1014-00005 · Optiwave Semiconductor Corp · Correspondence/External

letter-to-koh-urgent-deadline-warning-a1.docx DOCUMENT IP / Technology

5 / 35 ← → ✕

CALDERWOOD & HARKNESS LLP 555 California Street, 42nd Floor San Francisco, CA 94104

Christy Bauer Lead Associate, intellectual Property Group USPTO Reg. No. 74,329 T: (415) 782-6140 F: (415) 782-6001 E: cbauer@calderwoodharkness.com

December 2, 2024

VIA EMAIL AND FIRST-CLASS MAIL

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

Sandra Koh IP Manager / In-House Patent Counsel Optiwave Semiconductor Corp. 4710 Ridgeview Parkway, Suite 300 Santa Clara, CA 95054

Re: URGENT — Absolute Statutory Deadline Approaching U.S. Patent Application No. 17/672,204 (the "A1 Application") "Multi-Channel Silicon-Photonic Mach-Zehnder Modulator with Segmented Traveling-Wave Electrode Architecture" C&H Matter No. 1014-00005

Dear Sandra:

1. Purpose and Urgency of This Letter

I am writing to provide formal urgent notice regarding an imminent and absolute statutory deadline for U.S. Patent Application No. 17/672,204 (the "A1 Application"), titled "Multi-Channel Silicon-Photonic Mach-Zehnder Modulator with Segmented Traveling-Wave Electrode Architecture."

The deadline to respond to the pending non-final Office Action in the A1 Application is March 9, 2025. This deadline is absolute. No further extensions of time are available under the rules of the United States Patent and Trademark Office ("USPTO"). The full six-month statutory maximum response period will have been exhausted on that date, and there is no procedural mechanism by which this deadline may be extended.

Failure to file a timely response by March 9, 2025 will result in the irrevocable abandonment of the A1 Application.

I want to underscore that this is not a soft deadline, a suggested date, or a date subject to extension upon payment of additional fees. March 9, 2025 is a hard statutory bar. Once that date passes without a proper response having been filed with the USPTO, the application will be deemed abandoned by operation of law.

As you are aware, the A1 Application is the foundational non-provisional application in the core modulator architecture sub-family designated internally as "Sub-Family A." It claims priority to Provisional Application No. 63/297,841, filed January 10, 2022, and serves as the parent application from which the continuation and continuation-in-part applications in Sub-Family A derive. The loss of this application would have significant and far-reaching consequences for Optiwave Semiconductor Corp. ("OWS"), as described in greater detail below.

2. Procedural History of the Deadline

To provide context for how the current deadline situation arose, the following is a summary of the relevant procedural history.

The non-final Office Action in the A1 Application was mailed by the USPTO during the summer of 2023, prior to the imposition of the budget freeze. Under the applicable provisions of the Patent Act and implementing regulations — specifically 35 U.S.C. § 133 and 37 C.F.R. § 1.136(a) — the initial period for responding to a non-final Office Action is three months from the mailing date of the action. An applicant may purchase up to three additional one-month extensions of time, for a maximum total response period of six months. No further extensions beyond the six-month statutory maximum are permitted under any circumstances.

On September 6, 2023, Calderwood & Harkness LLP ("C&H") filed a two-month extension of time on behalf of OWS with the USPTO, accompanied by the applicable extension fee of $640.00 at the small entity rate. This filing represented the last billable activity by C&H on the OWS patent prosecution docket. We note that this extension was filed approximately three and a half weeks after the Project Lighthouse budget freeze was imposed by Harborview Partners on August 11, 2023, and was undertaken as a protective measure to preserve OWS's ability to respond while the internal budget deliberations were ongoing.

Since September 6, 2023, the A1 Application matter has been maintained in dormant status on C&H's docket in accordance with the Project Lighthouse budget freeze directive. No substantive prosecution work has been authorized or performed on the file during this period.

The remaining extension time — consisting of four additional months that were available for purchase under 37 C.F.R. § 1.136(a) — has either already been consumed or will be consumed by the passage of time without any further extensions being purchasable. The cumulative effect is that the full six-month maximum statutory response period will expire on March 9, 2025.

To be absolutely clear: there is no mechanism under the USPTO rules of practice, the Patent Act, or the Manual of Patent Examining Procedure ("MPEP") by which this deadline can be extended beyond March 9, 2025. This is a hard statutory bar, and it is immovable.

3. Current Status of the Draft Response

Prior to the imposition of the Project Lighthouse budget freeze in August 2023, C&H had been actively preparing a draft response to the non-final Office Action in the A1 Application. This draft response includes proposed claim amendments and a partial remarks section addressing the examiner's rejections.

The draft was prepared primarily by me through approximately August 2023, at which point work was suspended in accordance with the budget freeze. The draft has not been completed and has not undergone partner review by Catherine Bloom, the Responsible Partner for the OWS engagement. While the draft represents a meaningful foundation upon which a complete response can be built, it is not in a state suitable for filing.

The substantive strategy reflected in the draft response emphasizes the tapered impedance-matching feature of OWS's claimed invention as the principal point of distinction over the prior art cited in the Office Action. The examiner's rejections rely primarily on two references assigned to Pinnacle Optics, Inc.:

• U.S. Patent No. 10,823,417 (the "'417 Patent"), issued November 3, 2020; and

• U.S. Patent No. 11,105,662 (the "'662 Patent"), issued August 31, 2021.

The proposed claim amendments in the draft are designed to narrow the independent claims to recite the tapered impedance-matching architecture with sufficient specificity to overcome the examiner's rejections while maintaining commercially meaningful claim scope that covers OWS's current and planned product lines.

Substantial additional work is required to finalize the response and bring it to a filing-ready state. Specifically, the following tasks remain:

1. Completion of the remarks section, including detailed arguments distinguishing the cited references and addressing each of the examiner's specific rejections;

2. Conduct of an updated prior art analysis to ensure that no additional relevant references have issued or published since August 2023 that could affect the prosecution strategy;

3. Review and finalization of the proposed claim amendments in light of the updated prior art landscape;

4. Partner review by Catherine Bloom;

5. Preparation of a final draft for client review and approval; and

6. Filing of the response with the USPTO.

Based on my assessment of the work remaining, I estimate that completing the response will require approximately 40 to 55 attorney hours, translating to approximately $22,000 to $30,000 in attorney fees at the discounted rates set forth in the current engagement letter. In addition, potential USPTO fees may be incurred — for example, if a Request for Continued Examination ("RCE") under 37 C.F.R. § 1.114 is determined to be necessary or strategically advisable, the associated government filing fee would be approximately $2,000 at the small entity rate. If the response to the non-final Office Action is sufficient to advance prosecution without the need for an RCE, no additional government fee beyond standard filing fees would be required.

4. Consequences of Missing the March 9, 2025 Deadline

The consequences of failing to file a timely response by the March 9, 2025 deadline would be severe, multifaceted, and in certain respects irreversible. I outline the principal areas of concern below.

4.1 Abandonment of the Foundational Application

If no response to the pending non-final Office Action is filed by March 9, 2025, Application No. 17/672,204 will be deemed abandoned by operation of law under 35 U.S.C. § 133. The USPTO will issue a Notice of Abandonment, and the application will lose its pendency.

While a petition to revive under 37 C.F.R. § 1.137 may theoretically be available in certain circumstances, I must strongly caution against reliance on this mechanism. Petitions to revive require a showing that the failure to respond was "unintentional," and the Director of the USPTO exercises discretion in granting or denying such petitions. In cases where the delay is prolonged or where the applicant was aware of the deadline — as is the case here, given this notice — the prospects for successful revival become materially more uncertain. Furthermore, the USPTO examines the circumstances surrounding the delay, and a conscious decision not to respond due to budgetary constraints may complicate the unintentionality showing. Reliance on revival is, in C&H's professional judgment, strongly inadvisable.

The A1 Application is the foundational non-provisional application in Sub-Family A (Core Modulator Architecture). It is the parent application from which the following related applications derive their priority claims:

• A2 — U.S. Patent Application No. 17/672,311 (Continuation); and

• A3 — U.S. Patent Application No. 17/672,489 (Continuation-in-Part).

The abandonment of the A1 Application would not automatically invalidate the pendency of the A2 and A3 applications, as those applications were filed while A1 was pending. However, the loss of the anchor application in the family would significantly constrain OWS's prosecution flexibility and would eliminate the possibility of filing additional continuation or divisional applications claiming the benefit of the A1 filing date.

4.2 Loss of Design-Around Claim Scope — Pinnacle Optics Exposure

The strategic importance of the A1 Application extends well beyond its role as a portfolio asset in the abstract. The claims in the A1 Application were specifically drafted to cover OWS's proprietary tapered impedance-matching design-around of the electrode-segmentation geometry claimed by Pinnacle Optics, Inc. in the '417 Patent.

As detailed in C&H's Freedom-to-Operate Analysis delivered to OWS on October 14, 2022, OWS's current commercial products — including the OWS-MZM-400 and OWS-MZM-800 series silicon-photonic modulator chipsets — face a "moderate-to-high" risk of infringement of Pinnacle's '417 Patent absent the incorporation of the design-around features that are the subject of the A1 Application claims. The tapered impedance-matching architecture was developed specifically to navigate around the scope of Pinnacle's patent claims while maintaining the performance characteristics required for OWS's 400G and 800G product roadmaps.

Abandonment of the A1 Application would eliminate OWS's ability to obtain issued patent claims covering the tapered-impedance design-around architecture. This would leave OWS in a significantly weakened position in the event that Pinnacle Optics elects to assert the '417 Patent (or the related '662 Patent) against OWS. Without issued claims of its own covering the design-around, OWS would lack a defensive patent position from which to negotiate a cross-license or otherwise deter an infringement action.

I note in this regard that Pinnacle Optics is represented by Cavanaugh Holt & Sayer LLP, with lead partner Grant Sayer heading their patent enforcement practice. It is well known within the silicon-photonics patent community that Pinnacle's Vice President of intellectual Property, Howard Raines, has pursued an aggressive prosecution and enforcement strategy in the modulator space. C&H has observed Pinnacle's pattern of filing continuation applications with progressively narrower claims targeted at specific competitors' product implementations — a strategy that underscores the importance of OWS maintaining its own robust patent position in this technology area.

4.3 Impact on Portfolio Valuation

The A1 Application and its associated family play a central role in the overall valuation of OWS's patent portfolio. As documented in the portfolio valuation report prepared by Graystone Valuation Advisors, LLC, dated April 28, 2023, the estimated fair market value of OWS's entire patent portfolio was assessed at $38.5 million. Of this total, approximately $12.2 million — or roughly 31.7% of the total portfolio value — was attributed to the pending application family anchored by the A1 Application.

The A1 Application is the anchor of that family. Its loss would materially undermine the valuation basis for the pending portfolio, and a revaluation following abandonment would almost certainly result in a significant downward adjustment to the portfolio's assessed fair market value. This diminution in value would affect not only OWS's balance sheet but also, as discussed below, OWS's compliance with certain financial covenants.

4.4 Potential Lender Covenant Implications

I wish to bring to your attention an additional area of concern that, while outside C&H's primary scope of engagement, is directly relevant to the decision at hand.

The Meridian National Bank, N.A. $55 million senior secured Revolving Credit Facility (dated September 30, 2020, as amended and restated March 15, 2022) (the "Credit Facility") contains certain intellectual property-related covenants. Specifically, Section 5.15 (Intellectual Property Covenants) requires OWS to:

"maintain, preserve, and protect all Material intellectual Property, including by timely prosecuting all pending patent applications and paying all required maintenance fees."

Additionally, the Security Agreement entered into in connection with the Credit Facility grants Meridian National Bank a first-priority security interest in all intellectual Property Collateral, defined broadly to include all patent applications "whether now existing or hereafter acquired."

Allowing the A1 Application to go abandoned may constitute a breach of Section 5.15 of the Credit Facility, particularly given that the A1 Application — as the anchor of a family valued at $12.2 million — would almost certainly qualify as "Material intellectual Property" under the applicable definitions. Such a breach could trigger an event of default under the Credit Facility, under which $32.5 million is currently drawn as of the most recently available figures (December 31, 2024 estimate).

I want to emphasize that C&H is providing this observation for Sandra's awareness and is not rendering an opinion on the lending agreement or its interpretation. I strongly recommend that OWS's General Counsel, Marcus Whitfield, consult with corporate counsel regarding the potential lending implications of allowing the A1 Application to become abandoned. Given the materiality of the Credit Facility and the amount currently outstanding, this issue warrants prompt attention.

5. Required Actions and Timeline

In light of the foregoing, C&H respectfully but strongly urges OWS to authorize the immediate resumption of prosecution work on Application No. 17/672,204.

Given the absolute nature of the March 9, 2025 deadline and the volume of work required to finalize and file a proper response to the non-final Office Action, C&H recommends that authorization and budget approval be obtained no later than January 15, 2025. This timeline is necessary to allow sufficient time for the following sequential steps:

1. Completion and finalization of the draft Office Action response, including completion of the remarks section, updated prior art analysis, and revision of proposed claim amendments — estimated duration: 4 to 6 weeks of attorney work time;

2. Partner review by Catherine Bloom (Responsible Partner) — estimated duration: 1 to 2 weeks;

3. Client review and approval by Sandra and, as appropriate, by OWS's technical team — estimated duration: 1 to 2 weeks; and

4. Filing with the USPTO well in advance of the March 9, 2025 absolute deadline, with a target filing date of no later than February 28, 2025, to provide a reasonable buffer against unforeseen complications.

As noted above, the estimated cost for this work is $22,000 to $30,000 in attorney fees plus potential USPTO fees. I recognize that this estimate is substantially in excess of the $25,000 per quarter cap imposed under the Project Lighthouse directive. However, I must emphasize that the consequences of inaction — including the irrevocable loss of the foundational application in OWS's most valuable patent family, the elimination of OWS's defensive patent position vis-à-vis Pinnacle Optics, the potential impairment of $12.2 million in portfolio value, and the potential triggering of a lender default under a $55 million credit facility — vastly outweigh the cost of the prosecution work required.

C&H is fully aware of the budget constraints under which OWS is currently operating, and we are prepared to discuss alternative arrangements to facilitate timely action on this matter. Such arrangements could include, for example:

• Phased billing, with fees spread across the first and second quarters of 2025;

• Deferred payment terms, with fees billed upon completion but payment deferred to a mutually agreed date;

• A reduced-scope response, if OWS determines that a narrower set of claim amendments (with correspondingly reduced attorney hours) would be acceptable from a business and technical standpoint, though C&H would need to carefully evaluate the prosecution risks of any reduced-scope approach before recommending it.

Additionally, I wish to note for purposes of transparency that there is currently $56,958.50 in total outstanding fees on this matter, consisting of:

• $34,218.50 in unbilled work-in-progress ("WIP"); and

• $22,740.00 in unpaid invoices, specifically Invoice No. 2023-07-04187 and Invoice No. 2023-08-04187.

C&H is willing to discuss resolution of these outstanding amounts — including potential adjustments or extended payment arrangements — in connection with the reactivation of prosecution work on the A1 Application. Our priority at this time is to ensure that OWS does not lose this critical patent asset.

6. Additional Upcoming Deadlines

While the A1 Application deadline is the most immediately critical matter requiring OWS's attention, I want to take this opportunity to flag several additional deadlines that are approaching on the OWS patent prosecution docket:

• April 21, 2025 — B1 (U.S. Application No. 17/814,057): Deadline to respond to the pending Restriction Requirement. A four-month extension of time was filed by C&H on October 18, 2024, under the emergency authorization granted by Sandra; the associated USPTO fee of $2,560.00 was paid at that time. The response deadline following this extension is April 21, 2025.

• May 17, 2025 — B3 (European Patent Application No. EP 23 741 682.3): Deadline to respond to the Extended European Search Report issued by the European Patent Office ("EPO"). This deadline requires coordination with C&H's European associate counsel and should be addressed well in advance of the due date.

• July 9, 2025 — A4 and A5 (PCT/US2023/010584 and PCT/US2023/010612): National-phase entry deadline. Under the Patent Cooperation Treaty, national-phase entry must be completed within 30 months of the earliest priority date. The earliest priority date for both of these PCT applications is January 10, 2022 (the filing date of Provisional Application No. 63/297,841), resulting in a national-phase entry deadline of July 9, 2025. National-phase entry decisions will need to be made for each jurisdiction in which OWS wishes to pursue patent protection, and the associated government fees and translation costs in each jurisdiction can be substantial.

C&H intends to prepare a comprehensive docket status and deadline triage memorandum in the coming weeks that will address each of these matters in detail, along with any other pending deadlines or action items on the OWS prosecution docket. This memorandum will provide a consolidated view of OWS's patent portfolio obligations and associated budget requirements to facilitate informed decision-making.

In light of the urgency and magnitude of the issues described in this letter, I strongly recommend that Sandra escalate this matter to Marcus Whitfield (General Counsel) and Daniel Everhart (Chief Financial Officer) at the earliest opportunity. If appropriate given the budget implications and the involvement of the Project Lighthouse directive, escalation to Christine Paulsen (Operating Partner, Technology, Harborview Partners) for budget reconsideration may also be warranted.

7. Ethical Obligation Notice

I wish to note that C&H has a continuing professional obligation under the California Rules of Professional Conduct and the USPTO rules of practice — including, without limitation, the duties set forth in 37 C.F.R. § 11.103 (diligence) and California Rule of Professional Conduct 1.3 — to advise OWS of impending deadlines that could result in the loss of patent rights. This obligation persists regardless of the dormancy status of the engagement, regardless of any outstanding billing matters, and regardless of whether active prosecution work has been authorized.

This letter is sent in fulfillment of that obligation. C&H takes its duties to its clients with the utmost seriousness, and we believe it would be a disservice to OWS not to bring this matter to your attention in the most direct and unambiguous terms possible.

C&H strongly recommends that OWS take immediate action to preserve its rights in the A1 Application.

8. Request for Response

I respectfully request that Sandra acknowledge receipt of this letter at your earliest convenience — by reply email or telephone is acceptable.

I further request a substantive response regarding OWS's intended course of action with respect to the A1 Application by no later than December 20, 2024. This date is necessary to allow C&H adequate time to plan and staff the prosecution work, including scheduling the necessary attorney resources and reserving time on Catherine Bloom's review calendar, given the complexity of the response and the absolute nature of the March 9, 2025 filing deadline.

If C&H does not receive a response or written authorization to resume prosecution by December 20, 2024, C&H may follow up with a formal escalation communication directed to Marcus Whitfield, General Counsel, in order to ensure that the appropriate decision-makers within OWS and its stakeholders are fully apprised of the situation.

C&H remains available at any time to discuss this matter. I am reachable by telephone at the number below, by email, or in person at our San Francisco office. Catherine Bloom is likewise available and may be reached at (415) 782-6200 or cbloom@calderwoodharkness.com.

Please do not hesitate to contact me or Catherine Bloom (Responsible Partner) with any questions. We look forward to hearing from you promptly.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Christy Bauer Lead Associate, intellectual Property Group USPTO Reg. No. 74,329 T: (415) 782-6140 E: cbauer@calderwoodharkness.com

cc: Catherine Bloom, Responsible Partner, Calderwood & Harkness LLP cc: Alan Ngo, Billing Partner, Calderwood & Harkness LLP

Enclosures: None

The incomplete draft Office Action response referenced in this letter is not enclosed herewith. All work product related to the A1 Application remains in C&H's files and will be made available upon reactivation of the matter.

CALDERWOOD & HARKNESS LLP 555 California Street, 42nd Floor San Francisco, CA 94104
Christy Bauer Lead Associate, intellectual Property Group USPTO Reg. No. 74,329 T: (415) 782-6140 F: (415) 782-6001 E: cbauer@calderwoodharkness.com
December 2, 2024
VIA EMAIL AND FIRST-CLASS MAIL
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
Sandra Koh IP Manager / In-House Patent Counsel Optiwave Semiconductor Corp. 4710 Ridgeview Parkway, Suite 300 Santa Clara, CA 95054
Re: URGENT — Absolute Statutory Deadline Approaching U.S. Patent Application No. 17/672,204 (the "A1 Application") "Multi-Channel Silicon-Photonic Mach-Zehnder Modulator with Segmented Traveling-Wave Electrode Architecture" C&H Matter No. 1014-00005
Dear Sandra:
1. Purpose and Urgency of This Letter
I am writing to provide formal urgent notice regarding an imminent and absolute statutory deadline for U.S. Patent Application No. 17/672,204 (the "A1 Application"), titled "Multi-Channel Silicon-Photonic Mach-Zehnder Modulator with Segmented Traveling-Wave Electrode Architecture."
The deadline to respond to the pending non-final Office Action in the A1 Application is March 9, 2025. This deadline is absolute. No further extensions of time are available under the rules of the United States Patent and Trademark Office ("USPTO"). The full six-month statutory maximum response period will have been exhausted on that date, and there is no procedural mechanism by which this deadline may be extended.
Failure to file a timely response by March 9, 2025 will result in the irrevocable abandonment of the A1 Application.
I want to underscore that this is not a soft deadline, a suggested date, or a date subject to extension upon payment of additional fees. March 9, 2025 is a hard statutory bar. Once that date passes without a proper response having been filed with the USPTO, the application will be deemed abandoned by operation of law.
As you are aware, the A1 Application is the foundational non-provisional application in the core modulator architecture sub-family designated internally as "Sub-Family A." It claims priority to Provisional Application No. 63/297,841, filed January 10, 2022, and serves as the parent application from which the continuation and continuation-in-part applications in Sub-Family A derive. The loss of this application would have significant and far-reaching consequences for Optiwave Semiconductor Corp. ("OWS"), as described in greater detail below.
2. Procedural History of the Deadline
To provide context for how the current deadline situation arose, the following is a summary of the relevant procedural history.
The non-final Office Action in the A1 Application was mailed by the USPTO during the summer of 2023, prior to the imposition of the budget freeze. Under the applicable provisions of the Patent Act and implementing regulations — specifically 35 U.S.C. § 133 and 37 C.F.R. § 1.136(a) — the initial period for responding to a non-final Office Action is three months from the mailing date of the action. An applicant may purchase up to three additional one-month extensions of time, for a maximum total response period of six months. No further extensions beyond the six-month statutory maximum are permitted under any circumstances.
On September 6, 2023, Calderwood & Harkness LLP ("C&H") filed a two-month extension of time on behalf of OWS with the USPTO, accompanied by the applicable extension fee of $640.00 at the small entity rate. This filing represented the last billable activity by C&H on the OWS patent prosecution docket. We note that this extension was filed approximately three and a half weeks after the Project Lighthouse budget freeze was imposed by Harborview Partners on August 11, 2023, and was undertaken as a protective measure to preserve OWS's ability to respond while the internal budget deliberations were ongoing.
Since September 6, 2023, the A1 Application matter has been maintained in dormant status on C&H's docket in accordance with the Project Lighthouse budget freeze directive. No substantive prosecution work has been authorized or performed on the file during this period.
The remaining extension time — consisting of four additional months that were available for purchase under 37 C.F.R. § 1.136(a) — has either already been consumed or will be consumed by the passage of time without any further extensions being purchasable. The cumulative effect is that the full six-month maximum statutory response period will expire on March 9, 2025.
To be absolutely clear: there is no mechanism under the USPTO rules of practice, the Patent Act, or the Manual of Patent Examining Procedure ("MPEP") by which this deadline can be extended beyond March 9, 2025. This is a hard statutory bar, and it is immovable.
3. Current Status of the Draft Response
Prior to the imposition of the Project Lighthouse budget freeze in August 2023, C&H had been actively preparing a draft response to the non-final Office Action in the A1 Application. This draft response includes proposed claim amendments and a partial remarks section addressing the examiner's rejections.
The draft was prepared primarily by me through approximately August 2023, at which point work was suspended in accordance with the budget freeze. The draft has not been completed and has not undergone partner review by Catherine Bloom, the Responsible Partner for the OWS engagement. While the draft represents a meaningful foundation upon which a complete response can be built, it is not in a state suitable for filing.
The substantive strategy reflected in the draft response emphasizes the tapered impedance-matching feature of OWS's claimed invention as the principal point of distinction over the prior art cited in the Office Action. The examiner's rejections rely primarily on two references assigned to Pinnacle Optics, Inc.:
• U.S. Patent No. 10,823,417 (the "'417 Patent"), issued November 3, 2020; and
• U.S. Patent No. 11,105,662 (the "'662 Patent"), issued August 31, 2021.
The proposed claim amendments in the draft are designed to narrow the independent claims to recite the tapered impedance-matching architecture with sufficient specificity to overcome the examiner's rejections while maintaining commercially meaningful claim scope that covers OWS's current and planned product lines.
Substantial additional work is required to finalize the response and bring it to a filing-ready state. Specifically, the following tasks remain:
1. Completion of the remarks section, including detailed arguments distinguishing the cited references and addressing each of the examiner's specific rejections;
2. Conduct of an updated prior art analysis to ensure that no additional relevant references have issued or published since August 2023 that could affect the prosecution strategy;
3. Review and finalization of the proposed claim amendments in light of the updated prior art landscape;
4. Partner review by Catherine Bloom;
5. Preparation of a final draft for client review and approval; and
6. Filing of the response with the USPTO.
Based on my assessment of the work remaining, I estimate that completing the response will require approximately 40 to 55 attorney hours, translating to approximately $22,000 to $30,000 in attorney fees at the discounted rates set forth in the current engagement letter. In addition, potential USPTO fees may be incurred — for example, if a Request for Continued Examination ("RCE") under 37 C.F.R. § 1.114 is determined to be necessary or strategically advisable, the associated government filing fee would be approximately $2,000 at the small entity rate. If the response to the non-final Office Action is sufficient to advance prosecution without the need for an RCE, no additional government fee beyond standard filing fees would be required.
4. Consequences of Missing the March 9, 2025 Deadline
The consequences of failing to file a timely response by the March 9, 2025 deadline would be severe, multifaceted, and in certain respects irreversible. I outline the principal areas of concern below.
4.1 Abandonment of the Foundational Application
If no response to the pending non-final Office Action is filed by March 9, 2025, Application No. 17/672,204 will be deemed abandoned by operation of law under 35 U.S.C. § 133. The USPTO will issue a Notice of Abandonment, and the application will lose its pendency.
While a petition to revive under 37 C.F.R. § 1.137 may theoretically be available in certain circumstances, I must strongly caution against reliance on this mechanism. Petitions to revive require a showing that the failure to respond was "unintentional," and the Director of the USPTO exercises discretion in granting or denying such petitions. In cases where the delay is prolonged or where the applicant was aware of the deadline — as is the case here, given this notice — the prospects for successful revival become materially more uncertain. Furthermore, the USPTO examines the circumstances surrounding the delay, and a conscious decision not to respond due to budgetary constraints may complicate the unintentionality showing. Reliance on revival is, in C&H's professional judgment, strongly inadvisable.
The A1 Application is the foundational non-provisional application in Sub-Family A (Core Modulator Architecture). It is the parent application from which the following related applications derive their priority claims:
• A2 — U.S. Patent Application No. 17/672,311 (Continuation); and
• A3 — U.S. Patent Application No. 17/672,489 (Continuation-in-Part).
The abandonment of the A1 Application would not automatically invalidate the pendency of the A2 and A3 applications, as those applications were filed while A1 was pending. However, the loss of the anchor application in the family would significantly constrain OWS's prosecution flexibility and would eliminate the possibility of filing additional continuation or divisional applications claiming the benefit of the A1 filing date.
4.2 Loss of Design-Around Claim Scope — Pinnacle Optics Exposure
The strategic importance of the A1 Application extends well beyond its role as a portfolio asset in the abstract. The claims in the A1 Application were specifically drafted to cover OWS's proprietary tapered impedance-matching design-around of the electrode-segmentation geometry claimed by Pinnacle Optics, Inc. in the '417 Patent.
As detailed in C&H's Freedom-to-Operate Analysis delivered to OWS on October 14, 2022, OWS's current commercial products — including the OWS-MZM-400 and OWS-MZM-800 series silicon-photonic modulator chipsets — face a "moderate-to-high" risk of infringement of Pinnacle's '417 Patent absent the incorporation of the design-around features that are the subject of the A1 Application claims. The tapered impedance-matching architecture was developed specifically to navigate around the scope of Pinnacle's patent claims while maintaining the performance characteristics required for OWS's 400G and 800G product roadmaps.
Abandonment of the A1 Application would eliminate OWS's ability to obtain issued patent claims covering the tapered-impedance design-around architecture. This would leave OWS in a significantly weakened position in the event that Pinnacle Optics elects to assert the '417 Patent (or the related '662 Patent) against OWS. Without issued claims of its own covering the design-around, OWS would lack a defensive patent position from which to negotiate a cross-license or otherwise deter an infringement action.
I note in this regard that Pinnacle Optics is represented by Cavanaugh Holt & Sayer LLP, with lead partner Grant Sayer heading their patent enforcement practice. It is well known within the silicon-photonics patent community that Pinnacle's Vice President of intellectual Property, Howard Raines, has pursued an aggressive prosecution and enforcement strategy in the modulator space. C&H has observed Pinnacle's pattern of filing continuation applications with progressively narrower claims targeted at specific competitors' product implementations — a strategy that underscores the importance of OWS maintaining its own robust patent position in this technology area.
4.3 Impact on Portfolio Valuation
The A1 Application and its associated family play a central role in the overall valuation of OWS's patent portfolio. As documented in the portfolio valuation report prepared by Graystone Valuation Advisors, LLC, dated April 28, 2023, the estimated fair market value of OWS's entire patent portfolio was assessed at $38.5 million. Of this total, approximately $12.2 million — or roughly 31.7% of the total portfolio value — was attributed to the pending application family anchored by the A1 Application.
The A1 Application is the anchor of that family. Its loss would materially undermine the valuation basis for the pending portfolio, and a revaluation following abandonment would almost certainly result in a significant downward adjustment to the portfolio's assessed fair market value. This diminution in value would affect not only OWS's balance sheet but also, as discussed below, OWS's compliance with certain financial covenants.
4.4 Potential Lender Covenant Implications
I wish to bring to your attention an additional area of concern that, while outside C&H's primary scope of engagement, is directly relevant to the decision at hand.
The Meridian National Bank, N.A. $55 million senior secured Revolving Credit Facility (dated September 30, 2020, as amended and restated March 15, 2022) (the "Credit Facility") contains certain intellectual property-related covenants. Specifically, Section 5.15 (Intellectual Property Covenants) requires OWS to:
"maintain, preserve, and protect all Material intellectual Property, including by timely prosecuting all pending patent applications and paying all required maintenance fees."
Additionally, the Security Agreement entered into in connection with the Credit Facility grants Meridian National Bank a first-priority security interest in all intellectual Property Collateral, defined broadly to include all patent applications "whether now existing or hereafter acquired."
Allowing the A1 Application to go abandoned may constitute a breach of Section 5.15 of the Credit Facility, particularly given that the A1 Application — as the anchor of a family valued at $12.2 million — would almost certainly qualify as "Material intellectual Property" under the applicable definitions. Such a breach could trigger an event of default under the Credit Facility, under which $32.5 million is currently drawn as of the most recently available figures (December 31, 2024 estimate).
I want to emphasize that C&H is providing this observation for Sandra's awareness and is not rendering an opinion on the lending agreement or its interpretation. I strongly recommend that OWS's General Counsel, Marcus Whitfield, consult with corporate counsel regarding the potential lending implications of allowing the A1 Application to become abandoned. Given the materiality of the Credit Facility and the amount currently outstanding, this issue warrants prompt attention.
5. Required Actions and Timeline
In light of the foregoing, C&H respectfully but strongly urges OWS to authorize the immediate resumption of prosecution work on Application No. 17/672,204.
Given the absolute nature of the March 9, 2025 deadline and the volume of work required to finalize and file a proper response to the non-final Office Action, C&H recommends that authorization and budget approval be obtained no later than January 15, 2025. This timeline is necessary to allow sufficient time for the following sequential steps:
1. Completion and finalization of the draft Office Action response, including completion of the remarks section, updated prior art analysis, and revision of proposed claim amendments — estimated duration: 4 to 6 weeks of attorney work time;
2. Partner review by Catherine Bloom (Responsible Partner) — estimated duration: 1 to 2 weeks;
3. Client review and approval by Sandra and, as appropriate, by OWS's technical team — estimated duration: 1 to 2 weeks; and
4. Filing with the USPTO well in advance of the March 9, 2025 absolute deadline, with a target filing date of no later than February 28, 2025, to provide a reasonable buffer against unforeseen complications.
As noted above, the estimated cost for this work is $22,000 to $30,000 in attorney fees plus potential USPTO fees. I recognize that this estimate is substantially in excess of the $25,000 per quarter cap imposed under the Project Lighthouse directive. However, I must emphasize that the consequences of inaction — including the irrevocable loss of the foundational application in OWS's most valuable patent family, the elimination of OWS's defensive patent position vis-à-vis Pinnacle Optics, the potential impairment of $12.2 million in portfolio value, and the potential triggering of a lender default under a $55 million credit facility — vastly outweigh the cost of the prosecution work required.
C&H is fully aware of the budget constraints under which OWS is currently operating, and we are prepared to discuss alternative arrangements to facilitate timely action on this matter. Such arrangements could include, for example:
• Phased billing, with fees spread across the first and second quarters of 2025;
• Deferred payment terms, with fees billed upon completion but payment deferred to a mutually agreed date;
• A reduced-scope response, if OWS determines that a narrower set of claim amendments (with correspondingly reduced attorney hours) would be acceptable from a business and technical standpoint, though C&H would need to carefully evaluate the prosecution risks of any reduced-scope approach before recommending it.
Additionally, I wish to note for purposes of transparency that there is currently $56,958.50 in total outstanding fees on this matter, consisting of:
• $34,218.50 in unbilled work-in-progress ("WIP"); and
• $22,740.00 in unpaid invoices, specifically Invoice No. 2023-07-04187 and Invoice No. 2023-08-04187.
C&H is willing to discuss resolution of these outstanding amounts — including potential adjustments or extended payment arrangements — in connection with the reactivation of prosecution work on the A1 Application. Our priority at this time is to ensure that OWS does not lose this critical patent asset.
6. Additional Upcoming Deadlines
While the A1 Application deadline is the most immediately critical matter requiring OWS's attention, I want to take this opportunity to flag several additional deadlines that are approaching on the OWS patent prosecution docket:
• April 21, 2025 — B1 (U.S. Application No. 17/814,057): Deadline to respond to the pending Restriction Requirement. A four-month extension of time was filed by C&H on October 18, 2024, under the emergency authorization granted by Sandra; the associated USPTO fee of $2,560.00 was paid at that time. The response deadline following this extension is April 21, 2025.
• May 17, 2025 — B3 (European Patent Application No. EP 23 741 682.3): Deadline to respond to the Extended European Search Report issued by the European Patent Office ("EPO"). This deadline requires coordination with C&H's European associate counsel and should be addressed well in advance of the due date.
• July 9, 2025 — A4 and A5 (PCT/US2023/010584 and PCT/US2023/010612): National-phase entry deadline. Under the Patent Cooperation Treaty, national-phase entry must be completed within 30 months of the earliest priority date. The earliest priority date for both of these PCT applications is January 10, 2022 (the filing date of Provisional Application No. 63/297,841), resulting in a national-phase entry deadline of July 9, 2025. National-phase entry decisions will need to be made for each jurisdiction in which OWS wishes to pursue patent protection, and the associated government fees and translation costs in each jurisdiction can be substantial.
C&H intends to prepare a comprehensive docket status and deadline triage memorandum in the coming weeks that will address each of these matters in detail, along with any other pending deadlines or action items on the OWS prosecution docket. This memorandum will provide a consolidated view of OWS's patent portfolio obligations and associated budget requirements to facilitate informed decision-making.
In light of the urgency and magnitude of the issues described in this letter, I strongly recommend that Sandra escalate this matter to Marcus Whitfield (General Counsel) and Daniel Everhart (Chief Financial Officer) at the earliest opportunity. If appropriate given the budget implications and the involvement of the Project Lighthouse directive, escalation to Christine Paulsen (Operating Partner, Technology, Harborview Partners) for budget reconsideration may also be warranted.
7. Ethical Obligation Notice
I wish to note that C&H has a continuing professional obligation under the California Rules of Professional Conduct and the USPTO rules of practice — including, without limitation, the duties set forth in 37 C.F.R. § 11.103 (diligence) and California Rule of Professional Conduct 1.3 — to advise OWS of impending deadlines that could result in the loss of patent rights. This obligation persists regardless of the dormancy status of the engagement, regardless of any outstanding billing matters, and regardless of whether active prosecution work has been authorized.
This letter is sent in fulfillment of that obligation. C&H takes its duties to its clients with the utmost seriousness, and we believe it would be a disservice to OWS not to bring this matter to your attention in the most direct and unambiguous terms possible.
C&H strongly recommends that OWS take immediate action to preserve its rights in the A1 Application.
8. Request for Response
I respectfully request that Sandra acknowledge receipt of this letter at your earliest convenience — by reply email or telephone is acceptable.
I further request a substantive response regarding OWS's intended course of action with respect to the A1 Application by no later than December 20, 2024. This date is necessary to allow C&H adequate time to plan and staff the prosecution work, including scheduling the necessary attorney resources and reserving time on Catherine Bloom's review calendar, given the complexity of the response and the absolute nature of the March 9, 2025 filing deadline.
If C&H does not receive a response or written authorization to resume prosecution by December 20, 2024, C&H may follow up with a formal escalation communication directed to Marcus Whitfield, General Counsel, in order to ensure that the appropriate decision-makers within OWS and its stakeholders are fully apprised of the situation.
C&H remains available at any time to discuss this matter. I am reachable by telephone at the number below, by email, or in person at our San Francisco office. Catherine Bloom is likewise available and may be reached at (415) 782-6200 or cbloom@calderwoodharkness.com.
Please do not hesitate to contact me or Catherine Bloom (Responsible Partner) with any questions. We look forward to hearing from you promptly.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Christy Bauer Lead Associate, intellectual Property Group USPTO Reg. No. 74,329 T: (415) 782-6140 E: cbauer@calderwoodharkness.com
cc: Catherine Bloom, Responsible Partner, Calderwood & Harkness LLP cc: Alan Ngo, Billing Partner, Calderwood & Harkness LLP
Enclosures: None
The incomplete draft Office Action response referenced in this letter is not enclosed herewith. All work product related to the A1 Application remains in C&H's files and will be made available upon reactivation of the matter.

CALDERWOOD & HARKNESS LLP 555 California Street, 42nd Floor San Francisco, CA 94104

VIA EMAIL AND FIRST-CLASS MAIL

CALDERWOOD & HARKNESS LLP

Record

Parties

Dates

Amounts