The Importance of a Sound Patent Plan in the Solid State Lighting Industry By Darren M. Jiron, Partner • Finnegan
The lighting industry is on the verge of a revolution. Over the next decade, solid state lighting devices will become the norm in lighting applications. Already, LEDs, OLEDs, and other solid state lighting devices have begun displacing traditional incandescent lights and gas discharge lamps. The new solid state lighting devices live longer and require far less energy than traditional lights. They are cool to the touch during operation and come in colors spanning the visible spectrum.
Nearly every facet of the lighting industry is expected to benefit from the introduction of solid state lighting devices. Among other applications, these devices have enabled the latest generation of thin, bright, energy efficient displays, and they are revolutionizing how we light our homes, offices, cars and even building exteriors. With so many applications, solid state lighting potentially offers a nearly limitless opportunity for growth. Many market segments have estimated multi-billion dollar growth over the next five years alone.
With demonstrated viability across a multitude of applications, technological advances in the solid state lighting area are accelerating rapidly. Refinements in the materials properties and structure of nitride-based semiconductor light emitters and the viability of patterned silicon substrates continue to push brightness and efficiency ever higher. Advances in MOCVD deposition systems are increasing manufacturing capacity and the quality of light emitting chips. New LEDs can operate using AC power without the need for an AC-DC converter. Organic light emitting diodes and integrated organic thin film transistor driver circuitry have enabled ultra thin, flexible displays. Backlights for displays, home and office lighting fixtures, street lamps, traffic lights, automotive headlights and displays, and an array of consumer electronics products all increasingly depend on the bright, efficient light provided by LEDs. Advanced solid state lighting control systems can create dazzling decorative lighting displays and can intelligently adjust the brightness of street lighting to maximize useful light while minimizing unnecessary power output. And, light from solar powered LEDs now shines in rural areas that have never had a dependable light source.
Explosive growth in the solid state lighting industry will foster increasingly intense competition. In such an environment, having a sound patent plan can make the difference between a dominant company and one that falls to the back of the pack. Those that gain an understanding of the relevant patent landscape will have the confidence to make competitive decisions while reducing the risk of costly litigation or late-stage design changes. Additionally, companies that invest in developing a strong patent portfolio will be better equipped to protect their space in the market and may have a source of leverage against others seeking to enforce patent rights. Further, companies that have outlined a patent enforcement and response strategy before one is needed will already know what to do when confronted with a patent issue and can efficiently deal with the issue. A sound patent plan should address each of these areas.
Know the Patent Landscape
Operating blindly in the patent world is risky. While patents do not grant the owner the right to practice the invention set forth in the claims, they do grant the patent owner the right to exclude others from practicing the invention. Thus, each issued patent relevant to solid state lighting technology creates a potential roadblock to others that make, use, or sell products in the same technology area. And, the number of solid state lighting -related patents is growing rapidly. Gaining an understanding of the patent landscape in the relevant technology areas can help to minimize the risk of a patent conflict.
Successfully navigating the ever-growing labyrinth of solid state lighting patents requires information. Patents and published patent applications relevant to a particular technology area or product can be identified and “landscaped” using a variety of tools now available. The identified patent documents may reveal information relating to competitors' research and development efforts, future products and relative patent portfolio strength. Further, studying the claims of the identified issued patents will provide a detailed insight into the scope of the inventions protected by those patents.
This information can promote competitive business decisions. Knowing who owns the most relevant patents may reveal the true competitors in a market space or may help to identify potential business partners. Knowing where relevant patents have issued may suggest preferred jurisdictions for business activities. Most importantly, knowing what these patents cover will promote an understanding of where freedom to operate exists (and the extent of this freedom) and where potential conflict exists. With this knowledge, product and process designs can be selected or changed early on to minimize the risk of costly patent litigation, or potential licensors can be approached before significant investment into a particular product or process design has occurred.
Develop a Strong Patent Portfolio
The old sports saying “the best defense is a good offense” applies equally well to the patent world. Because a patent provides a right to exclude, patents can be used offensively to defend a particular market space by restricting competitor access to that space. As the strength and number of a company's patents grow, the barrier to entry into a particular technology area can become formidable. Without patent protection, however, especially in a product-based technology area like solid state lighting, there is little a company can do to restrict its competitor activities. Unhindered by patent restrictions, a competitor would be free to reverse engineer the company's products, begin manufacturing replicas of those products, and start selling those replicas to the company's own customers. And, the sales price would likely be lower because the competitor was able to avoid the costly research and development investment necessary to bring those products to market.
While a dense thicket of patents over a wide-ranging technology area can provide an equally wide barrier to entry, even a more focused approach can create a significant competitive advantage. For example, a well-designed patent portfolio may target the primary technological path and include claimed inventions that capture and protect the most commercially viable designs (and even the most desirable alternatives). Thus, in order to compete in the same space without the risk of provoking a patent infringement lawsuit, the competitor would have to decide between obtaining a license to the relevant patents or, if possible, designing around the patents. Either way, the company could potentially benefit. A license would increase costs to competitor while providing a source of revenue to the company, and, even assuming that a design-around was available, the competitor may be forced to rely upon a technological alternative less desirable to customers.
Patents need not be tied directly to current or planned products. Rather, value from patents may be derived by protecting inventions arising from research and development efforts, even when those inventions fall outside the primary technology path. Such inventions may become important to future products or processes. Such inventions may also generate licensing opportunities if they relate to the activities of others.
A well-developed patent portfolio can also serve as a strong deterrent or source of leverage. For example, a company is less likely to get sued by a competitor for patent infringement if the company also has patents that read on the competitor's products. Additionally, if a competitor does file a patent infringement suit against the company, the ability to file counterclaims of infringement could even the playing field. Strong patent portfolios can also promote favorable cross-licensing terms among similarly situated competitors (an outcome that would be less likely if one competitor's patent position was significantly stronger than the other's).
Create a Patent Action Plan Now
Patent enforcement issues are typically complex, so it’s important to have a plan in place for dealing with those issues before they arise. Whether offensively asserting one’s own patents or responding to a patent assertion by others, early development of a patent action plan will likely pay dividends. When a patent situation arises without an action plan in place, the risk increases for a reactionary response made without fully considering the potential ramifications. Such a response may even be counter to company objectives.
Offensive Planning
To develop an offensive patent action plan, a patentee first needs to know what patents are found in the portfolio and also what they cover. This can be more difficult than it sounds, especially as the patent portfolio grows. Next, the patentee should identify those areas of the marketplace most critical to the company’s business and consistently monitor the activities of its competitors in that space. As competing products enter the market, the patentee should study those products and consider mapping the claims of relevant patents to those products. This type of methodical approach may aid in making well-informed decisions regarding whether to pursue enforcement of patent rights, and when such a decision is made, the supporting infringement analysis will already be available for use.
An offensive patent plan should also include an objective approach for determining whether to seek enforcement of patent rights. For example, a decision matrix can aid in analyzing a set of factors (e.g., whether a competitor’s potentially infringing activity is occurring in a market area critical to the patentee, the sales volume of the potentially infringing product, the strength and relevance of the competitor’s patents, etc.) and determining whether to seek a license, litigate, or take no action.
Defensive Planning
On the defensive side, a company needs to have a response plan in place before the “you’re-infringing-our-patents” letter arrives. The company should understand which market areas are critical to its business and must be protected as top priority assets. To protect these areas, litigation may be justified.
The company should also know its competitors and which of its own patents may be viable for counter assertion against those competitors. Quickly responding to an enforcement letter with counter assertions of infringement or introducing threatening counterclaims in an infringement suit can promote early settlement of the dispute.
A defensive plan should also consider scenarios for responding to assertions by non-practicing entities (i.e., patent holders that, for the most part, do not make or sell products). Depending on the demands of the non-practicing entity, a company may be more inclined to litigate than to settle for a license.
Final Thoughts
The patent system offers opportunities for effectively competing and for defending market space in the solid state lighting technology area. Be sure to take advantage of those opportunities ─ your competitors are most likely doing just that.
Darren M. Jiron is a partner with Finnegan. Mr. Jiron’s practice focuses on patent litigation and strategic development of patent portfolios. He has represented clients in all phases of patent litigation before numerous district courts and before the US International Trade Commission (ITC). He has taken leading roles in pre-filing investigations, discovery, motions practice, and examining witnesses at trial. He has taken numerous depositions, drafted summary judgment and claim construction briefs, and has argued claim construction positions in court. Mr. Jiron has also prepared and filed numerous ex parte and inter partes reexamination requests, has successfully argued before the Board of Appeals and Patent Interferences of the US Patent and Trademark Office (USPTO), and has extensive experience in the strategic use of patent reexamination in litigation.
Mr. Jiron has a special interest in helping clients develop strong patent portfolios and strategic plans for navigating the patent landscape. He is skilled in defensive and offensive patent portfolio assessment, patent validity and infringement opinions, product clearance studies, patent portfolio management, patent license negotiation, and patent prosecution.
Mr. Jiron’s practice encompasses a wide range of technology areas, including semiconductor design and fabrication, display devices, mobile telephone design and operation, advanced materials, batteries, optics, imaging systems, power inverters and control systems. He also has worked extensively in the area of solid state lighting devices and applications.
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The Importance of a Sound Patent Plan in the Solid State Lighting Industry
Nearly every facet of the lighting industry is expected to benefit from the introduction of solid state lighting devices. Among other applications, these devices have enabled the latest generation of thin, bright, energy efficient displays, and they are revolutionizing how we light our homes, offices, cars and even building exteriors. With so many applications, solid state lighting potentially offers a nearly limitless opportunity for growth. Many market segments have estimated multi-billion dollar growth over the next five years alone. 
Know the Patent Landscape