Cree and Epistar sign major LED patent cross-licensing agreement
LED manufacturers Cree and Taiwan-based Epistar have announced a global intellectual property (IP) cross-licensing agreement covering all nitride-based-LED patents owned by each and some non-nitride-based patents as well. The companies revealed little of the details of the agreement other than stating that Epistar will pay Cree a licensing fee and royalty payments over the term of the agreement.
Cree and Epistar are competitors, although not directly so. Cree manufactures the bulk of its LED chips and packages the chips for sale to solid-state lighting (SSL) product developers. Epistar is focused more purely on chips and sells those to LED manufacturers that don’t own chip manufacturing lines and to some SSL manufacturers that can work with the unpackaged die.
"Cree is pleased to enter into this LED chip license agreement with Epistar, a leading chip innovator and manufacturer of LEDs used by packagers and lighting companies," said Chuck Swoboda, Cree chairman and CEO. "This agreement underscores both companies’ commitment to accelerating the adoption of LED lighting while respecting the value and importance of international intellectual property laws."
While the press release implies that Cree will benefit directly from the licensing fee and royalty, there may have been other motivation for Cree to pursue such an agreement. Cree recently announced a major restructuring in its LED manufacturing operation that was driven by price erosion in the packaged LED space and at least in part by the transition to mid-power LEDs in many products. Cree has not made major inroads into the mid-power space, instead championing high-power LEDs as superior for most all general lighting applications. Epistar, meanwhile, has deep experience and has had considerable success in the mid-power technology area, and most likely has established IP in the area.
Epistar will clearly benefit from access to the high-power IP from Cree. "The patent license agreement we have achieved will help us to accelerate the R&D activities for creating new innovation," said BJ Lee, chairman of Epistar. "In addition, it is a clear indication of the strength of our LED chip patent portfolio and our desire to further the growth of the LED lighting market,” he stated. “By entering into this cross-license agreement with Cree, Epistar is able to provide LED chips that ultimately benefit our customers across the world."
The new deal does not mark the first time Cree has struck a deal with an LED manufacturer based in Taiwan. Last year, Cree invested in Lextar, another company with mid-power expertise. At the time of that announcement, Cree said it would source LEDs from Lextar.
Already mid-power LEDs have shown up in at least one Cree lighting product — the newest LED-based T8 tubes designed to replace linear fluorescent tubes. We had a recent feature that provided an inside look at that tube design. The author could not discern the source of the LEDs, but they were clearly not Cree LEDs.
Overall, however, Cree and Epistar said jointly that new deal is meant to push the evolution of LED-based lighting in general. "Cree’s pioneering technology and resulting broad patent portfolio has significantly advanced performance in LED and LED Lighting products," said Swoboda. The companies did say that there will be no direct technology transfer under the terms of the LED patent cross-licensing agreement.