If domestic LED companies want to rise, they still need to reserve patent "ammunition"

Four years ago, Taiwanese LED company Everlight Electronics Co., Ltd. (hereinafter referred to as Everlight Electronics) filed a claim in the U.S. District Court for the Eastern District of Michigan against two white-light LED patents owned by Nichia Chemical Industry Co., Ltd. (hereinafter referred to as Nichia) that the patents were invalid and did not constitute infringement. After years of trial, the latest result of this case was reached recently. The U.S. District Court for the Eastern District of Michigan ruled against Nichia Chemical on the grounds that the two patents were not inventive and unenforceable. As soon as the news came out, it caused quite a shock in the industry.

In recent years, international LED giants represented by Nichia Chemicals and others have used their strong patent reserves to continuously put pressure on Chinese LED companies. Chinese LED companies are under unprecedented pressure. In this regard, industry experts said that the victory of Everlight Electronics is of positive significance to relevant domestic enterprises. While exploring the market, relevant domestic enterprises should continue to strengthen independent research and development, promote industrial upgrading, actively carry out patent layout, and enhance the voice and dominance of Chinese LED enterprises in the international market by strengthening their own strength.

Foreign giants trigger patent litigation

The reporter learned during the interview that as a giant in the LED industry, Nichia holds a large number of basic patents and has an absolute monopoly in the LED field. These patents cover the full-process manufacturing technology of LED structure, epitaxy, chips, and packaging, as well as related raw materials such as phosphors. However, in recent years, with the continuous rise of domestic LED companies, Nichia has continuously used its patents to challenge Chinese companies.

Industry insiders said that in order to control the entire LED market, Nichia, on the one hand, uses the basic patents it masters to suppress competitors; on the other hand, through the patent network woven by patent cross-licensing, it isolates most of the rising stars from the high-profit market. "Although Everlight Electronics can end this dispute by reaching a cross-license with Nichia Chemical, only by invalidating the above two patents can we completely untie the development of the industry and promote the development of the LED application market." Liu Chen, assistant general manager of Everlight Electronics, said in an interview with a reporter from China Intellectual Property News.

“If you want to become an international LED company, you not only need to accumulate ‘patent muscle’, but also need to compete with the giants.” Wang Hua, deputy secretary-general of the LED Industry Patent Alliance, said in an interview with this reporter that Everlight Electronics successfully invalidated two Nichia patents through this lawsuit, which has attracted widespread attention in the industry. As the number of patents owned by Osram, Toyoda Gosei, Cree, Philips and other companies in the LED field continues to increase, Nichia has gradually reached patent settlement and licensing agreements with the above-mentioned companies, basically adopting a litigation-settlement-cross-licensing model. The invalidation of Nichia's patent rights this time shows that the patent network built by giants through patent cross-licensing has begun to loosen, and they will begin to build a new white LED patent layout, which will provide new development opportunities for domestic companies. While opening up the market, domestic enterprises can strengthen independent research and development, promote industrial upgrading, actively carry out patent applications and layout, and change the existing development pattern by improving their own strength.

Reserve patented ammunition to actively respond

In fact, for domestic LED companies, "going global" will inevitably face patent issues. Foreign giants have already used intellectual property as a weapon to exclude competitors from the market through patent layout, thereby obtaining monopoly profits. "Future technology development and application are international. Companies should actively develop advanced technologies from a global perspective, conduct patent analysis, strengthen patent warnings, accurately judge market development trends, and improve patent layout." Wang Hua said that due to the late start of domestic related companies, there is still a certain gap with foreign countries in terms of patent accumulation. In the context of increasingly fierce competition in the LED market, it may become the norm for Chinese companies to encounter patent litigation. In addition to having a certain degree of defensive strength, domestic companies must have a good mentality to respond to lawsuits. It is also an important factor in determining the success of litigation.

“When a company is involved in patent litigation in international competition, it means that it has the strength to compete with large international companies and has grown into an ‘enemy’ that can erode the monopoly profits of competitors. Whether a company can successfully overcome the patent hurdle is also an important sign of its ability to successfully go overseas.” Wang Hua said that for my country’s rapidly developing LED industry, in addition to achieving a “global perspective and respecting the rules of the game,” it must also actively respond to intellectual property litigation.

It is understood that relevant departments in my country are currently providing intellectual property information services for domestic enterprises to "go global" through various channels, establishing an intellectual property information platform to promote the international development of enterprises, and providing enterprises with overseas intellectual property dynamic information, environmental information, legal information, practical information, etc. In addition, the LED Industry Patent Alliance is carrying out a project called the "LED Industry Protective Patent Collection Plan", which aims to obtain a sufficient number of patents that can achieve the expected results, and build a patent portfolio through three methods: independent application through entrusted development, patent purchase, and patent entrustment operation, so as to improve the overall patent strength of my country's LED industry.

“The purpose of this project is to build a virtuous cycle of the LED industry intellectual property value chain, promote the effective circulation of patent assets, protect our country’s LED companies from reducing or avoiding patent litigation, and lay the foundation for building internationally competitive LED companies.” Wang Hua said that in the future, the alliance will also actively try to provide intellectual property protection for domestic LED companies through equity financing, the establishment of LED industry patent operating companies and other models through market-oriented mechanisms.