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Despite patent shield, LED giants being challenged by Chinese LED makers

Despite patent shield, LED giants being challenged by Chinese LED makers

By BizLED Bureau

July 25, 2017: The global LED giants Nichia, Lumileds, Osram Opto., Toyota Gosei and Cree have been for long jointly dominating the patent scene with cross-license agreements. Now with these patents about to expire, China- Taiwan- and Korea-based LED manufacturers are set to challenge this existing dominant group with their new patents. Besides, the expansion of Chinese businesses in the LED market is also posing threats to this group, as the global LED industry is slowly moving away from the state of limited competition, reports LEDinside.

More and more Chinese companies are now relying on technology innovation as have embarked upon an expansion spree. They now have a clear strategy for managing and protecting their intellectual property rights as they expand in the international markets.

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Some major LED companies in China, are actively pursuing patent defence of their technology as a part of their expansion plan outside the Chinese market. They have now recognised the importance of IP protection and are developing an effective patent strategy to protect their technologies in the global market.

Despite patents, business go down

Despite patent shield, LED giants being challenged by Chinese LED makers

Most of the important patents have been filed by these five LED giants, and most patent infringement lawsuits have been filed by them, mostly against LED manufacturers in Taiwan, Korea and China. Seoul Semiconductor has also joined this group when it filed a patent lawsuit in 2009 against Nichia, making the group six-companies strong.

Also Read: Bridgelux disaproves Everlight lawsuit alleging LED patent infringement

However, despite holding the maximum numbers of patents, these six companies are seeing their businesses gradually going down, leading them to change their business strategies by earning licensing revenue or releasing some of their patents.

Nichia’s white LED related YAG ‘925 patent will expire on July 29, 2017. On the othe hand, Everlight won a case against Nichia in a patent lawsuit in a few countries including the US, weakening Nichia’s patent shield. This shows that the patent defense of the LED lighting giants is no longer working well for them.

Chinese LED compaies giving a good fight

Besides the patent defence being crumbling down, the LED giants are also facing challenge from the Chinese, Taiwanese, and Korean LED companies as they expand their LED businesses. Some Chinese companies including MLS, Everlight have made their ways up to the top 10 global LED companies in 2016. These companies have embarked upon large-scale business expansion, and have acquired or merged with international LED companies, for example China Electronics Corporation (CEC) acquired Bridgelux in 2015. San’an Opto acquired Luminus in 2013. Many international lighting companies have given original equipment production rights Chinese companies, indirectly increasing their share in the international markets.

However, the expansion of the Chinese companies is also giving a fight to the Taiwanese and Korean companies. They are, therefore, changing their strategies, and filing lawsuits against Chinese LED manufacturers with competitive cost structures.

According to LEDinside, most lighting OEMs prefer patented LED light sources for their products in order to avoid legal issues in Europe, America, Japan and other markets. They prefer to procure LEDs from the lighting giants despite higher prices.

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