Nichia Blocks Chinese LED Competitors with Patent Infringement Suit Against TCL

(Author: Judy Lin, Chief Editor, LEDinside)

Nichia’s patent infringement suit filed against the world’s third largest TV vendor TCL Multimedia (TCL) and subsidiary TTE Technology (TTE) on Aug. 8, 2016, is a significant move to prevent unpatented Chinese LED chips from entering U.S., said LEDinside analysts.

The leading Japanese LED manufacturer’s latest patent lawsuit is slightly different from an alleged patent infringement lawsuit it filed against U.S. TV vendor Vizio in March 2016, where industry insiders believed was specifically targeting Taiwanese LED package manufacturers.

A diagram of Nichia's U.S. Patent No. 8,530,250. (Photo courtesy of USTPO)

According to LEDinside's understanding, Nichia’s latest patent infringement lawsuits is expected to have a large impact on Chinese LED manufacturers that are part of Chinese electronic conglomerate TCL TV LED backlight supply chain.

 “Nichia’s latest lawsuits against TCL marks a significant development in patent infringement disputes that is aimed at blocking unpatented Chinese LED chip makers from entering the U.S. market,” said a LEDinside analyst that declined to be named.

The Japanese company filed two separate patent infringement suits against TCL and affiliated TV distributor TTE in Texas and Delaware District Courts on Monday.

The scope of the patent infringement suits include white LEDs, white LEDs for display backlight applications, and LED package technology. In both suits, Nichia asked for the injunction directed towards the sale and distribution of infringing LCD TVs, and sought damages for TCL’s past infringements.

(Source: Nichia, Organized by LEDinside)

Chinese LED manufacturers are still behind international competitors when it comes to the scope of their white LED patent portfolio, which has hindered their growth in international markets.

Some Chinese companies have overcome patent issues and expanded in international markets by signing LED patent licensing agreements, such as LED packagers Jufei Opto and Shineon sealed white LED patent licensing agreements with Toyoda Gosei in July 2015.

Still, if Nichia’s latest legal actions end in its favor it could have a large impact on Chinese LED companies, due to the sheer size of their client TCL. Based on TCL’s financial reports from 2015, the company tied with Hisense as the world’s third largest TV vendor by clinching 5.56% global market share, while Korean electronic giants Samsung (20.87%) and LG Electronics (12.40%) respectively ranked in first and second place.

The Chinese TV vendor sold 921,093 TV sets in oversea markets in June 2016 alone, and posted sales were up 18% compared to the same period in 2015.

North America has been TCL’s fastest growing oversea market in 2015, making it one of its most important regional markets, where it posted LCD TV sales in the region soared 180.2% Year-on-Year (YoY) to HK $1.73 billion (US $222.90 million). Strong sales in the North American market continued into first quarter of 2016, where the company posted LCD TV revenue surged 173.6% YoY.

This will make the recent U.S. patent infringement lawsuits filed against TCL by Nichia especially important, and the final outcome could have long lasting impact on its developments in the North American market.

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