing so — particularly given the resources available to a company with a $3.4 billion market capitalization and represented by a sophisticated law firm — suggests that Lumicore's invalidity positions are not strong enough to survive the PTAB's institution threshold.
Lumicore's invalidity contentions, served on October 1, 2024, cite a total of 23 prior-art references across the four asserted patents. OWS's analysis of these references — supported by the expert testimony of Dr. Caroline Ashford, Professor of Electrical Engineering and Computer Science at the Northfield Institute of Technology — demonstrates that none of the cited references anticipates or renders obvious any of the asserted claims. The deficiencies in Lumicore's invalidity positions are discussed in detail in Section VIII.B below.
Additionally, Lumicore has asserted a counterclaim for inequitable conduct, alleging that Dr. Jian-Wei Huang, OWS's CTO and a named inventor on the '193 Patent, failed to disclose a prior publication during the prosecution of that patent. This counterclaim is meritless. The allegedly undisclosed reference is cumulative of prior art that was already cited by the USPTO examiner during prosecution. The reference does not disclose any element or combination of elements that was not already before the examiner, and Lumicore cannot establish the specific intent to deceive required under the Federal Circuit's stringent standard in Brightmoor & Co., Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc). This defense is discussed further in Section VIII.C below.
IV. THE ACCUSED PRODUCTS AND INFRINGEMENT EVIDENCE
A. Lumicore's Accused Product Lines
OWS accuses three of Lumicore's product lines of infringing the asserted patents. These three product lines — the LumiLink 400G-ZR+, the LumiLink 800G-DR8, and the LumiEdge 1600G-LR — collectively represent the overwhelming majority of Lumicore's revenue and are direct competitors to OWS's own product families in the hyperscale data-center transceiver market.
The following table summarizes the accused products, their launch dates, estimated fiscal year 2023 revenues, and the patents each product is accused of infringing:
The total accused-product revenue for fiscal year 2023 alone was approximately $264.9 million, representing approximately 84.7% of Lumicore's total reported revenue. For the full infringement period — from the launch of the LumiLink 400G-ZR+ in Q3 2022 through Q1 2024 — total accused-product revenue is approximately $378.2 million. Projected through the anticipated trial date (Q3 2022 through Q4 2025), total accused-product revenue is expected to reach approximately $714.6 million.
These figures underscore the magnitude of Lumicore's infringing activity and the significance of the patents at issue. Lumicore has built a substantial portion of its business on products that incorporate OWS's patented technologies, and that business has grown rapidly: the LumiLink 800G-DR8, which infringes all four asserted patents, has become Lumicore's highest-revenue product in less than two years since launch.
B. Technical Infringement Evidence
OWS has developed a strong technical record supporting its infringement allegations. The foundation of this evidence is a series of independent reverse-engineering teardown analyses performed by Benchmark Semiconductor Analysis, LLC ("Benchmark"), an industry-leading semiconductor analysis firm headquartered in San Jose, California. The lead engineer on the project was Kevin Ng, a senior failure analysis and reverse-engineering specialist with over fifteen years of experience analyzing semiconductor devices, including silicon-photonics transceivers.
Benchmark performed the following teardown analyses:
December 12, 2022 — LumiLink 400G-ZR+ Teardown Report. Benchmark's initial teardown of the LumiLink 400G-ZR+ transceiver module confirmed the presence of the accused waveguide multiplexer structures (corresponding to the claims of the '847 Patent), the coherent optical transceiver architecture integrated on a silicon substrate (corresponding to the claims of the '193 Patent), and the embedded micro-channel heat-sink structures (corresponding to the claims of the '562 Patent). Scanning electron microscopy (SEM), energy-dispersive X-ray spectroscopy (EDX), and focused ion beam (FIB) cross-sectioning were employed to identify and characterize the relevant structures at the sub-micron level.
June 2023 — LumiLink 800G-DR8 Teardown. A subsequent teardown of the LumiLink 800G-DR8 transceiver module confirmed infringement of all four asserted patents. In addition to the structures identified in the 400G-ZR+ teardown, the 800G-DR8 module incorporated a polarization-diverse grating coupler corresponding to the claims of the '015 Patent. The 800G-DR8 module was found to utilize an advanced version of the same waveguide multiplexer architecture identified in the 400G-ZR+ teardown, with additional channels but the same fundamental design.
February 2024 — LumiEdge 1600G-LR Teardown. A teardown of the LumiEdge 1600G-LR transceiver module — Lumicore's newest product, launched in Q4 2023 — confirmed infringement of the '193 Patent and the '015 Patent. The LumiEdge 1600G-LR utilizes a different waveguide multiplexer architecture than the LumiLink products (and thus is not accused of infringing the '847 or '562 Patents), but it incorporates the same coherent transceiver integration and polarization-diverse grating coupler technologies covered by the '193 and '015 Patents.
Building on the Benchmark teardowns, OWS served its Infringement Contentions on September 16, 2024, pursuant to Patent Rule 3-1 of the local rules for the Eastern District of Texas. The Infringement Contentions include detailed claim-by-claim, limitation-by-limitation analyses for each asserted patent and each accused product, supported by claim charts that map each claim limitation to specific structures and functionalities identified in the accused products through the Benchmark teardowns, Lumicore's own product documentation (including datasheets, design guides, and application notes), and Lumicore's source code and design files produced in discovery.
OWS asserts both literal infringement and, for certain claims, infringement under the doctrine of equivalents. Specifically, OWS asserts doctrine-of-equivalents infringement for Claims 3 and 7 of the '193 Patent and Claim 12 of the '015 Patent. In each case, the accused structures perform substantially the same function, in substantially the same way, to achieve substantially the same result as the claimed limitations, and the differences between the accused structures and the claimed limitations are insubstantial.
The reliability and thoroughness of OWS's technical infringement evidence was confirmed through the deposition of Kevin Ng on January 7, 2025. During his deposition, Mr. Ng testified in detail about the teardown methodology employed by Benchmark, including the chain of custody for the accused products, the analytical techniques used, and the specific structures and functionalities identified in each accused product. Mr. Ng confirmed that each of the accused structures identified in the teardown reports corresponds to the claim limitations asserted in OWS's Infringement Contentions. His testimony was clear, consistent, and unshaken on cross-examination.
C. Deposition Testimony Supporting Infringement
In addition to the Benchmark teardown evidence, OWS has obtained significant deposition testimony from Lumicore's own personnel that supports OWS's infringement allegations and undermines Lumicore's defenses.
Dr. Sandra Michaud (Lumicore CTO, deposed November 19, 2024). Dr. Michaud, who oversees all engineering and product development at Lumicore, provided testimony that is highly damaging to Lumicore's position. Most significantly, Dr. Michaud admitted that she personally reviewed OWS's published patent application No. 2018/0123456 — which corresponds to the '193 Patent — during the design phase of the LumiLink 400G-ZR+ product in 2021. When pressed, Dr. Michaud acknowledged that she was aware of the specific claims in the published application at the time of the product design but stated that she "did not believe the claims, as published, covered Lumicore's approach." When asked to identify specific non-infringing design alternatives that Lumicore could have adopted, Dr. Michaud was unable to identify any. This testimony is significant both for infringement (establishing that Lumicore designed its products with knowledge of OWS's patent claims) and for willfulness (establishing awareness of the patents during the design phase).
Raymond Bautista (Lumicore General Counsel, deposed December 3, 2024). Mr. Bautista confirmed that he received FairPoint Licensing Group's licensing/notice letter dated January 15, 2023, identifying the '847, '193, and '562 Patents and the LumiLink 400G-ZR+ product. Mr. Bautista further confirmed that he forwarded the letter to Lumicore's outside counsel at Hawthorne Vega & Cruz LLP within three business days of receipt. Critically, Mr. Bautista admitted that no formal design-around analysis was commissioned before Lumicore launched the LumiEdge 1600G-LR in Q4 2023 — meaning that Lumicore launched a new product after receiving notice of infringement without undertaking any substantive effort to avoid the asserted patents. Mr. Bautista stated that Lumicore relied on "competent legal opinions" but refused to produce those opinions, asserting attorney-client privilege.
Anticipated Testimony of Melissa Chen. OWS expects to present testimony from Melissa Chen, a former Lumicore engineer who is now employed at Veridian Photonics, Inc. Ms. Chen was a member of the LumiLink 400G-ZR+ design team from 2020 through 2022. Ms. Chen is expected to describe how the design team accessed and reviewed OWS's published patent applications during the product design phase, including the published application corresponding to the '193 Patent. Ms. Chen's testimony is expected to corroborate Dr. Michaud's deposition testimony and provide additional detail about the extent to which Lumicore's engineers were aware of and relied upon OWS's patented technologies.
D. Claim Construction Posture
The parties have identified 16 claim terms for construction, of which 2 have been agreed upon, leaving 12 disputed terms (plus 2 additional terms on which the parties have exchanged constructions but have not yet finalized their positions) for resolution at the Markman hearing scheduled for March 14, 2025.
The key disputed claim terms include:
• "waveguide multiplexer" ('847 Patent, Claims 1 and 7)
• "integrated on a silicon substrate" ('193 Patent, Claims 1 and 15)
• "micro-channel heat sink" ('562 Patent, Claims 1 and 8)
• "polarization-diverse grating coupler" ('015 Patent, Claims 1, 5, and 12)
OWS's proposed constructions for these terms are broadly consistent with the plain and ordinary meaning of the claim language as understood by a person of ordinary skill in the art. OWS's constructions are supported by the patent specifications, the prosecution histories, and the expert testimony of Dr. Caroline Ashford, who has submitted a detailed declaration in support of OWS's claim construction briefing.
Lumicore's proposed constructions, by contrast, are improperly narrow. Lumicore seeks to import limitations from preferred embodiments described in the specifications into the independent claims, a practice repeatedly rejected by the Federal Circuit. For example, Lumicore proposes to construe "waveguide multiplexer" as limited to "an arrayed waveguide grating that combines optical signals using a slab coupler and phase-shifted waveguide array" — a construction that excludes other types of waveguide multiplexers clearly encompassed by the claim language and specification. Similarly, Lumicore proposes to construe "integrated on a silicon substrate" as limited to "monolithically fabricated on a single silicon die without hybrid bonding or heterogeneous integration" — a construction that would exclude the well-known and widely used technique of heterogeneous integration, which is expressly discussed in the '193 Patent specification as an alternative embodiment.
OWS's Opening Claim Construction Brief was filed on November 15, 2024, and its Reply Brief was filed on December 20, 2024. Both briefs present strong intrinsic evidence — drawn from the claim language, specifications, and prosecution histories — supporting OWS's proposed constructions. OWS is confident that the Court will adopt constructions consistent with, or at least not materially different from, OWS's proposals.
Importantly, however, OWS's infringement case does not depend on winning every claim construction dispute. Even under Lumicore's narrower proposed constructions, infringement can be established for the core product lines. For example, even if the Court adopts Lumicore's narrow construction of "micro-channel heat sink" (requiring a closed-loop liquid-cooling system with channels between 10 µm and 200 µm), the Benchmark teardowns demonstrate that the LumiLink 400G-ZR+ and 800G-DR8 products incorporate structures that fall within even that narrow construction. OWS's infringement case is robust across a range of plausible claim construction outcomes.
V. WILLFUL INFRINGEMENT
A. The Legal Standard
Under the Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), enhanced damages under 35 U.S.C. § 284 are available at the district court's discretion where the infringer's conduct is "willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or — indeed — characteristic of a pirate." Id. at 103–04. The Halo decision rejected the rigid two-part test previously imposed by the Federal Circuit in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), and returned discretion to the district courts to evaluate willfulness on the totality of the circumstances.
To establish willful infringement, the patent holder must show that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent and that this risk was either known or so obvious that it should have been known to the infringer. Where willful infringement is established, the Court has discretion to award enhanced damages up to three times the amount of compensatory damages found by the jury under 35 U.S.C. § 284.
The Federal Circuit has identified nine factors, known as the Read factors, that guide the district court's exercise of discretion in determining whether and to what extent to enhance damages. See Read Corp. v. Portec, Inc., 970 F.2d 816, 826–27 (Fed. Cir. 1992). These factors include whether the infringer deliberately copied the patented design, whether the infringer investigated the scope of the patent and formed a good-faith belief that it was invalid or not infringed, the infringer's behavior as a party to the litigation, the infringer's size and financial condition, the closeness of the case, the duration of the infringer's misconduct, any remedial action by the infringer, the infringer's motivation for harm, and whether the infringer attempted to conceal its misconduct.
B. Evidence of Willfulness
OWS has developed a comprehensive record demonstrating that Lumicore's infringement was willful, deliberate, and continuing. The evidence falls into several categories, each of which independently supports a finding of willfulness.
Pre-Suit Notice. OWS, through its licensing agent FairPoint Licensing Group, LLC (Managing Director: Angela Reeves), provided detailed pre-suit notice to Lumicore beginning on January 15, 2023. On that date, FairPoint sent a comprehensive licensing/notice letter to Raymond Bautista, Lumicore's General Counsel, specifically identifying the '847, '193, and '562 Patents, the LumiLink 400G-ZR+ product as an accused infringing product, and specific claims and claim limitations that OWS believed were infringed. The letter was accompanied by preliminary claim charts and an invitation to enter into licensing discussions.
Lumicore's Response. Lumicore responded to FairPoint's letter on February 28, 2023, through its outside counsel at Hawthorne Vega & Cruz LLP. The response disputed infringement and questioned the validity of the asserted patents but provided no substantive technical analysis to support these assertions. The response was approximately three pages in length and did not address the specific claim limitations identified in FairPoint's preliminary claim charts.
In-Person Meeting. On April 20, 2023, the parties held an in-person meeting in Austin, Texas, attended by Angela Reeves (FairPoint), Rebecca Tanaka (OWS General Counsel), Raymond Bautista (Lumicore General Counsel), and Kate Rourke (Hawthorne Vega & Cruz). At this meeting, OWS's representatives presented a detailed overview of the asserted patents, the accused products, and the basis for OWS's infringement allegations. According to Angela Reeves (deposed December 10, 2024), Lumicore showed "no interest in negotiating" and did not engage substantively with the technical merits of OWS's position. Ms. Reeves testified that Mr. Bautista and Ms. Rourke "listened politely but gave no indication that Lumicore intended to take any action to avoid the patents or negotiate a license."
Supplemental Notice. On May 15, 2023, FairPoint sent a second licensing letter to Lumicore, expanding the scope of the notice to include the '015 Patent (which had been issued on August 2, 2022) and the LumiLink 800G-DR8 product (which had been launched in Q1 2023). The supplemental letter included updated claim charts addressing all four patents and both accused products.
Lumicore's Declination. On July 10, 2023, Lumicore, through Hawthorne Vega & Cruz, formally declined to take a license. The declination letter stated that Lumicore had obtained "competent legal opinions" concluding that its products do not infringe the asserted patents and questioning the validity of those patents. Despite this reference to legal opinions, Lumicore has refused to produce the opinions in discovery, asserting attorney-client privilege. OWS has filed a Motion to Compel production of the opinions (Docket Entry 38, filed October 21, 2024), which remains pending before the Court.
Post-Notice Product Launch. After receiving full notice of all four asserted patents and two accused product lines — and after declining to take a license — Lumicore proceeded to launch the LumiEdge 1600G-LR in Q4 2023. This new product launch occurred with full knowledge of OWS's patent portfolio and without any formal design-around analysis. Mr. Bautista admitted at his deposition on December 3, 2024 that no formal design-around study was commissioned before the LumiEdge 1600G-LR was launched. This admission is particularly damning: Lumicore launched an entirely new product into the market, knowing that OWS had identified its existing products as infringing, without even bothering to analyze whether the new product avoided the asserted patents.
Design-Phase Awareness. The evidence of willfulness extends beyond the pre-suit notice period to the very design phase of Lumicore's products. Dr. Sandra Michaud, Lumicore's CTO, testified at her deposition on November 19, 2024 that she personally reviewed OWS's published patent application No. 2018/0123456 (corresponding to the '193 Patent) during the design phase of the LumiLink 400G-ZR+ product in 2021. This means that Lumicore's engineering leadership was aware of OWS's patent claims before the first accused product was even designed, and designed the product with full knowledge of those claims. Anticipated testimony from Melissa Chen, a former Lumicore engineer, is expected to provide further detail about the extent of the design team's awareness of and reliance upon OWS's patented technologies.
Refusal to Produce Opinion Letters. Lumicore's refusal to produce the "competent legal opinions" referenced in its July 10, 2023 declination letter further supports a finding of willfulness. If Lumicore had obtained genuinely exculpatory opinions — opinions concluding in good faith that its products did not infringe and that the asserted patents were invalid — one would expect Lumicore to waive privilege and produce those opinions as evidence of its good faith. The fact that Lumicore has instead chosen to assert privilege, while simultaneously relying on the existence of the opinions to support a good-faith defense, supports an adverse inference that the opinions do not in fact support Lumicore's position. OWS's Motion to Compel (D.E. 38) addresses this issue and seeks an order requiring production or, in the alternative, precluding Lumicore from relying on an advice-of-counsel defense at trial.
C. Read Factor Analysis Summary
An analysis of the nine Read factors weighs heavily in OWS's favor and supports a substantial enhancement of damages:
1. Deliberate copying. Supported by Dr. Michaud's testimony that the LumiLink 400G-ZR+ design team reviewed OWS's published patent applications during the product design phase, and by the anticipated testimony of Melissa Chen.
2. Investigation and good-faith belief. Lumicore claims to have obtained "competent legal opinions" but refuses to produce them, undermining any assertion of good faith. Mr. Bautista's admission that no design-around analysis was conducted before the LumiEdge 1600G-LR launch further undermines this factor.
3. Infringer's behavior as a party to the litigation. Lumicore has asserted a meritless inequitable conduct counterclaim and has taken aggressive positions on privilege and discovery matters, but this factor is neutral at this stage.
4. Infringer's size and financial condition. Lumicore is a publicly traded company with a market capitalization of approximately $3.4 billion. It has the financial resources to have conducted a thorough investigation and to have taken a license, and it has the financial resources to pay enhanced damages.
5. Closeness of the case. OWS's infringement evidence is strong, Lumicore's defenses are weak, and the case is not close.
6. Duration of the infringer's misconduct. Lumicore has been selling infringing products since Q3 2022 — over two years — and continues to do so. The misconduct has been ongoing and expanding, with the launch of additional infringing products after notice.
7. Remedial action by the infringer. Lumicore has taken no remedial action. It has not redesigned its products, has not sought a license, and has not withdrawn any accused products from the market.
8. Infringer's motivation for harm. Lumicore directly competes with OWS in the hyperscale data-center transceiver market. Its infringement has the direct effect of diverting sales from OWS and depressing prices in the market.
9. Attempt to conceal misconduct. Lumicore's refusal to produce the opinion letters and its assertion of privilege over documents relating to its awareness of OWS's patents may be viewed as an attempt to conceal the full extent of its knowledge and intent.
D. Enhancement Exposure for Lumicore
The financial exposure associated with willfulness is significant. Post-notice lost profits — calculated from January 15, 2023 (the date of FairPoint's first licensing letter) through the projected trial date — are estimated at approximately $109.2 million. Under a 2× multiplier applied to the post-notice period, enhanced lost profits alone would amount to approximately $218.4 million. Under the full treble-damages enhancement authorized by 35 U.S.C. § 284, Lumicore's total exposure would increase substantially further.
The $210 million total demand reflected in OWS's complaint incorporates a selected, conservative enhancement of approximately $43.6 million — well below the maximum available enhancement. This underscores the conservatism of OWS's demand and the significant additional exposure Lumicore faces if a jury finds willful infringement and the Court exercises its discretion to award enhanced damages.
This enhancement exposure represents a significant incremental risk that Lumicore should weigh heavily in evaluating settlement. A negotiated resolution eliminates this risk entirely.
VI. DAMAGES EVIDENCE
A. Overview of Damages Theories
OWS presents three complementary damages theories, supported by the expert analysis of Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, Chicago, Illinois. Dr. Keating is a recognized expert in intellectual property damages with over twenty years of experience as a damages consultant and expert witness in patent infringement cases. He has been retained as an expert in more than seventy patent cases and has testified at trial in fifteen.
OWS's three damages theories, which together yield the approximately $210 million total demand reflected in the complaint, are as follows:
1. Lost Profits (Panduit analysis): approximately $128.9 million;
2. Reasonable Royalty (Georgia-Pacific analysis): approximately $37.5 million; and
3. Enhanced Damages for Willful Infringement: approximately $43.6 million (selected enhancement; maximum available enhancement is substantially higher).
These theories are cumulative in the sense that lost profits apply to sales where OWS can demonstrate that it would have made the sale but for the infringement, while the reasonable royalty applies to sales where OWS cannot make this showing (i.e., sales to customers that OWS could not have served). The willfulness enhancement applies on top of the base compensatory damages. The total demand of approximately $210 million is a blended and rounded figure that reflects a conservative assessment of OWS's damages across all three theories.
B. Theory 1: Lost Profits Under Panduit
OWS's primary damages theory is lost profits, measured under the four-factor framework established in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), and widely adopted by the Federal Circuit. Under this framework, a patent holder is entitled to recover lost profits if it can demonstrate: (1) demand for the patented product; (2) the absence of acceptable non-infringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit the patent holder would have made.
Dr. Keating's analysis demonstrates that OWS satisfies all four Panduit factors.
Panduit Factor 1 — Demand for the Patented Product. There is overwhelming demand for silicon-photonics transceiver modules incorporating the patented technologies. OWS's fiscal year 2023 revenue of $487.3 million — of which approximately $310 million is attributable to products practicing one or more of the asserted patents — demonstrates that customers are willing to pay significant prices for products incorporating the claimed innovations. The overall market for silicon-photonics transceivers for hyperscale data centers is growing rapidly, driven by the exponential increase in data-center bandwidth requirements. Industry analysts project the total addressable market to exceed $8 billion by 2027, up from approximately $4.2 billion in 2023.
Panduit Factor 2 — Absence of Acceptable Non-Infringing Substitutes. Dr. Keating's analysis identifies four potential substitute products in the market and demonstrates that each lacks one or more key patented features. No viable non-infringing alternative exists that offers the specific combination of waveguide multiplexing with low insertion loss, coherent transceiver integration on a silicon substrate, embedded micro-channel thermal management, and polarization-diverse grating coupling that is covered by OWS's patent portfolio. While there are other transceiver products on the market, none offers the same combination of performance, cost, and form factor enabled by the patented technologies. This analysis is further supported by Dr. Michaud's inability to identify specific non-infringing design alternatives during her deposition.
Panduit Factor 3 — Manufacturing and Marketing Capability. OWS has demonstrated manufacturing capacity sufficient to serve the demand displaced by Lumicore's infringing products. OWS's transceiver modules are manufactured through foundry partnerships with leading semiconductor fabrication facilities, and OWS has existing contractual arrangements that provide scalable capacity. OWS has existing sales channels and customer relationships with all major hyperscale data-center operators, including the twelve customers where OWS and Lumicore compete head-to-head. OWS has the sales force, technical support infrastructure, and logistics capability to have served the incremental demand represented by Lumicore's sales.
Panduit Factor 4 — Amount of Profit. OWS's gross margin on the competing product lines that practice the asserted patents is 47.3%, as reflected in OWS's internal financial records produced in discovery. This margin reflects OWS's efficient manufacturing operations and premium pricing, which is supported by the performance advantages of the patented technologies.
Calculation. Dr. Keating calculates lost profits as follows:
Projected accused-product revenue (Q3 2022 – Q4 2025): $714.6 million
× Market-share displacement factor: 38.2%
× OWS gross margin: 47.3%
= Lost profits: approximately $128.9 million
The market-share displacement factor of 38.2% is based on Dr. Keating's analysis of customer overlap data, which shows that OWS and Lumicore compete head-to-head at 12 of the top 20 hyperscale data-center operators. The displacement factor is adjusted downward from a raw overlap figure to account for customers where OWS is not an approved vendor and therefore could not have captured the sale regardless of Lumicore's infringement. This adjustment makes the analysis conservative and accounts for the reality that not every sale made by Lumicore would have been captured by OWS in a but-for world.
C. Theory 2: Reasonable Royalty Under Georgia-Pacific
For sales that OWS cannot capture as lost profits — i.e., sales to customers where OWS is not an approved vendor or otherwise could not have made the sale — OWS seeks a reasonable royalty under the framework established in Georgia-Pacific Corp. v. United States Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). The Georgia-Pacific framework considers fifteen factors to determine the royalty that would have been agreed upon in a hypothetical negotiation between a willing licensor and a willing licensee at the time infringement began.
Hypothetical Negotiation Date. The hypothetical negotiation is set in Q2 2022, just before the launch of the first accused product (the LumiLink 400G-ZR+ in Q3 2022).
Proposed Royalty Rate. Dr. Keating proposes a reasonable royalty rate of 8.5% of accused-product net sales, supported by the following comparable license transactions and industry benchmarks:
The proposed rate of 8.5% falls squarely within the range established by these comparable transactions (6.5% to 10.2%) and within the broader industry range of 4.0% to 12.5% observed in comparable silicon-photonics licensing transactions. The rate reflects the critical importance of the patented technologies to the accused products, the breadth of the patent portfolio (four patents covering complementary aspects of the accused products' core functionality), and the competitive relationship between OWS and Lumicore.
Royalty Base. The royalty base consists of the portion of total accused-product revenue that is not captured by the lost-profits analysis:
Total projected accused-product revenue: $714.6 million
Less: Lost-profit sales ($714.6M × 38.2%): $273.0 million
= Non-lost-profit sales (royalty base): $441.6 million
Reasonable Royalty Calculation.
Royalty base: $441.6 million × Royalty rate: 8.5% = approximately $37.5 million
Entire-Market-Value Rule. The application of the royalty rate to the full module-level price is appropriate under the entire-market-value rule ("EMVR") because the patented features — the waveguide multiplexer, the coherent transceiver integration, the thermal management system, and the polarization-diverse grating coupler — are the core technologies that drive customer demand for the accused transceiver modules. These are not ancillary or peripheral components; they are the fundamental innovations that enable the products' performance characteristics. Without these patented technologies, the accused products would not exist in their current form and would not be competitive in the hyperscale data-center market. Customer testimony and purchasing specifications obtained in discovery confirm that the performance parameters enabled by the patented technologies (including insertion loss, bandwidth, thermal performance, and polarization handling) are the primary factors driving purchasing decisions.
D. Theory 3: Enhanced Damages for Willful Infringement
As detailed in Section V above, the evidence of willful infringement is compelling. OWS's damages demand includes an enhancement component that reflects the egregiousness of Lumicore's conduct. Specifically:
Post-notice lost profits (January 15, 2023 onward): approximately $109.2 million
Selected enhancement (as reflected in the $210M demand): approximately $43.6 million in additional enhanced damages
The $43.6 million selected enhancement represents an approximately 40% uplift on the post-notice lost-profits figure. This is a conservative enhancement — well below the 2× or 3× multipliers available under Section 284. The selected enhancement reflects OWS's judgment that, while a substantial enhancement is warranted given the evidence of willfulness, a moderate enhancement is more likely to be sustained on appeal than a maximum treble-damages award.
However, the maximum available enhancement is substantially higher. Under a full 2× multiplier on post-notice damages (lost profits and reasonable royalty attributable to the post-notice period), Lumicore's exposure would increase by over $100 million beyond the complaint demand. Under a full 3× multiplier, the exposure increases further still. This maximum-exposure scenario is an important data point for Lumicore's settlement analysis.
E. Ongoing Damages
It bears emphasis that Lumicore continues to sell all three accused product lines. Damages accrue daily. Every LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR transceiver module that Lumicore sells between now and the resolution of this case adds to the total damages that will be owed to OWS. Dr. Keating's projections extend through Q4 2025 (the projected trial date), and any delay in reaching trial — or in reaching a settlement — will increase total damages.
As of January 2025, Lumicore's accused-product sales are tracking at an annualized rate of approximately $325 million, reflecting continued growth in the 800G-DR8 and 1600G-LR product lines. Every month of continued infringement adds approximately $27 million to the royalty base and approximately $5.1 million to the lost-profits calculation.
F. Summary Damages Table
The following table summarizes OWS's damages theories and the corresponding amounts:
The $210 million demand reflected in the complaint is a blended and conservative figure. The full maximum exposure, including a 3× multiplier on post-notice damages, a permanent injunction, and attorneys' fees and costs, substantially exceeds this amount.