Cree and Epistar Consolidate Market Position through LED Patent Cross-License Agreement

Cree and Epistar announced on Aug. 4, 2015, the two companies signed a global LED patent cross license agreement. The move signals large LED manufacturers strategy of maintaining market positions through patent advantages, said LEDinside analysts.

Under the cross-license patent agreement, Cree and Epistar will each receive a license to the other’s nitride LED chip patents and will be granted certain rights to non-nitride LED chip patents. During the term of the agreement, Epistar will need to pay Cree a licensing fee and royalty payments, ensuring the two companies will keep their client relationship, and a sustainable business model. Both companies have extensive blue and white LED patent portfolios.

Over the past year, LED industry patent infringement lawsuits include those between Nichia and Everlight, and Cree’s patent lawsuits against Unity Opto and Feit Electric. These ongoing LED patent disputes demonstrate the industry’s top five LED manufacturers are trying to utilize patent portfolio advantages to maintain their leading market positions.

In the U.S. market, the strong U.S. dollar, government policies, and lighting manufacturers’ promotions show LED lighting demands in construction projects, commercial lighting and residential lighting markets will increase steadily.

Major lighting brands light bulb shipments will grow exponentially in 2015, according to LEDinside’s latest survey. Responding to this trend, Cree filed a patent infringement lawsuit against Unity Opto and Feit Electric in January 2015 to retain its market position. The scope of the lawsuit includes LED chip, LED package, bulb and operation designs. In total, the suits allege infringement covered 10 patents related to LED lighting (eight invention patents and two design patents).

The recent global LED patent cross-license agreement signed between Cree and Epistar is another example of the U.S. LED manufacturers strategy in the lighting application sector. The patent license agreement is aimed at boosting revenue growth in the LED lighting and LED bulb markets.

Large manufacturers recent course of actions to consolidate their market positions suggest there will be more patent related alliances or lawsuits in the market in the near future.

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