On 4th August, Cree released the news that it had signed major LED patent cross-licensing agreement with Epistar corporate. In the agreement, they will obtain license to all nitride-based-LED patents owned by each and some non-nitride-based patents as well. Detailed terms such as definite patents and any technology transfer are not available now ( LEDs magazines.) Doubtlessly, this agreement is seen as a win-win strategy for both parties by the public. Do you want to know more about the causes and influences of this agreement?

Cree is a market-leading innovator of lighting products, LED components, and semiconductor products for power and radio-frequency (RF) applications. And Epistar is a leading chip innovator and manufacturer whose global development is obvious. As both competitors as well as partners, the two companies are delighted to sign the agreement to maintain a better business relationship.

Cree light

Cree light

Cree CEO, Chuck Swoboda, claimed, “This agreement underscores both companies’ commitment to accelerating the adoption of LED lighting while respecting the value and importance of international intellectual property laws.” Under the statement, Cree is speculated to have other motivations. It is guessed that Cree wants to enter the mid-power space through this agreement. Although it is a champion supplier of high-power LEDs, its financial accomplishments of this quarter has been suffering a downturn and it has been in the patent infringement litigation with two Taiwan led leaders since last year.

Like Cree, Epistar could gain a larger global market as well. Moreover, this agreement will also help Epistar “accelerate the R&D activities for creating new innovation.” Although Epistar is not involved in LED patent war, it faces threats from the mainland China where many competitive led factories are prosperous by advantages of low prices and measures of merger and acquisition. To solve the problems of patent infringement, price erosion and technology aging, cross-licensing is a good choice of Epistar.

Moreover, what impacts will this agreement have on the led industry?

After this cross-licensing agreement publicized, the stocks of Epistar increases by 4.82% immediately and put an end to the continuous 3-day downturn. This phenomenon may stimulate more LED corporates to build on their patent advantages and maintain their shares. It is predicted that 2015 will continue witnessing a stable development in the LED lighting markets.

Can we guess what will happen in the future? Will Cree and Epistar grab a larger share of the pie or will there be more led corporations who will cooperate and join the cross-licensing team?  My answer is waiting to see it later.