1014-00004 · Hawthorne Vega & Cruz LLP · Willful Infringement & Enhanced Damages

draft-motion-willful-infringement.docx DOCUMENT Litigation

163 / 168 ← → ✕

Contract analysis Extract to table

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

OPTIWAVE SEMICONDUCTOR CORP.,

Plaintiff,

LUMICORE TECHNOLOGIES, INC.,

Defendant.

Case No. 2:24-cv-00319-JRG

Hon. James R. Gilstrap

JURY TRIAL DEMANDED

PLAINTIFF OPTIWAVE SEMICONDUCTOR CORP.'S MOTION FOR FINDING OF WILLFUL INFRINGEMENT AND FOR ENHANCED DAMAGES UNDER 35 U.S.C. § 284

[DRAFT — To Be Finalized Post-Markman / Post-Dispositive-Motion Rulings]

Filed by: Calderwood & Harkness LLP, Counsel for Plaintiff Optiwave Semiconductor Corp.

Right-click to update Table of Contents

TABLE OF AUTHORITIES

Cases

Statutes and Rules

I. INTRODUCTION

Plaintiff Optiwave Semiconductor Corp. ("OWS" or "Plaintiff") respectfully submits this Motion for Finding of Willful Infringement and for Enhanced Damages Under 35 U.S.C. § 284, and in support thereof states as follows:

OWS is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. Founded in 2009, OWS is a fabless semiconductor company specializing in the design, development, and commercialization of silicon photonics chipsets for data-center interconnects. The company employs approximately 1,250 people across its Santa Clara headquarters, its design centers in Portland, Oregon and Cambridge, Massachusetts, and its sales offices in the United States, Europe, and Asia. For fiscal year 2023, OWS reported total revenue of $487.3 million, reflecting the company's position as the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers. OWS's products are deployed in the networks of many of the world's largest cloud-computing and telecommunications providers, and its silicon-photonics technology represents more than a decade of sustained research and development investment.

OWS maintains a robust and growing intellectual property portfolio. As of the date of this filing, OWS holds 142 issued United States utility patents and has 58 patent applications pending before the United States Patent and Trademark Office ("USPTO"). These patents and applications cover a wide range of innovations in silicon photonics, including waveguide design, optical modulation, coherent receiver architectures, thermal management for photonic integrated circuits, and packaging for high-bandwidth optical transceivers. OWS's patent portfolio reflects hundreds of millions of dollars of cumulative research and development expenditure and represents the core competitive assets that underpin the company's commercial success in the silicon-photonics transceiver market.

Defendant Lumicore Technologies, Inc. ("Lumicore" or "Defendant") is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore is a fast-growing competitor in the silicon-photonics transceiver market. Lumicore completed its initial public offering on the Nasdaq Stock Market in March 2022 at a price of $24.00 per share. For fiscal year 2023, Lumicore reported estimated total revenue of $312.6 million. As of the date of the filing of the complaint in this action, Lumicore had a market capitalization of approximately $3.4 billion, based on approximately 91.8 million shares outstanding at a share price of approximately $37.00.

In this action, OWS asserts four United States utility patents against three of Lumicore's transceiver product lines. The asserted patents are:

• U.S. Patent No. 10,234,847 (the "'847 Patent"), titled "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss";

• U.S. Patent No. 10,891,193 (the "'193 Patent"), titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate";

• 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"; and

• U.S. Patent No. 11,402,015 (the "'015 Patent"), titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers."

The accused products are Lumicore's LumiLink 400G-ZR+ transceiver module, LumiLink 800G-DR8 transceiver module, and LumiEdge 1600G-LR transceiver module. These three product lines represent the core of Lumicore's commercial offerings and the primary drivers of its revenue growth since 2022. Total accused-product revenue projected through the anticipated trial date (covering the period from Q3 2022 through Q4 2025) is approximately $714.6 million.

By this motion, OWS seeks a finding that Lumicore's infringement of the asserted patents was and continues to be willful, and requests that the Court enhance damages pursuant to 35 U.S.C. § 284, up to and including treble damages. The basis for this motion is straightforward and compelling: Lumicore had actual knowledge of OWS's asserted patents well before and during its period of infringement; Lumicore's own design team reviewed and relied upon OWS's published patent applications during the design of its accused products; Lumicore received multiple formal licensing letters identifying the asserted patents and the accused products; Lumicore attended an in-person licensing meeting at which its representatives acknowledged review of the patents yet showed no interest in negotiating a license; Lumicore declined to take a license; Lumicore launched a new infringing product after receiving notice of all four asserted patents; and Lumicore has made no effort whatsoever to design around the asserted patents or to modify its accused products to avoid infringement, continuing to sell those products uninterrupted to this day.

OWS seeks total damages of approximately $210 million, inclusive of a willful infringement enhancement component. As set forth in detail below, OWS requests that the Court apply a 2× enhancement multiplier on the post-notice lost-profits component of damages — approximately $109.2 million — yielding approximately $109.2 million in additional enhanced damages. This request is measured, proportional, and fully consistent with the Supreme Court's guidance in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), and the enhancement factors articulated in Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992).

This motion is drafted for filing post-trial or in connection with summary judgment on the issue of willfulness, and is to be finalized based on the Court's Markman ruling (hearing scheduled for March 14, 2025) and the outcome of any dispositive motions (due September 15, 2025). The evidence of willfulness, however, is already overwhelming, and OWS respectfully submits that no reasonable factfinder could conclude that Lumicore's infringement was anything other than deliberate, knowing, and egregious.

II. LEGAL STANDARD

A. Willful Infringement Under *Halo Electronics, Inc. v. Pulse Electronics, Inc.*, 579 U.S. 93 (2016)

The standard for determining willful infringement and the appropriateness of enhanced damages under 35 U.S.C. § 284 is governed by the Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016). In Halo, the Supreme Court abrogated the Federal Circuit's rigid two-part test established in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), which had required a patent holder to show by clear and convincing evidence both (1) an objectively high likelihood that the infringer's actions constituted infringement of a valid patent, and (2) that the objective risk of infringement was either known or so obvious that it should have been known to the accused infringer. The Supreme Court found this framework "unduly rigid" and inconsistent with the broad discretion Congress vested in district courts under § 284. Halo, 579 U.S. at 103.

Under Halo, enhanced damages under § 284 are "not to be meted out in a typical infringement case, but are instead designed as a punitive or vindictive sanction for egregious infringement behavior." Id. at 103–04 (citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 555 (2014)). The Supreme Court emphasized that the principal consideration under § 284 is the "egregiousness of the infringer's conduct," explaining that "the sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or — indeed — characteristic of a pirate." Id. at 103–04.

The Halo standard requires a showing of subjective willfulness on the part of the accused infringer. The patent holder must demonstrate that the infringer "acted despite an objectively high likelihood that its actions constituted infringement of a valid patent" and that "this objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer." Id. at 105 (quoting Seagate, 497 F.3d at 1371, but recasting the standard under a totality-of-the-circumstances approach). Importantly, the Supreme Court held that this determination should be made based on the "totality of the circumstances" and should not be governed by any rigid formula. Id. at 103–04.

Following Halo, district courts have broad discretion to determine whether a case is sufficiently "egregious" to warrant enhancement. See Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229, 1244 (Fed. Cir. 2017) (affirming district court's exercise of discretion in assessing willfulness under Halo). The Federal Circuit has confirmed that a plaintiff need prove willfulness only by a preponderance of the evidence, not by clear and convincing evidence as the Seagate framework previously required. WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016) (noting that the preponderance standard applies to willfulness after Halo). The ultimate decision on whether to enhance damages, and by how much, remains within the sound discretion of the district court, subject to review for abuse of discretion. Halo, 579 U.S. at 106.

Finally, the Supreme Court in Halo made clear that the availability of enhanced damages under § 284 extends up to three times the amount of compensatory damages found or assessed by the factfinder. Id. at 97. The trebling provision provides a ceiling, not a floor, and the Court retains discretion to award any level of enhancement up to that statutory maximum based on the totality of the circumstances.

B. The *Read* Factors for Determining Enhanced Damages

Although the Supreme Court in Halo did not mandate the use of any particular framework for exercising the district court's discretion in determining the appropriateness and magnitude of enhanced damages, district courts in this District and throughout the Federal Circuit have routinely applied the nine factors set forth in Read Corp. v. Portec, Inc., 970 F.2d 816, 826–27 (Fed. Cir. 1992), as a useful analytical framework. See, e.g., Hollowell Industries v. Zimmer, Inc., 837 F.3d 1268, 1279 (Fed. Cir. 2016) (applying Read factors after remand from Halo); Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (affirming district court's application of Read factors to determine enhancement multiplier).

The nine Read factors are:

1. Whether the infringer deliberately copied the ideas or design of another;

2. Whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed;

3. The infringer's behavior as a party to the litigation;

4. The defendant's size and financial condition;

5. The closeness of the case;

6. The duration of the defendant's misconduct;

7. Remedial action by the defendant;

8. The defendant's motivation for harm; and

9. Whether the defendant attempted to conceal its misconduct.

Read, 970 F.2d at 826–27. These factors are not exhaustive, and no single factor is dispositive. Rather, the Court considers the totality of the circumstances, weighing each factor as appropriate to the facts of the case. Id. at 827. Not all factors need favor enhancement for an award to be appropriate; the Court may determine that certain factors weigh more heavily than others based on the specific conduct at issue. See Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017).

The Read factors serve as a structured guide for the Court to evaluate the nature and severity of the infringer's conduct, the adequacy of any good-faith defenses, and the proportionality of any proposed enhancement. They provide a disciplined analytical framework that, when combined with the overarching Halo standard of "egregious" conduct, ensures that enhanced damages are awarded in those cases that truly warrant them and are calibrated to the circumstances.

C. 35 U.S.C. § 284 — Enhanced Damages Provision

The statutory authority for enhanced damages in patent cases is found at 35 U.S.C. § 284, which provides in relevant part:

"Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. . . . [T]he court may increase the damages up to three times the amount found or assessed."

35 U.S.C. § 284 (emphasis added). The enhancement provision is discretionary with the Court and is applied as a post-verdict or post-judgment determination. The statute vests the Court with the authority to apply enhancement to all or any portion of the compensatory damages found or assessed, and to calibrate the multiplier at any level up to and including 3×, as the Court deems just and appropriate under the circumstances.

The Supreme Court has explained that this provision "gives district courts the discretion to award enhanced damages against those guilty of patent infringement" and that such awards are intended to serve both compensatory and punitive functions — to ensure adequate compensation for the patentee and to deter willful, knowing, and egregious infringement. Halo, 579 U.S. at 99–100. The enhancement power is "a tool that must be carefully applied," but one that Congress intentionally placed in the hands of district courts to address the full spectrum of infringing conduct, from innocent to deliberate. Id. at 103.

III. STATEMENT OF FACTS SUPPORTING WILLFUL INFRINGEMENT

A. OWS's Patent Portfolio and the Asserted Patents

OWS's four asserted patents represent core innovations in the field of silicon photonics — specifically, in the design and manufacture of high-bandwidth optical transceiver modules used in data-center interconnect applications. Each patent was developed through extensive research and development efforts, prosecuted through the USPTO by experienced patent counsel, and has been maintained in full force and effect. The asserted patents are described in detail below.

The '847 Patent. U.S. Patent No. 10,234,847, 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 assignee is Optiwave Semiconductor Corp. The '847 Patent claims methods and apparatus for a multi-channel waveguide multiplexer fabricated on a silicon photonic platform that achieves industry-leading low insertion loss across multiple optical channels. The invention addressed a long-standing challenge in the field of silicon photonics — namely, how to combine multiple optical signals onto a single waveguide with minimal signal degradation — and represents a foundational building block for high-bandwidth transceiver modules operating at 400 Gbps and above.

The '193 Patent. U.S. Patent No. 10,891,193, titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate," was filed on April 7, 2017, and issued on January 12, 2021. The original assignee is Optiwave Semiconductor Corp. The '193 Patent claims priority to Provisional Application No. 62/499,117, filed April 7, 2017. The '193 Patent claims a coherent optical transceiver architecture that integrates the transmitter and receiver on a single silicon substrate, achieving both high bandwidth and compact form factor. This integrated approach was a significant departure from prior-art transceiver designs, which typically employed separate transmitter and receiver components, and it enabled the development of pluggable transceiver modules suitable for deployment in hyperscale data centers where space, power, and thermal constraints are critical.

The '562 Patent. U.S. Patent No. 9,678,562, titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks," was filed on November 22, 2014, and issued on June 13, 2017. The '562 Patent was originally assigned to Solara Optics, Inc. ("Solara"), a pioneer in photonic thermal management technologies that ceased independent operations in 2018. OWS acquired the '562 Patent, along with eleven other Solara patents, pursuant to an Asset Purchase Agreement dated June 15, 2018, for a total consideration of $34.5 million. The '562 Patent claims a method for managing the thermal output of photonic integrated circuits through the use of embedded micro-channel heat sinks fabricated directly within the silicon substrate. This thermal management technique is essential for maintaining signal integrity and reliability in high-power optical transceivers, and it represented a significant advance over the passive heat-dissipation methods that were standard in the industry at the time of filing.

The '015 Patent. U.S. Patent No. 11,402,015, titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers," was filed on August 30, 2019, and issued on August 2, 2022. The original assignee is Optiwave Semiconductor Corp. The '015 Patent shares a common provisional application with the '193 Patent (Provisional Application No. 62/499,117, filed April 7, 2017), reflecting the interrelated nature of OWS's coherent transceiver innovations. The '015 Patent claims a grating coupler design that achieves polarization diversity — the ability to efficiently couple light of any polarization state into the silicon waveguide — which is essential for coherent optical communication systems where the polarization of the incoming light is unpredictable and changes rapidly.

The '562 Patent and the '847 Patent are in the same patent family, related by a continuation relationship. The '193 Patent and the '015 Patent share a common provisional application, as noted above. Together, these four patents cover a range of interrelated innovations that, taken collectively, define the architecture and performance capabilities of modern silicon-photonics transceiver modules.

All four asserted patents were prosecuted by Cascade IP Advisors, LLC, under the direction of lead prosecution attorney Dr. Martin Chu, whose offices are located at 1550 Crystal Drive, Suite 600, Arlington, Virginia 22202. All maintenance fees on the asserted patents are current, and no inter partes review ("IPR") petitions have been filed against any of the four asserted patents to date.

OWS's key commercial products embodying the patented inventions include the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families, which are sold to major hyperscale data-center operators and telecommunications equipment manufacturers. These products compete directly with Lumicore's accused products in the same market segments.

B. Lumicore's Knowledge of OWS's Patents Prior to and During Infringement

The evidence in this case establishes that Lumicore had knowledge of OWS's patent rights at multiple stages — before, during, and after the design and launch of its accused products. This knowledge is established through (i) testimony from a former Lumicore engineer who participated in the design of the first accused product, (ii) deposition testimony from Lumicore's own Chief Technology Officer, (iii) formal licensing correspondence, (iv) an in-person licensing meeting, and (v) Lumicore's own written communications acknowledging and referencing the asserted patents.

1. Lumicore's Design-Phase Awareness of OWS Patent Applications. The evidence establishes that Lumicore was aware of OWS's patent claims during the very design phase of its first accused product, the LumiLink 400G-ZR+.

Melissa Chen is a former Lumicore engineer who worked on the LumiLink 400G-ZR+ design team from 2020 to 2024. Ms. Chen left Lumicore in early 2024 and is now employed at Veridian Photonics, Inc. Ms. Chen is expected to testify — and an anticipated declaration drafted for this motion describes — that during the product design phase of the LumiLink 400G-ZR+ in 2021 and 2022, Lumicore's design team accessed and reviewed OWS's published patent applications, including specifically Published Application No. 2018/0123456, which corresponds to the '193 Patent. According to Ms. Chen's expected testimony, the design team reviewed this published application as part of its technology development efforts and was aware that the application claimed innovations in coherent optical transceiver architecture integrated on a silicon substrate — the very technology at the heart of the LumiLink 400G-ZR+ design.

This testimony establishes that Lumicore was aware of OWS's patent claims before the LumiLink 400G-ZR+ was even launched. Lumicore's design engineers knew that OWS had filed patent applications covering the very technology that Lumicore was incorporating into its product, yet Lumicore proceeded with its design without taking any steps to avoid infringement or to obtain a license.

Ms. Chen's anticipated testimony is corroborated by the deposition testimony of Dr. Sandra Michaud, Lumicore's Chief Technology Officer. Dr. Michaud was deposed on November 19, 2024. During her deposition, Dr. Michaud admitted that she reviewed OWS Published Application No. 2018/0123456 during the design phase of the LumiLink product line. While Dr. Michaud denied having knowledge of OWS's issued patents until the receipt of the first FairPoint licensing letter in January 2023, her admission that she reviewed the published application that matured into the '193 Patent is significant. The published application contained the very claims that issued as the '193 Patent, and Dr. Michaud's review of those claims demonstrates that Lumicore's senior technical leadership was aware of and had considered OWS's intellectual property before Lumicore launched its accused products. The distinction between knowledge of a published application and knowledge of an issued patent is immaterial for purposes of willfulness, because the published application put Lumicore on notice of the scope and content of OWS's claimed inventions, and a reasonably prudent company would have monitored the prosecution of those applications and assessed the risk of infringement once the patents issued.

2. FairPoint Licensing Group's First Notice Letter (January 15, 2023). On January 15, 2023, FairPoint Licensing Group, LLC ("FairPoint"), acting as OWS's authorized licensing agent, sent a formal licensing and notice letter to Lumicore's General Counsel, Raymond Bautista. FairPoint is a patent licensing firm managed by Angela Reeves, with offices at 500 Sansome Street, Suite 1400, San Francisco, California 94111. FairPoint was retained by OWS to manage the licensing of its patent portfolio, including the identification of potential licensees and the negotiation of license agreements.

The January 15, 2023 letter specifically identified three of the four asserted patents by number and title: the '847 Patent, the '193 Patent, and the '562 Patent. The letter identified Lumicore's LumiLink 400G-ZR+ transceiver module, which had been launched in Q3 2022, as an accused infringing product. The letter included a brief technical analysis explaining how the LumiLink 400G-ZR+ incorporated elements corresponding to specific claims of each identified patent. The letter invited Lumicore to engage in licensing discussions and offered to provide a more detailed claim chart and technical analysis upon request. A true and correct copy of this letter is attached hereto as Exhibit 1.

The January 15, 2023 letter constituted actual, formal notice to Lumicore of at least three of the four asserted patents and of OWS's contention that the LumiLink 400G-ZR+ infringed those patents. Upon receipt of this letter, Lumicore was on actual notice that its continued manufacture, use, sale, offer for sale, and importation of the LumiLink 400G-ZR+ posed a risk of patent infringement with respect to the '847, '193, and '562 Patents.

The receipt and handling of this letter are confirmed by the deposition testimony of Raymond Bautista, Lumicore's General Counsel, taken on December 3, 2024. During his deposition, Mr. Bautista confirmed that he received the January 15, 2023 FairPoint letter and that he forwarded it to Lumicore's outside patent litigation counsel, Hawthorne Vega & Cruz LLP, within three business days of receipt. This testimony establishes that Lumicore's legal leadership was promptly informed of OWS's patent assertions and took the step of engaging outside counsel in connection with the matter.

3. Lumicore's Initial Response Disputing Infringement (February 28, 2023). On February 28, 2023, approximately six weeks after receiving the FairPoint licensing letter, Lumicore responded through its outside counsel, Hawthorne Vega & Cruz LLP. The response letter, signed by Catherine "Kate" Rourke of Hawthorne Vega & Cruz, disputed infringement and raised questions regarding the validity of the identified patents.

Critically, however, Lumicore's February 28, 2023 response did not include any substantive analysis supporting its assertions of non-infringement or invalidity. The letter did not attach or reference any opinion of counsel. It did not identify any specific claim limitation that Lumicore contended was not met by the LumiLink 400G-ZR+. It did not identify any specific prior-art reference that Lumicore contended rendered the patents invalid. It did not describe any investigation that Lumicore had undertaken to assess the scope of the asserted patents or to form a good-faith belief as to non-infringement or invalidity.

In short, Lumicore's initial response was a conclusory denial, devoid of the type of substantive analysis that would be expected from a company that had genuinely investigated the patent assertions and formed a good-faith belief that its products did not infringe valid patents. The absence of any substantive analysis in this letter is relevant to the Court's assessment of whether Lumicore undertook the type of good-faith investigation contemplated by the second Read factor.

4. In-Person Licensing Meeting (April 20, 2023). On April 20, 2023, an in-person licensing meeting was held in Austin, Texas, to discuss the patent assertions and explore the possibility of a licensing arrangement. The meeting was attended by Angela Reeves of FairPoint Licensing Group, Rebecca Tanaka, OWS's General Counsel, Raymond Bautista, Lumicore's General Counsel, and Catherine "Kate" Rourke of Hawthorne Vega & Cruz LLP.

The deposition testimony of Angela Reeves, taken on December 10, 2024, provides a detailed account of the April 20, 2023 meeting. According to Ms. Reeves, OWS's representatives presented a detailed overview of the asserted patents, including claim charts mapping specific claims to the structures identified in the LumiLink 400G-ZR+ product through the Benchmark teardown analysis. OWS's representatives also presented licensing terms and invited Lumicore to engage in a substantive negotiation regarding a royalty rate and other license terms.

Ms. Reeves testified that Lumicore's representatives showed "no interest in negotiating" during the meeting. According to Ms. Reeves, Lumicore's representatives listened to the presentation but did not engage with the substance of the claim charts or the licensing proposal. Ms. Reeves further testified that during the meeting, Lumicore's representatives "acknowledged receipt of the licensing letters and confirmed they had reviewed the identified patents." This acknowledgment is significant because it eliminates any question about whether Lumicore's decision-makers were aware of and had considered OWS's patent rights.

No resolution was reached at the April 20, 2023 meeting, and no follow-up meetings were scheduled. A true and correct declaration of Angela Reeves attesting to these facts is attached hereto as Exhibit 4.

5. FairPoint's Second Notice Letter (May 15, 2023). On May 15, 2023, FairPoint sent a second formal licensing letter to Lumicore. This letter expanded the scope of the patent assertions in two significant respects. First, the letter added the '015 Patent (U.S. Patent No. 11,402,015, issued August 2, 2022) to the list of asserted patents. The '015 Patent had issued approximately nine months prior to the date of this second letter, and its addition brought the total number of asserted patents to four. Second, the letter expanded the list of accused products to include the LumiLink 800G-DR8 transceiver module, which Lumicore had launched in Q1 2023 — after receiving the first FairPoint letter.

The May 15, 2023 letter thus provided Lumicore with actual notice of all four patents now asserted in this litigation and identified two of the three accused product lines. A true and correct copy of this letter is attached hereto as Exhibit 2.

As of May 15, 2023, Lumicore had received two formal licensing letters from FairPoint, had participated in an in-person licensing meeting, and had been provided with specific, detailed notice of all four asserted patents and two of the three accused products. Lumicore was fully on notice of OWS's patent rights and its contentions of infringement.

6. Lumicore's Declination Letter and Claimed "Competent Legal Opinions" (July 10, 2023). On July 10, 2023, Lumicore formally declined to take a license. In its declination letter — attached hereto as Exhibit 3 — Lumicore stated that it had obtained "competent legal opinions" that its products do not infringe the asserted patents. This statement was the first and only time Lumicore referenced the existence of opinion-of-counsel work product in any written communication.

Despite referencing these alleged opinions in its declination letter and subsequently asserting the advice of counsel as part of its defense to willful infringement in this litigation, Lumicore has refused to produce the alleged opinion-of-counsel letters. Lumicore has asserted that the opinions are protected by the attorney-client privilege and the work-product doctrine.

OWS filed a Motion to Compel Production of Opinion-of-Counsel Letters (D.E. 40) on October 21, 2024, arguing that Lumicore waived the applicable privileges by (i) affirmatively referencing the opinions in its July 10, 2023 declination letter, and (ii) asserting the advice of counsel as part of its defense to OWS's willful infringement allegations in this litigation. The Motion to Compel remains pending before the Court. OWS submits that Lumicore's dual invocation of the privilege — relying on the existence of opinion letters to support its defense while simultaneously refusing to disclose the substance of those opinions — is fundamentally inequitable and deprives OWS of the ability to assess and challenge the adequacy of Lumicore's claimed good-faith defenses.

The deposition testimony of Raymond Bautista, taken on December 3, 2024, sheds additional light on this issue. During his deposition, Mr. Bautista refused to answer questions about the substance of the opinion letters, asserting the attorney-client privilege. He also declined to identify the attorneys who prepared the opinions, the dates on which the opinions were prepared, or the specific patents and products analyzed. Critically, however, Mr. Bautista made a significant admission during the deposition: he admitted that no formal design-around analysis was commissioned before the launch of the LumiEdge 1600G-LR module in Q4 2023. This admission is devastating to Lumicore's willfulness defense, because it demonstrates that even if Lumicore obtained some form of opinion letter with respect to its earlier products, it did not undertake any comparable analysis before launching a new product that it knew or should have known infringed OWS's patents.

The adverse inference that should be drawn from Lumicore's refusal to produce the opinion letters is significant. If the pending Motion to Compel is granted and Lumicore still refuses to produce the opinions, or if the opinions are ultimately found to be non-existent, incomplete, or substantively deficient, the Court should draw the inference that the opinions either do not exist, do not support a good-faith belief in non-infringement or invalidity, or are actually adverse to Lumicore's position. See WCM Indus., Inc. v. IPS Corp., 721 F. App'x 959, 970 (Fed. Cir. 2018) (noting that the failure to produce opinion-of-counsel evidence may support an inference that no such opinion exists or that the opinion is unfavorable).

C. Lumicore's Continued Infringement After Notice

The evidence establishes that after receiving actual notice of all four asserted patents, Lumicore continued to infringe without interruption, without product modification, and without any effort to design around the patented technology. Lumicore's post-notice conduct is perhaps the strongest evidence of willfulness in this case.

1. Continued Sale of LumiLink 400G-ZR+ and LumiLink 800G-DR8. After receiving the first FairPoint licensing letter on January 15, 2023, and after receiving actual notice of all four asserted patents by no later than May 15, 2023, Lumicore continued to manufacture, use, sell, offer to sell, and import the LumiLink 400G-ZR+ and LumiLink 800G-DR8 transceiver modules without any modification whatsoever. Lumicore did not pause production. It did not initiate a design-around effort. It did not modify the accused structures. It did not limit its sales activities. It continued its infringing conduct as if it had never received notice of OWS's patents.

The financial magnitude of this continued infringement is substantial. For fiscal year 2023, Lumicore's accused-product revenues were as follows:

These revenues were generated in substantial part during the post-notice period, after Lumicore had been specifically informed that its products were believed to infringe OWS's patents. The decision to continue selling these products without modification was not an inadvertent oversight — it was a deliberate business decision to prioritize revenue over respect for OWS's intellectual property rights.

2. Launch of the LumiEdge 1600G-LR (Q4 2023) — Post-Notice New Product Launch. Perhaps the most compelling evidence of Lumicore's willfulness is its decision to launch an entirely new accused product — the LumiEdge 1600G-LR transceiver module — in Q4 2023, after having received notice of all four asserted patents, after having attended an in-person licensing meeting, and after having formally declined to take a license.

The LumiEdge 1600G-LR was launched more than nine months after Lumicore received the first FairPoint licensing letter, more than five months after Lumicore received the second FairPoint letter identifying all four patents, and approximately three months after Lumicore formally declined to take a license. The LumiEdge 1600G-LR is accused of infringing the '193 Patent and the '015 Patent.

Fiscal year 2023 revenue from the LumiEdge 1600G-LR, covering only its initial launch quarter, was $41.7 million. This revenue has continued to grow in subsequent quarters as the product has gained market traction.

The launch of a new infringing product after actual notice of the asserted patents, after declining to negotiate a license, and without having conducted any design-around analysis is powerful evidence of deliberate, willful infringement. As Mr. Bautista admitted during his deposition, no formal design-around analysis was commissioned before the LumiEdge 1600G-LR launch. This means that Lumicore introduced a new product into the market without even attempting to determine whether it could avoid infringing OWS's patents. The unmistakable inference is that Lumicore made a calculated business decision that the profits from selling infringing products outweighed the risk of a patent infringement judgment — precisely the type of egregious, bad-faith conduct that the Supreme Court identified in Halo as warranting enhanced damages.

3. Total Post-Notice Revenue. The post-notice period in this case runs from January 15, 2023 (the date of the first FairPoint licensing letter) through the projected trial date. During this period, Lumicore has continued to sell all three accused products without interruption.

According to the preliminary damages analysis prepared by Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, Plaintiff's damages expert, the total post-notice lost profits attributable to Lumicore's continued infringement are approximately $109.2 million. This figure represents the lost profits that OWS would have earned but for Lumicore's continued sale of infringing products during the post-notice period, calculated using a market-share displacement analysis and OWS's established gross margin on its competing transceiver products.

The magnitude of Lumicore's post-notice revenue underscores the deliberateness of its infringement. Lumicore did not merely continue to sell existing inventory — it actively manufactured new units, marketed and promoted its infringing products at industry trade shows, and expanded its customer base, all while on actual notice that its products were accused of infringing OWS's patents.

D. Evidence of Deliberate Copying

Independent of the evidence of actual notice and continued infringement, the record also contains affirmative evidence that Lumicore deliberately copied OWS's patented innovations.

Benchmark Semiconductor Analysis, LLC ("Benchmark"), an independent semiconductor analysis firm based in Santa Clara, California, conducted comprehensive product teardowns of all three accused products. The teardown analyses were led by Kevin Ng, Lead Engineer at Benchmark, whose offices are located at 2244 Mission College Boulevard, Santa Clara, California 95054. Benchmark is a well-established firm with extensive experience in semiconductor product analysis and has provided expert teardown services in numerous patent litigation matters.

The first teardown was conducted on the LumiLink 400G-ZR+ on December 12, 2022. The resulting teardown report confirmed the use of waveguide multiplexer structures and thermal management micro-channels that are "substantially identical" to the structures described and claimed in the asserted patents. Specifically, the report identified a multi-channel waveguide multiplexer architecture that corresponded element-by-element to the claims of the '847 Patent, embedded micro-channel heat-sink structures that corresponded to the claims of the '562 Patent, and an integrated coherent transceiver architecture that corresponded to the claims of the '193 Patent.

Subsequent teardowns of the LumiLink 800G-DR8 (conducted in June 2023) and the LumiEdge 1600G-LR (conducted in February 2024) confirmed the presence of similar structures in those products as well. The consistency of the infringing structures across all three product lines suggests a systematic, organization-wide design approach that adopted OWS's patented technology as a foundation.

The evidence of deliberate copying is further supported by testimony from Lumicore's own personnel. Dr. Sandra Michaud, Lumicore's CTO, admitted during her November 19, 2024 deposition that she could not identify specific non-infringing design alternatives to the accused structures in any of the three products. When asked whether Lumicore's design team had considered alternative approaches that would avoid the need for the patented waveguide multiplexer and thermal management structures, Dr. Michaud stated that she could not identify any specific alternatives. This admission supports the inference that Lumicore's design team knowingly adopted the patented technology because no viable non-infringing alternative existed — and that the patented technology was adopted precisely because it was the best available solution, developed and patented by OWS.

Finally, Melissa Chen's anticipated testimony — that the LumiLink 400G-ZR+ design team reviewed OWS's published patent applications during the design phase — directly supports a finding that Lumicore deliberately copied OWS's patented innovations. The design team was aware of OWS's claimed inventions, chose to incorporate the very structures described in those claims into its products, and proceeded to market without obtaining a license or developing an independent, non-infringing design. Summaries of the Benchmark teardown reports are attached hereto as Exhibit 11.

IV. APPLICATION OF THE READ FACTORS

The nine Read factors, applied to the facts of this case, weigh heavily in favor of enhanced damages. OWS addresses each factor in turn below.

A. Factor 1: Deliberate Copying

The first Read factor asks whether the infringer deliberately copied the ideas or design of another. The evidence in this case strongly supports a finding of deliberate copying.

First, Lumicore's design team reviewed OWS's published patent applications during the design of the LumiLink 400G-ZR+. Both Dr. Sandra Michaud (Lumicore's CTO) and Melissa Chen (a former Lumicore design engineer) provide testimony establishing that the design team accessed and reviewed Published Application No. 2018/0123456, which corresponds to the '193 Patent. The design team was thus aware of the specific innovations that OWS had claimed, and it proceeded to incorporate structures corresponding to those claims into the LumiLink 400G-ZR+ product.

Second, the Benchmark teardown data confirms that the accused products employ structures that are substantially identical to the claimed inventions. This is not a case where the accused products merely resemble the patented technology in general concept; rather, the teardown analyses revealed element-by-element correspondence between the accused structures and the specific claim limitations of the asserted patents. The degree of structural similarity is consistent with deliberate adoption of the patented designs rather than independent development.

Third, Dr. Michaud's inability to identify non-infringing design alternatives further supports the inference of deliberate copying. If Lumicore had independently developed its own solutions to the technical challenges addressed by the asserted patents, one would expect its CTO to be able to articulate the alternative approaches considered during the design process. Dr. Michaud's failure to do so supports the inference that Lumicore adopted the patented designs because they were the best available technology — technology that had been invented and patented by OWS.

Considered together, this evidence demonstrates that Lumicore was aware of OWS's patent claims, studied those claims during its design process, and incorporated the claimed structures into its products without developing independent, non-infringing alternatives. This factor weighs heavily in favor of enhanced damages.

B. Factor 2: Good-Faith Investigation and Belief

The second Read factor asks whether the infringer, when it knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that the patent was invalid or not infringed. The evidence establishes that Lumicore did not conduct an adequate good-faith investigation and has failed to demonstrate a genuine, well-reasoned belief of non-infringement or invalidity.

Lumicore's July 10, 2023 declination letter referenced "competent legal opinions" that its products do not infringe. Yet Lumicore has refused to produce these alleged opinion letters, asserting attorney-client privilege. This refusal is telling. If Lumicore had obtained a genuine, thorough, and well-reasoned opinion of counsel concluding that its products did not infringe valid patents, one would expect Lumicore to waive the privilege and present the opinion as a centerpiece of its defense to willfulness. The standard practice in patent litigation, when a defendant wishes to rely on an advice-of-counsel defense, is to waive the privilege and produce the opinion for the Court and opposing party to evaluate. Lumicore's refusal to do so, while simultaneously invoking the existence of the opinions in its defense, supports a strong inference that the opinions are either non-existent, substantively deficient, or actually adverse to Lumicore's position. See Eko Brands, 946 F.3d at 1378.

Lumicore's February 28, 2023 initial response to FairPoint's first licensing letter further undermines any claim of good-faith investigation. That response was entirely conclusory — it disputed infringement and questioned validity but did not include any substantive analysis supporting those positions. The letter did not identify any specific claim limitation that Lumicore contended was not met, did not cite any prior-art reference, and did not describe any investigation that Lumicore had undertaken. A response of this type does not reflect the kind of serious, good-faith investigation that the second Read factor contemplates.

Most significantly, Mr. Bautista admitted during his December 3, 2024 deposition that no formal design-around analysis was commissioned before the launch of the LumiEdge 1600G-LR in Q4 2023. This means that even after receiving actual notice of all four asserted patents, even after declining to take a license, and even while allegedly relying on "competent legal opinions," Lumicore did not bother to analyze whether its newest product could be designed to avoid the asserted patents. This is not the conduct of a company that has formed a good-faith belief of non-infringement; it is the conduct of a company that has decided to ignore the risks and proceed regardless.

This factor weighs in favor of enhanced damages.

C. Factor 3: Litigation Conduct

The third Read factor examines the infringer's behavior as a party to the litigation. While this factor will be more fully developed as the litigation proceeds, there are already indications that Lumicore's litigation conduct merits scrutiny.

Most notably, Lumicore has asserted attorney-client privilege over the opinion letters referenced in its declination letter, while simultaneously relying on the existence of those opinions as part of its defense to willful infringement. This "sword and shield" approach creates a fundamental asymmetry: Lumicore benefits from the inference that it obtained legal advice while denying OWS the ability to evaluate the adequacy of that advice. OWS's pending Motion to Compel (D.E. 40) squarely addresses this issue.

Additionally, Lumicore's Rule 30(b)(6) designee was deficiently prepared on Topic 14 of OWS's deposition notice, which covered non-infringing design alternatives. The designee's inability to testify meaningfully on this topic — a topic central to both infringement and willfulness — raises questions about whether Lumicore has taken its discovery obligations seriously.

OWS acknowledges that this factor is still developing. Based on the evidence currently available, OWS submits that this factor is currently neutral to slightly in favor of enhancement and will be reassessed based on Lumicore's conduct through trial.

D. Factor 4: Defendant's Size and Financial Condition

The fourth Read factor considers the defendant's size and financial condition. This factor is relevant because enhanced damages serve a greater deterrence function when the infringer is a well-capitalized entity that made a calculated decision to infringe rather than a small company that may have inadvertently infringed due to limited resources.

Lumicore is a publicly traded company listed on the Nasdaq Stock Market with a market capitalization of approximately $3.4 billion as of the date the complaint was filed, based on approximately 91.8 million shares outstanding at a share price of approximately $37.00 per share. Lumicore reported estimated total revenue of $312.6 million for fiscal year 2023. The company is led by Chief Executive Officer Thomas "Tom" Kessler and Chief Financial Officer Janet Moreno. Lumicore employs hundreds of engineers and other personnel and maintains significant operations in Austin, Texas.

Lumicore is not a small startup that could claim ignorance of the patent landscape or an inability to conduct a thorough patent clearance analysis. It is a multi-billion-dollar public company with access to sophisticated legal counsel — specifically, Hawthorne Vega & Cruz LLP, a major law firm with a nationally recognized patent litigation practice. Lumicore had the resources and the expertise to conduct a comprehensive infringement and validity analysis, to design around the asserted patents if technically feasible, or to negotiate a license on commercially reasonable terms. It chose to do none of these things.

This factor weighs in favor of enhanced damages.

E. Factor 5: Closeness of the Case

The fifth Read factor considers the closeness of the case on the merits. If the infringement case is clear-cut and the validity of the patents is not seriously in doubt, this factor weighs in favor of enhancement because it demonstrates that the risk of infringement was apparent and the infringer's decision to proceed was correspondingly more reckless.

OWS acknowledges that this factor will be more fully developed following the Court's Markman ruling (scheduled for March 14, 2025) and the trial. However, OWS submits that even at this stage, the evidence demonstrates that this is not a close case.

On infringement, the Benchmark teardown data shows clear structural correspondence between the accused products and the specific claim limitations of the asserted patents. OWS's technical expert, Dr. Caroline Ashford — Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology — opines that each accused product infringes each asserted claim. Dr. Ashford's analysis is supported by detailed claim charts mapping the accused structures to each claim element.

On validity, OWS's position is robust. All four asserted patents survived prosecution before the USPTO, all maintenance fees are current, and no IPR petitions have been filed against any of the asserted patents. While Lumicore has identified 23 prior-art references in its invalidity contentions, Dr. Ashford will rebut each of those references and demonstrate that the asserted claims are valid and patentable. OWS is confident that the validity challenges will be resolved in its favor.

If, as OWS expects, the case is not close, this factor will weigh in favor of enhancement. OWS reserves the right to update this analysis following the Markman ruling and trial.

F. Factor 6: Duration of Misconduct

The sixth Read factor considers the duration of the defendant's infringing conduct. Prolonged infringement — particularly after actual notice — is a significant aggravating factor that supports enhanced damages.

Lumicore's infringement commenced no later than Q3 2022, when the LumiLink 400G-ZR+ was launched. Lumicore received actual notice of three of the four asserted patents on January 15, 2023, via the first FairPoint licensing letter, and actual notice of all four asserted patents by May 15, 2023, via the second FairPoint letter.

Lumicore's infringement has continued unabated from Q3 2022 through the present — a period of over three years through the projected trial date of February 2, 2026. At no point during this period has Lumicore ceased selling any of the accused products, modified any of the accused products to avoid infringement, or initiated any design-around effort. To the contrary, Lumicore expanded its infringement by launching the LumiEdge 1600G-LR in Q4 2023, more than nine months after receiving the first notice letter and more than five months after receiving notice of all four asserted patents.

The duration of Lumicore's misconduct is not merely a passive continuation of pre-notice behavior; it reflects an active, ongoing decision to infringe OWS's patents in the face of actual knowledge and specific notice. Each quarter that Lumicore continues to sell the accused products is a quarter in which it makes a conscious business decision to prioritize revenue over respect for OWS's intellectual property rights.

This factor weighs strongly in favor of enhanced damages.

G. Factor 7: Remedial Action

The seventh Read factor considers whether the defendant has taken remedial action to address the infringement. Remedial action can include product modifications, design-around efforts, cessation of sales, or other steps to mitigate the harm caused by the infringement.

Lumicore has taken no remedial action whatsoever. It has not modified any of the accused products. It has not initiated any design-around effort. It has not ceased sales of any of the accused products. It has not even taken preliminary steps to investigate the feasibility of a design-around, as confirmed by Mr. Bautista's deposition admission that no formal design-around analysis was commissioned before the launch of the LumiEdge 1600G-LR.

Lumicore has estimated in discovery responses that a redesign of its transceiver products to avoid the asserted patents would take 18 to 24 months. Yet despite having been on notice of OWS's patent claims since at least January 2023 — a period of now more than two years — Lumicore has not initiated any such redesign effort. Had Lumicore commenced a redesign promptly upon receiving notice, it could have completed the redesign by now. Its failure to do so further demonstrates the deliberateness and voluntariness of its ongoing infringement.

This factor weighs heavily in favor of enhanced damages.

H. Factor 8: Motivation for Harm

The eighth Read factor considers the defendant's motivation for harm. This factor examines whether the defendant had a competitive motivation to infringe and whether the infringement was calculated to cause economic harm to the patent holder.

Lumicore is a direct competitor of OWS in the silicon-photonics transceiver market. The three accused products — the LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR — directly compete with OWS's OWS-400ZR and OWS-800XR transceiver module families for the same customers and the same design-in opportunities. These are not products in adjacent or tangentially related markets; they are head-to-head competitors for the same purchase orders from hyperscale data-center operators.

The competitive impact of Lumicore's infringement has been severe. OWS's market data demonstrates that the entry of Lumicore's infringing products into the market has caused a documented 18.7% decline in average selling prices of 400G-ZR transceivers from Q3 2022 to Q4 2023. This price erosion has harmed not only OWS's revenue on individual sales but also the overall economic value of its product portfolio.

The financial significance of the accused products to Lumicore underscores its motivation to continue infringing. Total accused-product revenue for FY 2023 was $264.9 million, representing approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million. The accused products are not a peripheral product line for Lumicore — they constitute the vast majority of its business. Lumicore's motivation to continue selling infringing products is thus self-evident: these products are its primary revenue engine, and ceasing sales or redesigning them would have a devastating impact on Lumicore's financial performance.

This competitive dynamic provides strong evidence that Lumicore's decision to infringe was economically motivated and calculated to capture market share at OWS's expense. Lumicore chose to free-ride on OWS's patented technology rather than invest in developing its own non-infringing solutions, gaining a competitive advantage that it would not have obtained through independent innovation.

This factor weighs in favor of enhanced damages.

I. Factor 9: Concealment of Misconduct

The ninth Read factor considers whether the defendant attempted to conceal its misconduct. This factor is distinct from the question of whether the infringing products were sold openly in the market; it encompasses any efforts by the defendant to hide the nature or scope of its infringing activities.

OWS acknowledges that Lumicore's accused products are commercially available and have been sold openly in the marketplace. There is no evidence that Lumicore attempted to conceal the existence or commercial availability of the accused products.

However, Lumicore's refusal to produce the opinion-of-counsel letters that it has referenced in its declination letter and in its defense to willful infringement can be viewed as a form of concealment. By invoking the existence of "competent legal opinions" while refusing to disclose their substance, Lumicore is effectively concealing the nature and adequacy of the legal analysis — if any — that underlies its claimed good-faith belief of non-infringement. If the pending Motion to Compel is resolved in OWS's favor and Lumicore nonetheless fails to produce the opinions, the inference of concealment will be strengthened.

This factor is currently neutral to slightly in favor of enhancement and will be reassessed based on the resolution of the pending Motion to Compel and additional discovery.

V. ENHANCED DAMAGES CALCULATION

A. Damages Base for Enhancement

OWS's damages case, as set forth in the preliminary analysis prepared by its damages expert, Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, encompasses two complementary theories: lost profits and reasonable royalty.

Lost Profits. Under the Panduit analysis, Dr. Keating has calculated lost profits of approximately $128.9 million. This figure is derived as follows:

The Panduit analysis establishes that but for Lumicore's infringement, OWS would have captured a significant share of the sales made by Lumicore, and OWS would have earned its established gross margin on those additional sales. The 38.2% market-share displacement factor reflects the portion of Lumicore's accused-product sales that would have been captured by OWS in a but-for world, based on OWS's market position, customer relationships, and the competitive dynamics of the silicon-photonics transceiver market.

Reasonable Royalty. For the portion of Lumicore's accused-product sales that would not have been captured by OWS in a but-for world (i.e., the remaining $441.6 million in non-lost-profit accused-product sales), Dr. Keating has calculated a reasonable royalty using the Georgia-Pacific fifteen-factor analysis. Dr. Keating's analysis yields a reasonable royalty rate of 8.5%, resulting in a reasonable royalty of approximately $37.5 million.

Total Compensatory Damages. Combining lost profits and reasonable royalty, total compensatory damages are approximately:

Post-Notice Lost Profits. Of the $128.9 million in total lost profits, approximately $109.2 million is attributable to the post-notice period — i.e., the period from January 15, 2023 (the date of the first FairPoint licensing letter) through the projected trial date. This figure represents the lost profits on sales that Lumicore made after it had actual knowledge of OWS's patents and was on notice that its products were accused of infringement. The post-notice lost-profits figure is the primary basis for OWS's enhancement request, as discussed below.

B. Enhancement Multiplier Sought

OWS requests that the Court apply a 2× enhancement mul

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS MARSHALL DIVISION
OPTIWAVE SEMICONDUCTOR CORP.,
Plaintiff,
v.
LUMICORE TECHNOLOGIES, INC.,
Defendant.
Case No. 2:24-cv-00319-JRG
Hon. James R. Gilstrap
JURY TRIAL DEMANDED
PLAINTIFF OPTIWAVE SEMICONDUCTOR CORP.'S MOTION FOR FINDING OF WILLFUL INFRINGEMENT AND FOR ENHANCED DAMAGES UNDER 35 U.S.C. § 284
[DRAFT — To Be Finalized Post-Markman / Post-Dispositive-Motion Rulings]
Filed by: Calderwood & Harkness LLP, Counsel for Plaintiff Optiwave Semiconductor Corp.
TABLE OF CONTENTS
Right-click to update Table of Contents
TABLE OF AUTHORITIES
Cases
Statutes and Rules
I. INTRODUCTION
Plaintiff Optiwave Semiconductor Corp. ("OWS" or "Plaintiff") respectfully submits this Motion for Finding of Willful Infringement and for Enhanced Damages Under 35 U.S.C. § 284, and in support thereof states as follows:
OWS is a Delaware corporation headquartered at 4810 Bayside Technology Parkway, Suite 300, Santa Clara, California 95054. Founded in 2009, OWS is a fabless semiconductor company specializing in the design, development, and commercialization of silicon photonics chipsets for data-center interconnects. The company employs approximately 1,250 people across its Santa Clara headquarters, its design centers in Portland, Oregon and Cambridge, Massachusetts, and its sales offices in the United States, Europe, and Asia. For fiscal year 2023, OWS reported total revenue of $487.3 million, reflecting the company's position as the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers. OWS's products are deployed in the networks of many of the world's largest cloud-computing and telecommunications providers, and its silicon-photonics technology represents more than a decade of sustained research and development investment.
OWS maintains a robust and growing intellectual property portfolio. As of the date of this filing, OWS holds 142 issued United States utility patents and has 58 patent applications pending before the United States Patent and Trademark Office ("USPTO"). These patents and applications cover a wide range of innovations in silicon photonics, including waveguide design, optical modulation, coherent receiver architectures, thermal management for photonic integrated circuits, and packaging for high-bandwidth optical transceivers. OWS's patent portfolio reflects hundreds of millions of dollars of cumulative research and development expenditure and represents the core competitive assets that underpin the company's commercial success in the silicon-photonics transceiver market.
Defendant Lumicore Technologies, Inc. ("Lumicore" or "Defendant") is a Delaware corporation headquartered at 9200 Spectrum Boulevard, Building C, Austin, Texas 78759. Lumicore is a fast-growing competitor in the silicon-photonics transceiver market. Lumicore completed its initial public offering on the Nasdaq Stock Market in March 2022 at a price of $24.00 per share. For fiscal year 2023, Lumicore reported estimated total revenue of $312.6 million. As of the date of the filing of the complaint in this action, Lumicore had a market capitalization of approximately $3.4 billion, based on approximately 91.8 million shares outstanding at a share price of approximately $37.00.
In this action, OWS asserts four United States utility patents against three of Lumicore's transceiver product lines. The asserted patents are:
• U.S. Patent No. 10,234,847 (the "'847 Patent"), titled "Multi-Channel Silicon Photonic Waveguide Multiplexer with Low Insertion Loss";
• U.S. Patent No. 10,891,193 (the "'193 Patent"), titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate";
• 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"; and
• U.S. Patent No. 11,402,015 (the "'015 Patent"), titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers."
The accused products are Lumicore's LumiLink 400G-ZR+ transceiver module, LumiLink 800G-DR8 transceiver module, and LumiEdge 1600G-LR transceiver module. These three product lines represent the core of Lumicore's commercial offerings and the primary drivers of its revenue growth since 2022. Total accused-product revenue projected through the anticipated trial date (covering the period from Q3 2022 through Q4 2025) is approximately $714.6 million.
By this motion, OWS seeks a finding that Lumicore's infringement of the asserted patents was and continues to be willful, and requests that the Court enhance damages pursuant to 35 U.S.C. § 284, up to and including treble damages. The basis for this motion is straightforward and compelling: Lumicore had actual knowledge of OWS's asserted patents well before and during its period of infringement; Lumicore's own design team reviewed and relied upon OWS's published patent applications during the design of its accused products; Lumicore received multiple formal licensing letters identifying the asserted patents and the accused products; Lumicore attended an in-person licensing meeting at which its representatives acknowledged review of the patents yet showed no interest in negotiating a license; Lumicore declined to take a license; Lumicore launched a new infringing product after receiving notice of all four asserted patents; and Lumicore has made no effort whatsoever to design around the asserted patents or to modify its accused products to avoid infringement, continuing to sell those products uninterrupted to this day.
OWS seeks total damages of approximately $210 million, inclusive of a willful infringement enhancement component. As set forth in detail below, OWS requests that the Court apply a 2× enhancement multiplier on the post-notice lost-profits component of damages — approximately $109.2 million — yielding approximately $109.2 million in additional enhanced damages. This request is measured, proportional, and fully consistent with the Supreme Court's guidance in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), and the enhancement factors articulated in Read Corp. v. Portec, Inc., 970 F.2d 816 (Fed. Cir. 1992).
This motion is drafted for filing post-trial or in connection with summary judgment on the issue of willfulness, and is to be finalized based on the Court's Markman ruling (hearing scheduled for March 14, 2025) and the outcome of any dispositive motions (due September 15, 2025). The evidence of willfulness, however, is already overwhelming, and OWS respectfully submits that no reasonable factfinder could conclude that Lumicore's infringement was anything other than deliberate, knowing, and egregious.
II. LEGAL STANDARD
A. Willful Infringement Under *Halo Electronics, Inc. v. Pulse Electronics, Inc.*, 579 U.S. 93 (2016)
The standard for determining willful infringement and the appropriateness of enhanced damages under 35 U.S.C. § 284 is governed by the Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016). In Halo, the Supreme Court abrogated the Federal Circuit's rigid two-part test established in In re Seagate Technology, LLC, 497 F.3d 1360 (Fed. Cir. 2007) (en banc), which had required a patent holder to show by clear and convincing evidence both (1) an objectively high likelihood that the infringer's actions constituted infringement of a valid patent, and (2) that the objective risk of infringement was either known or so obvious that it should have been known to the accused infringer. The Supreme Court found this framework "unduly rigid" and inconsistent with the broad discretion Congress vested in district courts under § 284. Halo, 579 U.S. at 103.
Under Halo, enhanced damages under § 284 are "not to be meted out in a typical infringement case, but are instead designed as a punitive or vindictive sanction for egregious infringement behavior." Id. at 103–04 (citing Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 555 (2014)). The Supreme Court emphasized that the principal consideration under § 284 is the "egregiousness of the infringer's conduct," explaining that "the sort of conduct warranting enhanced damages has been variously described in our cases as willful, wanton, malicious, bad-faith, deliberate, consciously wrongful, flagrant, or — indeed — characteristic of a pirate." Id. at 103–04.
The Halo standard requires a showing of subjective willfulness on the part of the accused infringer. The patent holder must demonstrate that the infringer "acted despite an objectively high likelihood that its actions constituted infringement of a valid patent" and that "this objectively-defined risk . . . was either known or so obvious that it should have been known to the accused infringer." Id. at 105 (quoting Seagate, 497 F.3d at 1371, but recasting the standard under a totality-of-the-circumstances approach). Importantly, the Supreme Court held that this determination should be made based on the "totality of the circumstances" and should not be governed by any rigid formula. Id. at 103–04.
Following Halo, district courts have broad discretion to determine whether a case is sufficiently "egregious" to warrant enhancement. See Georgetown Rail Equip. Co. v. Holland L.P., 867 F.3d 1229, 1244 (Fed. Cir. 2017) (affirming district court's exercise of discretion in assessing willfulness under Halo). The Federal Circuit has confirmed that a plaintiff need prove willfulness only by a preponderance of the evidence, not by clear and convincing evidence as the Seagate framework previously required. WBIP, LLC v. Kohler Co., 829 F.3d 1317, 1341 (Fed. Cir. 2016) (noting that the preponderance standard applies to willfulness after Halo). The ultimate decision on whether to enhance damages, and by how much, remains within the sound discretion of the district court, subject to review for abuse of discretion. Halo, 579 U.S. at 106.
Finally, the Supreme Court in Halo made clear that the availability of enhanced damages under § 284 extends up to three times the amount of compensatory damages found or assessed by the factfinder. Id. at 97. The trebling provision provides a ceiling, not a floor, and the Court retains discretion to award any level of enhancement up to that statutory maximum based on the totality of the circumstances.
B. The *Read* Factors for Determining Enhanced Damages
Although the Supreme Court in Halo did not mandate the use of any particular framework for exercising the district court's discretion in determining the appropriateness and magnitude of enhanced damages, district courts in this District and throughout the Federal Circuit have routinely applied the nine factors set forth in Read Corp. v. Portec, Inc., 970 F.2d 816, 826–27 (Fed. Cir. 1992), as a useful analytical framework. See, e.g., Hollowell Industries v. Zimmer, Inc., 837 F.3d 1268, 1279 (Fed. Cir. 2016) (applying Read factors after remand from Halo); Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc., 946 F.3d 1367, 1378 (Fed. Cir. 2020) (affirming district court's application of Read factors to determine enhancement multiplier).
The nine Read factors are:
1. Whether the infringer deliberately copied the ideas or design of another;
2. Whether the infringer, when he knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that it was invalid or that it was not infringed;
3. The infringer's behavior as a party to the litigation;
4. The defendant's size and financial condition;
5. The closeness of the case;
6. The duration of the defendant's misconduct;
7. Remedial action by the defendant;
8. The defendant's motivation for harm; and
9. Whether the defendant attempted to conceal its misconduct.
Read, 970 F.2d at 826–27. These factors are not exhaustive, and no single factor is dispositive. Rather, the Court considers the totality of the circumstances, weighing each factor as appropriate to the facts of the case. Id. at 827. Not all factors need favor enhancement for an award to be appropriate; the Court may determine that certain factors weigh more heavily than others based on the specific conduct at issue. See Presidio Components, Inc. v. Am. Tech. Ceramics Corp., 875 F.3d 1369, 1382 (Fed. Cir. 2017).
The Read factors serve as a structured guide for the Court to evaluate the nature and severity of the infringer's conduct, the adequacy of any good-faith defenses, and the proportionality of any proposed enhancement. They provide a disciplined analytical framework that, when combined with the overarching Halo standard of "egregious" conduct, ensures that enhanced damages are awarded in those cases that truly warrant them and are calibrated to the circumstances.
C. 35 U.S.C. § 284 — Enhanced Damages Provision
The statutory authority for enhanced damages in patent cases is found at 35 U.S.C. § 284, which provides in relevant part:
"Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. . . . [T]he court may increase the damages up to three times the amount found or assessed."
35 U.S.C. § 284 (emphasis added). The enhancement provision is discretionary with the Court and is applied as a post-verdict or post-judgment determination. The statute vests the Court with the authority to apply enhancement to all or any portion of the compensatory damages found or assessed, and to calibrate the multiplier at any level up to and including 3×, as the Court deems just and appropriate under the circumstances.
The Supreme Court has explained that this provision "gives district courts the discretion to award enhanced damages against those guilty of patent infringement" and that such awards are intended to serve both compensatory and punitive functions — to ensure adequate compensation for the patentee and to deter willful, knowing, and egregious infringement. Halo, 579 U.S. at 99–100. The enhancement power is "a tool that must be carefully applied," but one that Congress intentionally placed in the hands of district courts to address the full spectrum of infringing conduct, from innocent to deliberate. Id. at 103.
III. STATEMENT OF FACTS SUPPORTING WILLFUL INFRINGEMENT
A. OWS's Patent Portfolio and the Asserted Patents
OWS's four asserted patents represent core innovations in the field of silicon photonics — specifically, in the design and manufacture of high-bandwidth optical transceiver modules used in data-center interconnect applications. Each patent was developed through extensive research and development efforts, prosecuted through the USPTO by experienced patent counsel, and has been maintained in full force and effect. The asserted patents are described in detail below.
The '847 Patent. U.S. Patent No. 10,234,847, 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 assignee is Optiwave Semiconductor Corp. The '847 Patent claims methods and apparatus for a multi-channel waveguide multiplexer fabricated on a silicon photonic platform that achieves industry-leading low insertion loss across multiple optical channels. The invention addressed a long-standing challenge in the field of silicon photonics — namely, how to combine multiple optical signals onto a single waveguide with minimal signal degradation — and represents a foundational building block for high-bandwidth transceiver modules operating at 400 Gbps and above.
The '193 Patent. U.S. Patent No. 10,891,193, titled "High-Bandwidth Coherent Optical Transceiver Integrated on Silicon Substrate," was filed on April 7, 2017, and issued on January 12, 2021. The original assignee is Optiwave Semiconductor Corp. The '193 Patent claims priority to Provisional Application No. 62/499,117, filed April 7, 2017. The '193 Patent claims a coherent optical transceiver architecture that integrates the transmitter and receiver on a single silicon substrate, achieving both high bandwidth and compact form factor. This integrated approach was a significant departure from prior-art transceiver designs, which typically employed separate transmitter and receiver components, and it enabled the development of pluggable transceiver modules suitable for deployment in hyperscale data centers where space, power, and thermal constraints are critical.
The '562 Patent. U.S. Patent No. 9,678,562, titled "Method for Thermal Management of Photonic Integrated Circuits Using Embedded Micro-Channel Heat Sinks," was filed on November 22, 2014, and issued on June 13, 2017. The '562 Patent was originally assigned to Solara Optics, Inc. ("Solara"), a pioneer in photonic thermal management technologies that ceased independent operations in 2018. OWS acquired the '562 Patent, along with eleven other Solara patents, pursuant to an Asset Purchase Agreement dated June 15, 2018, for a total consideration of $34.5 million. The '562 Patent claims a method for managing the thermal output of photonic integrated circuits through the use of embedded micro-channel heat sinks fabricated directly within the silicon substrate. This thermal management technique is essential for maintaining signal integrity and reliability in high-power optical transceivers, and it represented a significant advance over the passive heat-dissipation methods that were standard in the industry at the time of filing.
The '015 Patent. U.S. Patent No. 11,402,015, titled "Polarization-Diverse Grating Coupler for Silicon Photonic Transceivers," was filed on August 30, 2019, and issued on August 2, 2022. The original assignee is Optiwave Semiconductor Corp. The '015 Patent shares a common provisional application with the '193 Patent (Provisional Application No. 62/499,117, filed April 7, 2017), reflecting the interrelated nature of OWS's coherent transceiver innovations. The '015 Patent claims a grating coupler design that achieves polarization diversity — the ability to efficiently couple light of any polarization state into the silicon waveguide — which is essential for coherent optical communication systems where the polarization of the incoming light is unpredictable and changes rapidly.
The '562 Patent and the '847 Patent are in the same patent family, related by a continuation relationship. The '193 Patent and the '015 Patent share a common provisional application, as noted above. Together, these four patents cover a range of interrelated innovations that, taken collectively, define the architecture and performance capabilities of modern silicon-photonics transceiver modules.
All four asserted patents were prosecuted by Cascade IP Advisors, LLC, under the direction of lead prosecution attorney Dr. Martin Chu, whose offices are located at 1550 Crystal Drive, Suite 600, Arlington, Virginia 22202. All maintenance fees on the asserted patents are current, and no inter partes review ("IPR") petitions have been filed against any of the four asserted patents to date.
OWS's key commercial products embodying the patented inventions include the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families, which are sold to major hyperscale data-center operators and telecommunications equipment manufacturers. These products compete directly with Lumicore's accused products in the same market segments.
B. Lumicore's Knowledge of OWS's Patents Prior to and During Infringement
The evidence in this case establishes that Lumicore had knowledge of OWS's patent rights at multiple stages — before, during, and after the design and launch of its accused products. This knowledge is established through (i) testimony from a former Lumicore engineer who participated in the design of the first accused product, (ii) deposition testimony from Lumicore's own Chief Technology Officer, (iii) formal licensing correspondence, (iv) an in-person licensing meeting, and (v) Lumicore's own written communications acknowledging and referencing the asserted patents.
1. Lumicore's Design-Phase Awareness of OWS Patent Applications. The evidence establishes that Lumicore was aware of OWS's patent claims during the very design phase of its first accused product, the LumiLink 400G-ZR+.
Melissa Chen is a former Lumicore engineer who worked on the LumiLink 400G-ZR+ design team from 2020 to 2024. Ms. Chen left Lumicore in early 2024 and is now employed at Veridian Photonics, Inc. Ms. Chen is expected to testify — and an anticipated declaration drafted for this motion describes — that during the product design phase of the LumiLink 400G-ZR+ in 2021 and 2022, Lumicore's design team accessed and reviewed OWS's published patent applications, including specifically Published Application No. 2018/0123456, which corresponds to the '193 Patent. According to Ms. Chen's expected testimony, the design team reviewed this published application as part of its technology development efforts and was aware that the application claimed innovations in coherent optical transceiver architecture integrated on a silicon substrate — the very technology at the heart of the LumiLink 400G-ZR+ design.
This testimony establishes that Lumicore was aware of OWS's patent claims before the LumiLink 400G-ZR+ was even launched. Lumicore's design engineers knew that OWS had filed patent applications covering the very technology that Lumicore was incorporating into its product, yet Lumicore proceeded with its design without taking any steps to avoid infringement or to obtain a license.
Ms. Chen's anticipated testimony is corroborated by the deposition testimony of Dr. Sandra Michaud, Lumicore's Chief Technology Officer. Dr. Michaud was deposed on November 19, 2024. During her deposition, Dr. Michaud admitted that she reviewed OWS Published Application No. 2018/0123456 during the design phase of the LumiLink product line. While Dr. Michaud denied having knowledge of OWS's issued patents until the receipt of the first FairPoint licensing letter in January 2023, her admission that she reviewed the published application that matured into the '193 Patent is significant. The published application contained the very claims that issued as the '193 Patent, and Dr. Michaud's review of those claims demonstrates that Lumicore's senior technical leadership was aware of and had considered OWS's intellectual property before Lumicore launched its accused products. The distinction between knowledge of a published application and knowledge of an issued patent is immaterial for purposes of willfulness, because the published application put Lumicore on notice of the scope and content of OWS's claimed inventions, and a reasonably prudent company would have monitored the prosecution of those applications and assessed the risk of infringement once the patents issued.
2. FairPoint Licensing Group's First Notice Letter (January 15, 2023). On January 15, 2023, FairPoint Licensing Group, LLC ("FairPoint"), acting as OWS's authorized licensing agent, sent a formal licensing and notice letter to Lumicore's General Counsel, Raymond Bautista. FairPoint is a patent licensing firm managed by Angela Reeves, with offices at 500 Sansome Street, Suite 1400, San Francisco, California 94111. FairPoint was retained by OWS to manage the licensing of its patent portfolio, including the identification of potential licensees and the negotiation of license agreements.
The January 15, 2023 letter specifically identified three of the four asserted patents by number and title: the '847 Patent, the '193 Patent, and the '562 Patent. The letter identified Lumicore's LumiLink 400G-ZR+ transceiver module, which had been launched in Q3 2022, as an accused infringing product. The letter included a brief technical analysis explaining how the LumiLink 400G-ZR+ incorporated elements corresponding to specific claims of each identified patent. The letter invited Lumicore to engage in licensing discussions and offered to provide a more detailed claim chart and technical analysis upon request. A true and correct copy of this letter is attached hereto as Exhibit 1.
The January 15, 2023 letter constituted actual, formal notice to Lumicore of at least three of the four asserted patents and of OWS's contention that the LumiLink 400G-ZR+ infringed those patents. Upon receipt of this letter, Lumicore was on actual notice that its continued manufacture, use, sale, offer for sale, and importation of the LumiLink 400G-ZR+ posed a risk of patent infringement with respect to the '847, '193, and '562 Patents.
The receipt and handling of this letter are confirmed by the deposition testimony of Raymond Bautista, Lumicore's General Counsel, taken on December 3, 2024. During his deposition, Mr. Bautista confirmed that he received the January 15, 2023 FairPoint letter and that he forwarded it to Lumicore's outside patent litigation counsel, Hawthorne Vega & Cruz LLP, within three business days of receipt. This testimony establishes that Lumicore's legal leadership was promptly informed of OWS's patent assertions and took the step of engaging outside counsel in connection with the matter.
3. Lumicore's Initial Response Disputing Infringement (February 28, 2023). On February 28, 2023, approximately six weeks after receiving the FairPoint licensing letter, Lumicore responded through its outside counsel, Hawthorne Vega & Cruz LLP. The response letter, signed by Catherine "Kate" Rourke of Hawthorne Vega & Cruz, disputed infringement and raised questions regarding the validity of the identified patents.
Critically, however, Lumicore's February 28, 2023 response did not include any substantive analysis supporting its assertions of non-infringement or invalidity. The letter did not attach or reference any opinion of counsel. It did not identify any specific claim limitation that Lumicore contended was not met by the LumiLink 400G-ZR+. It did not identify any specific prior-art reference that Lumicore contended rendered the patents invalid. It did not describe any investigation that Lumicore had undertaken to assess the scope of the asserted patents or to form a good-faith belief as to non-infringement or invalidity.
In short, Lumicore's initial response was a conclusory denial, devoid of the type of substantive analysis that would be expected from a company that had genuinely investigated the patent assertions and formed a good-faith belief that its products did not infringe valid patents. The absence of any substantive analysis in this letter is relevant to the Court's assessment of whether Lumicore undertook the type of good-faith investigation contemplated by the second Read factor.
4. In-Person Licensing Meeting (April 20, 2023). On April 20, 2023, an in-person licensing meeting was held in Austin, Texas, to discuss the patent assertions and explore the possibility of a licensing arrangement. The meeting was attended by Angela Reeves of FairPoint Licensing Group, Rebecca Tanaka, OWS's General Counsel, Raymond Bautista, Lumicore's General Counsel, and Catherine "Kate" Rourke of Hawthorne Vega & Cruz LLP.
The deposition testimony of Angela Reeves, taken on December 10, 2024, provides a detailed account of the April 20, 2023 meeting. According to Ms. Reeves, OWS's representatives presented a detailed overview of the asserted patents, including claim charts mapping specific claims to the structures identified in the LumiLink 400G-ZR+ product through the Benchmark teardown analysis. OWS's representatives also presented licensing terms and invited Lumicore to engage in a substantive negotiation regarding a royalty rate and other license terms.
Ms. Reeves testified that Lumicore's representatives showed "no interest in negotiating" during the meeting. According to Ms. Reeves, Lumicore's representatives listened to the presentation but did not engage with the substance of the claim charts or the licensing proposal. Ms. Reeves further testified that during the meeting, Lumicore's representatives "acknowledged receipt of the licensing letters and confirmed they had reviewed the identified patents." This acknowledgment is significant because it eliminates any question about whether Lumicore's decision-makers were aware of and had considered OWS's patent rights.
No resolution was reached at the April 20, 2023 meeting, and no follow-up meetings were scheduled. A true and correct declaration of Angela Reeves attesting to these facts is attached hereto as Exhibit 4.
5. FairPoint's Second Notice Letter (May 15, 2023). On May 15, 2023, FairPoint sent a second formal licensing letter to Lumicore. This letter expanded the scope of the patent assertions in two significant respects. First, the letter added the '015 Patent (U.S. Patent No. 11,402,015, issued August 2, 2022) to the list of asserted patents. The '015 Patent had issued approximately nine months prior to the date of this second letter, and its addition brought the total number of asserted patents to four. Second, the letter expanded the list of accused products to include the LumiLink 800G-DR8 transceiver module, which Lumicore had launched in Q1 2023 — after receiving the first FairPoint letter.
The May 15, 2023 letter thus provided Lumicore with actual notice of all four patents now asserted in this litigation and identified two of the three accused product lines. A true and correct copy of this letter is attached hereto as Exhibit 2.
As of May 15, 2023, Lumicore had received two formal licensing letters from FairPoint, had participated in an in-person licensing meeting, and had been provided with specific, detailed notice of all four asserted patents and two of the three accused products. Lumicore was fully on notice of OWS's patent rights and its contentions of infringement.
6. Lumicore's Declination Letter and Claimed "Competent Legal Opinions" (July 10, 2023). On July 10, 2023, Lumicore formally declined to take a license. In its declination letter — attached hereto as Exhibit 3 — Lumicore stated that it had obtained "competent legal opinions" that its products do not infringe the asserted patents. This statement was the first and only time Lumicore referenced the existence of opinion-of-counsel work product in any written communication.
Despite referencing these alleged opinions in its declination letter and subsequently asserting the advice of counsel as part of its defense to willful infringement in this litigation, Lumicore has refused to produce the alleged opinion-of-counsel letters. Lumicore has asserted that the opinions are protected by the attorney-client privilege and the work-product doctrine.
OWS filed a Motion to Compel Production of Opinion-of-Counsel Letters (D.E. 40) on October 21, 2024, arguing that Lumicore waived the applicable privileges by (i) affirmatively referencing the opinions in its July 10, 2023 declination letter, and (ii) asserting the advice of counsel as part of its defense to OWS's willful infringement allegations in this litigation. The Motion to Compel remains pending before the Court. OWS submits that Lumicore's dual invocation of the privilege — relying on the existence of opinion letters to support its defense while simultaneously refusing to disclose the substance of those opinions — is fundamentally inequitable and deprives OWS of the ability to assess and challenge the adequacy of Lumicore's claimed good-faith defenses.
The deposition testimony of Raymond Bautista, taken on December 3, 2024, sheds additional light on this issue. During his deposition, Mr. Bautista refused to answer questions about the substance of the opinion letters, asserting the attorney-client privilege. He also declined to identify the attorneys who prepared the opinions, the dates on which the opinions were prepared, or the specific patents and products analyzed. Critically, however, Mr. Bautista made a significant admission during the deposition: he admitted that no formal design-around analysis was commissioned before the launch of the LumiEdge 1600G-LR module in Q4 2023. This admission is devastating to Lumicore's willfulness defense, because it demonstrates that even if Lumicore obtained some form of opinion letter with respect to its earlier products, it did not undertake any comparable analysis before launching a new product that it knew or should have known infringed OWS's patents.
The adverse inference that should be drawn from Lumicore's refusal to produce the opinion letters is significant. If the pending Motion to Compel is granted and Lumicore still refuses to produce the opinions, or if the opinions are ultimately found to be non-existent, incomplete, or substantively deficient, the Court should draw the inference that the opinions either do not exist, do not support a good-faith belief in non-infringement or invalidity, or are actually adverse to Lumicore's position. See WCM Indus., Inc. v. IPS Corp., 721 F. App'x 959, 970 (Fed. Cir. 2018) (noting that the failure to produce opinion-of-counsel evidence may support an inference that no such opinion exists or that the opinion is unfavorable).
C. Lumicore's Continued Infringement After Notice
The evidence establishes that after receiving actual notice of all four asserted patents, Lumicore continued to infringe without interruption, without product modification, and without any effort to design around the patented technology. Lumicore's post-notice conduct is perhaps the strongest evidence of willfulness in this case.
1. Continued Sale of LumiLink 400G-ZR+ and LumiLink 800G-DR8. After receiving the first FairPoint licensing letter on January 15, 2023, and after receiving actual notice of all four asserted patents by no later than May 15, 2023, Lumicore continued to manufacture, use, sell, offer to sell, and import the LumiLink 400G-ZR+ and LumiLink 800G-DR8 transceiver modules without any modification whatsoever. Lumicore did not pause production. It did not initiate a design-around effort. It did not modify the accused structures. It did not limit its sales activities. It continued its infringing conduct as if it had never received notice of OWS's patents.
The financial magnitude of this continued infringement is substantial. For fiscal year 2023, Lumicore's accused-product revenues were as follows:
These revenues were generated in substantial part during the post-notice period, after Lumicore had been specifically informed that its products were believed to infringe OWS's patents. The decision to continue selling these products without modification was not an inadvertent oversight — it was a deliberate business decision to prioritize revenue over respect for OWS's intellectual property rights.
2. Launch of the LumiEdge 1600G-LR (Q4 2023) — Post-Notice New Product Launch. Perhaps the most compelling evidence of Lumicore's willfulness is its decision to launch an entirely new accused product — the LumiEdge 1600G-LR transceiver module — in Q4 2023, after having received notice of all four asserted patents, after having attended an in-person licensing meeting, and after having formally declined to take a license.
The LumiEdge 1600G-LR was launched more than nine months after Lumicore received the first FairPoint licensing letter, more than five months after Lumicore received the second FairPoint letter identifying all four patents, and approximately three months after Lumicore formally declined to take a license. The LumiEdge 1600G-LR is accused of infringing the '193 Patent and the '015 Patent.
Fiscal year 2023 revenue from the LumiEdge 1600G-LR, covering only its initial launch quarter, was $41.7 million. This revenue has continued to grow in subsequent quarters as the product has gained market traction.
The launch of a new infringing product after actual notice of the asserted patents, after declining to negotiate a license, and without having conducted any design-around analysis is powerful evidence of deliberate, willful infringement. As Mr. Bautista admitted during his deposition, no formal design-around analysis was commissioned before the LumiEdge 1600G-LR launch. This means that Lumicore introduced a new product into the market without even attempting to determine whether it could avoid infringing OWS's patents. The unmistakable inference is that Lumicore made a calculated business decision that the profits from selling infringing products outweighed the risk of a patent infringement judgment — precisely the type of egregious, bad-faith conduct that the Supreme Court identified in Halo as warranting enhanced damages.
3. Total Post-Notice Revenue. The post-notice period in this case runs from January 15, 2023 (the date of the first FairPoint licensing letter) through the projected trial date. During this period, Lumicore has continued to sell all three accused products without interruption.
According to the preliminary damages analysis prepared by Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, Plaintiff's damages expert, the total post-notice lost profits attributable to Lumicore's continued infringement are approximately $109.2 million. This figure represents the lost profits that OWS would have earned but for Lumicore's continued sale of infringing products during the post-notice period, calculated using a market-share displacement analysis and OWS's established gross margin on its competing transceiver products.
The magnitude of Lumicore's post-notice revenue underscores the deliberateness of its infringement. Lumicore did not merely continue to sell existing inventory — it actively manufactured new units, marketed and promoted its infringing products at industry trade shows, and expanded its customer base, all while on actual notice that its products were accused of infringing OWS's patents.
D. Evidence of Deliberate Copying
Independent of the evidence of actual notice and continued infringement, the record also contains affirmative evidence that Lumicore deliberately copied OWS's patented innovations.
Benchmark Semiconductor Analysis, LLC ("Benchmark"), an independent semiconductor analysis firm based in Santa Clara, California, conducted comprehensive product teardowns of all three accused products. The teardown analyses were led by Kevin Ng, Lead Engineer at Benchmark, whose offices are located at 2244 Mission College Boulevard, Santa Clara, California 95054. Benchmark is a well-established firm with extensive experience in semiconductor product analysis and has provided expert teardown services in numerous patent litigation matters.
The first teardown was conducted on the LumiLink 400G-ZR+ on December 12, 2022. The resulting teardown report confirmed the use of waveguide multiplexer structures and thermal management micro-channels that are "substantially identical" to the structures described and claimed in the asserted patents. Specifically, the report identified a multi-channel waveguide multiplexer architecture that corresponded element-by-element to the claims of the '847 Patent, embedded micro-channel heat-sink structures that corresponded to the claims of the '562 Patent, and an integrated coherent transceiver architecture that corresponded to the claims of the '193 Patent.
Subsequent teardowns of the LumiLink 800G-DR8 (conducted in June 2023) and the LumiEdge 1600G-LR (conducted in February 2024) confirmed the presence of similar structures in those products as well. The consistency of the infringing structures across all three product lines suggests a systematic, organization-wide design approach that adopted OWS's patented technology as a foundation.
The evidence of deliberate copying is further supported by testimony from Lumicore's own personnel. Dr. Sandra Michaud, Lumicore's CTO, admitted during her November 19, 2024 deposition that she could not identify specific non-infringing design alternatives to the accused structures in any of the three products. When asked whether Lumicore's design team had considered alternative approaches that would avoid the need for the patented waveguide multiplexer and thermal management structures, Dr. Michaud stated that she could not identify any specific alternatives. This admission supports the inference that Lumicore's design team knowingly adopted the patented technology because no viable non-infringing alternative existed — and that the patented technology was adopted precisely because it was the best available solution, developed and patented by OWS.
Finally, Melissa Chen's anticipated testimony — that the LumiLink 400G-ZR+ design team reviewed OWS's published patent applications during the design phase — directly supports a finding that Lumicore deliberately copied OWS's patented innovations. The design team was aware of OWS's claimed inventions, chose to incorporate the very structures described in those claims into its products, and proceeded to market without obtaining a license or developing an independent, non-infringing design. Summaries of the Benchmark teardown reports are attached hereto as Exhibit 11.
IV. APPLICATION OF THE READ FACTORS
The nine Read factors, applied to the facts of this case, weigh heavily in favor of enhanced damages. OWS addresses each factor in turn below.
A. Factor 1: Deliberate Copying
The first Read factor asks whether the infringer deliberately copied the ideas or design of another. The evidence in this case strongly supports a finding of deliberate copying.
First, Lumicore's design team reviewed OWS's published patent applications during the design of the LumiLink 400G-ZR+. Both Dr. Sandra Michaud (Lumicore's CTO) and Melissa Chen (a former Lumicore design engineer) provide testimony establishing that the design team accessed and reviewed Published Application No. 2018/0123456, which corresponds to the '193 Patent. The design team was thus aware of the specific innovations that OWS had claimed, and it proceeded to incorporate structures corresponding to those claims into the LumiLink 400G-ZR+ product.
Second, the Benchmark teardown data confirms that the accused products employ structures that are substantially identical to the claimed inventions. This is not a case where the accused products merely resemble the patented technology in general concept; rather, the teardown analyses revealed element-by-element correspondence between the accused structures and the specific claim limitations of the asserted patents. The degree of structural similarity is consistent with deliberate adoption of the patented designs rather than independent development.
Third, Dr. Michaud's inability to identify non-infringing design alternatives further supports the inference of deliberate copying. If Lumicore had independently developed its own solutions to the technical challenges addressed by the asserted patents, one would expect its CTO to be able to articulate the alternative approaches considered during the design process. Dr. Michaud's failure to do so supports the inference that Lumicore adopted the patented designs because they were the best available technology — technology that had been invented and patented by OWS.
Considered together, this evidence demonstrates that Lumicore was aware of OWS's patent claims, studied those claims during its design process, and incorporated the claimed structures into its products without developing independent, non-infringing alternatives. This factor weighs heavily in favor of enhanced damages.
B. Factor 2: Good-Faith Investigation and Belief
The second Read factor asks whether the infringer, when it knew of the other's patent protection, investigated the scope of the patent and formed a good-faith belief that the patent was invalid or not infringed. The evidence establishes that Lumicore did not conduct an adequate good-faith investigation and has failed to demonstrate a genuine, well-reasoned belief of non-infringement or invalidity.
Lumicore's July 10, 2023 declination letter referenced "competent legal opinions" that its products do not infringe. Yet Lumicore has refused to produce these alleged opinion letters, asserting attorney-client privilege. This refusal is telling. If Lumicore had obtained a genuine, thorough, and well-reasoned opinion of counsel concluding that its products did not infringe valid patents, one would expect Lumicore to waive the privilege and present the opinion as a centerpiece of its defense to willfulness. The standard practice in patent litigation, when a defendant wishes to rely on an advice-of-counsel defense, is to waive the privilege and produce the opinion for the Court and opposing party to evaluate. Lumicore's refusal to do so, while simultaneously invoking the existence of the opinions in its defense, supports a strong inference that the opinions are either non-existent, substantively deficient, or actually adverse to Lumicore's position. See Eko Brands, 946 F.3d at 1378.
Lumicore's February 28, 2023 initial response to FairPoint's first licensing letter further undermines any claim of good-faith investigation. That response was entirely conclusory — it disputed infringement and questioned validity but did not include any substantive analysis supporting those positions. The letter did not identify any specific claim limitation that Lumicore contended was not met, did not cite any prior-art reference, and did not describe any investigation that Lumicore had undertaken. A response of this type does not reflect the kind of serious, good-faith investigation that the second Read factor contemplates.
Most significantly, Mr. Bautista admitted during his December 3, 2024 deposition that no formal design-around analysis was commissioned before the launch of the LumiEdge 1600G-LR in Q4 2023. This means that even after receiving actual notice of all four asserted patents, even after declining to take a license, and even while allegedly relying on "competent legal opinions," Lumicore did not bother to analyze whether its newest product could be designed to avoid the asserted patents. This is not the conduct of a company that has formed a good-faith belief of non-infringement; it is the conduct of a company that has decided to ignore the risks and proceed regardless.
This factor weighs in favor of enhanced damages.
C. Factor 3: Litigation Conduct
The third Read factor examines the infringer's behavior as a party to the litigation. While this factor will be more fully developed as the litigation proceeds, there are already indications that Lumicore's litigation conduct merits scrutiny.
Most notably, Lumicore has asserted attorney-client privilege over the opinion letters referenced in its declination letter, while simultaneously relying on the existence of those opinions as part of its defense to willful infringement. This "sword and shield" approach creates a fundamental asymmetry: Lumicore benefits from the inference that it obtained legal advice while denying OWS the ability to evaluate the adequacy of that advice. OWS's pending Motion to Compel (D.E. 40) squarely addresses this issue.
Additionally, Lumicore's Rule 30(b)(6) designee was deficiently prepared on Topic 14 of OWS's deposition notice, which covered non-infringing design alternatives. The designee's inability to testify meaningfully on this topic — a topic central to both infringement and willfulness — raises questions about whether Lumicore has taken its discovery obligations seriously.
OWS acknowledges that this factor is still developing. Based on the evidence currently available, OWS submits that this factor is currently neutral to slightly in favor of enhancement and will be reassessed based on Lumicore's conduct through trial.
D. Factor 4: Defendant's Size and Financial Condition
The fourth Read factor considers the defendant's size and financial condition. This factor is relevant because enhanced damages serve a greater deterrence function when the infringer is a well-capitalized entity that made a calculated decision to infringe rather than a small company that may have inadvertently infringed due to limited resources.
Lumicore is a publicly traded company listed on the Nasdaq Stock Market with a market capitalization of approximately $3.4 billion as of the date the complaint was filed, based on approximately 91.8 million shares outstanding at a share price of approximately $37.00 per share. Lumicore reported estimated total revenue of $312.6 million for fiscal year 2023. The company is led by Chief Executive Officer Thomas "Tom" Kessler and Chief Financial Officer Janet Moreno. Lumicore employs hundreds of engineers and other personnel and maintains significant operations in Austin, Texas.
Lumicore is not a small startup that could claim ignorance of the patent landscape or an inability to conduct a thorough patent clearance analysis. It is a multi-billion-dollar public company with access to sophisticated legal counsel — specifically, Hawthorne Vega & Cruz LLP, a major law firm with a nationally recognized patent litigation practice. Lumicore had the resources and the expertise to conduct a comprehensive infringement and validity analysis, to design around the asserted patents if technically feasible, or to negotiate a license on commercially reasonable terms. It chose to do none of these things.
This factor weighs in favor of enhanced damages.
E. Factor 5: Closeness of the Case
The fifth Read factor considers the closeness of the case on the merits. If the infringement case is clear-cut and the validity of the patents is not seriously in doubt, this factor weighs in favor of enhancement because it demonstrates that the risk of infringement was apparent and the infringer's decision to proceed was correspondingly more reckless.
OWS acknowledges that this factor will be more fully developed following the Court's Markman ruling (scheduled for March 14, 2025) and the trial. However, OWS submits that even at this stage, the evidence demonstrates that this is not a close case.
On infringement, the Benchmark teardown data shows clear structural correspondence between the accused products and the specific claim limitations of the asserted patents. OWS's technical expert, Dr. Caroline Ashford — Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology — opines that each accused product infringes each asserted claim. Dr. Ashford's analysis is supported by detailed claim charts mapping the accused structures to each claim element.
On validity, OWS's position is robust. All four asserted patents survived prosecution before the USPTO, all maintenance fees are current, and no IPR petitions have been filed against any of the asserted patents. While Lumicore has identified 23 prior-art references in its invalidity contentions, Dr. Ashford will rebut each of those references and demonstrate that the asserted claims are valid and patentable. OWS is confident that the validity challenges will be resolved in its favor.
If, as OWS expects, the case is not close, this factor will weigh in favor of enhancement. OWS reserves the right to update this analysis following the Markman ruling and trial.
F. Factor 6: Duration of Misconduct
The sixth Read factor considers the duration of the defendant's infringing conduct. Prolonged infringement — particularly after actual notice — is a significant aggravating factor that supports enhanced damages.
Lumicore's infringement commenced no later than Q3 2022, when the LumiLink 400G-ZR+ was launched. Lumicore received actual notice of three of the four asserted patents on January 15, 2023, via the first FairPoint licensing letter, and actual notice of all four asserted patents by May 15, 2023, via the second FairPoint letter.
Lumicore's infringement has continued unabated from Q3 2022 through the present — a period of over three years through the projected trial date of February 2, 2026. At no point during this period has Lumicore ceased selling any of the accused products, modified any of the accused products to avoid infringement, or initiated any design-around effort. To the contrary, Lumicore expanded its infringement by launching the LumiEdge 1600G-LR in Q4 2023, more than nine months after receiving the first notice letter and more than five months after receiving notice of all four asserted patents.
The duration of Lumicore's misconduct is not merely a passive continuation of pre-notice behavior; it reflects an active, ongoing decision to infringe OWS's patents in the face of actual knowledge and specific notice. Each quarter that Lumicore continues to sell the accused products is a quarter in which it makes a conscious business decision to prioritize revenue over respect for OWS's intellectual property rights.
This factor weighs strongly in favor of enhanced damages.
G. Factor 7: Remedial Action
The seventh Read factor considers whether the defendant has taken remedial action to address the infringement. Remedial action can include product modifications, design-around efforts, cessation of sales, or other steps to mitigate the harm caused by the infringement.
Lumicore has taken no remedial action whatsoever. It has not modified any of the accused products. It has not initiated any design-around effort. It has not ceased sales of any of the accused products. It has not even taken preliminary steps to investigate the feasibility of a design-around, as confirmed by Mr. Bautista's deposition admission that no formal design-around analysis was commissioned before the launch of the LumiEdge 1600G-LR.
Lumicore has estimated in discovery responses that a redesign of its transceiver products to avoid the asserted patents would take 18 to 24 months. Yet despite having been on notice of OWS's patent claims since at least January 2023 — a period of now more than two years — Lumicore has not initiated any such redesign effort. Had Lumicore commenced a redesign promptly upon receiving notice, it could have completed the redesign by now. Its failure to do so further demonstrates the deliberateness and voluntariness of its ongoing infringement.
This factor weighs heavily in favor of enhanced damages.
H. Factor 8: Motivation for Harm
The eighth Read factor considers the defendant's motivation for harm. This factor examines whether the defendant had a competitive motivation to infringe and whether the infringement was calculated to cause economic harm to the patent holder.
Lumicore is a direct competitor of OWS in the silicon-photonics transceiver market. The three accused products — the LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR — directly compete with OWS's OWS-400ZR and OWS-800XR transceiver module families for the same customers and the same design-in opportunities. These are not products in adjacent or tangentially related markets; they are head-to-head competitors for the same purchase orders from hyperscale data-center operators.
The competitive impact of Lumicore's infringement has been severe. OWS's market data demonstrates that the entry of Lumicore's infringing products into the market has caused a documented 18.7% decline in average selling prices of 400G-ZR transceivers from Q3 2022 to Q4 2023. This price erosion has harmed not only OWS's revenue on individual sales but also the overall economic value of its product portfolio.
The financial significance of the accused products to Lumicore underscores its motivation to continue infringing. Total accused-product revenue for FY 2023 was $264.9 million, representing approximately 84.7% of Lumicore's total FY 2023 revenue of $312.6 million. The accused products are not a peripheral product line for Lumicore — they constitute the vast majority of its business. Lumicore's motivation to continue selling infringing products is thus self-evident: these products are its primary revenue engine, and ceasing sales or redesigning them would have a devastating impact on Lumicore's financial performance.
This competitive dynamic provides strong evidence that Lumicore's decision to infringe was economically motivated and calculated to capture market share at OWS's expense. Lumicore chose to free-ride on OWS's patented technology rather than invest in developing its own non-infringing solutions, gaining a competitive advantage that it would not have obtained through independent innovation.
This factor weighs in favor of enhanced damages.
I. Factor 9: Concealment of Misconduct
The ninth Read factor considers whether the defendant attempted to conceal its misconduct. This factor is distinct from the question of whether the infringing products were sold openly in the market; it encompasses any efforts by the defendant to hide the nature or scope of its infringing activities.
OWS acknowledges that Lumicore's accused products are commercially available and have been sold openly in the marketplace. There is no evidence that Lumicore attempted to conceal the existence or commercial availability of the accused products.
However, Lumicore's refusal to produce the opinion-of-counsel letters that it has referenced in its declination letter and in its defense to willful infringement can be viewed as a form of concealment. By invoking the existence of "competent legal opinions" while refusing to disclose their substance, Lumicore is effectively concealing the nature and adequacy of the legal analysis — if any — that underlies its claimed good-faith belief of non-infringement. If the pending Motion to Compel is resolved in OWS's favor and Lumicore nonetheless fails to produce the opinions, the inference of concealment will be strengthened.
This factor is currently neutral to slightly in favor of enhancement and will be reassessed based on the resolution of the pending Motion to Compel and additional discovery.
V. ENHANCED DAMAGES CALCULATION
A. Damages Base for Enhancement
OWS's damages case, as set forth in the preliminary analysis prepared by its damages expert, Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, encompasses two complementary theories: lost profits and reasonable royalty.
Lost Profits. Under the Panduit analysis, Dr. Keating has calculated lost profits of approximately $128.9 million. This figure is derived as follows:
The Panduit analysis establishes that but for Lumicore's infringement, OWS would have captured a significant share of the sales made by Lumicore, and OWS would have earned its established gross margin on those additional sales. The 38.2% market-share displacement factor reflects the portion of Lumicore's accused-product sales that would have been captured by OWS in a but-for world, based on OWS's market position, customer relationships, and the competitive dynamics of the silicon-photonics transceiver market.
Reasonable Royalty. For the portion of Lumicore's accused-product sales that would not have been captured by OWS in a but-for world (i.e., the remaining $441.6 million in non-lost-profit accused-product sales), Dr. Keating has calculated a reasonable royalty using the Georgia-Pacific fifteen-factor analysis. Dr. Keating's analysis yields a reasonable royalty rate of 8.5%, resulting in a reasonable royalty of approximately $37.5 million.
Total Compensatory Damages. Combining lost profits and reasonable royalty, total compensatory damages are approximately:
Post-Notice Lost Profits. Of the $128.9 million in total lost profits, approximately $109.2 million is attributable to the post-notice period — i.e., the period from January 15, 2023 (the date of the first FairPoint licensing letter) through the projected trial date. This figure represents the lost profits on sales that Lumicore made after it had actual knowledge of OWS's patents and was on notice that its products were accused of infringement. The post-notice lost-profits figure is the primary basis for OWS's enhancement request, as discussed below.
B. Enhancement Multiplier Sought
OWS requests that the Court apply a 2× enhancement mul

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

OPTIWAVE SEMICONDUCTOR CORP.,

LUMICORE TECHNOLOGIES, INC.,

JURY TRIAL DEMANDED

TABLE OF CONTENTS

TABLE OF AUTHORITIES

I. INTRODUCTION

II. LEGAL STANDARD

III. STATEMENT OF FACTS SUPPORTING WILLFUL INFRINGEMENT

IV. APPLICATION OF THE READ FACTORS

V. ENHANCED DAMAGES CALCULATION

Record

Parties

Dates

Amounts