I’veÂ written several postsÂ about the LED litigation wars between Nichia Corporation (Nichia) and Seoul Semiconductor, Inc. (Seoul), andÂ they just get curiouser and curiouser.Â The arch rivals haveÂ been through patent suits aplenty throughout the world, a false advertising suit stemming fromÂ one of thoseÂ patent suits and now an antitrust suit whose narrativeÂ may tieÂ it all together.Â
Last month Seoul sued Nichia in federal court in San Francisco, accusing its rival of, among other things,Â monopolization and attempted monopolization for pursuing expensive and allegedly baseless litigation to squeeze Seoul out of the LED market.Â According to the complaint (seoul-_antitrust_complaint.pdf), Nichia has filed over half a dozen suits against Seoul in California, Asia and Europe.
Seoul’sÂ complaint accuses Nichia ofÂ implementing a comprehensiveÂ strategy of repeatedly filing and prosecutingÂ frivolous lawsuits to fight back competition from other LED makers and preserve its monopoly power in the market for white side-view LEDs (used primarily to backlight LCD displays).Â Â The complaint alleges that in 2007 Nichia’s worldwide share of this market was between 50 and 60 percent.
The centerpiece of Seoul’sÂ monopolizationÂ claimÂ is a patent infringement action involving four design patents that Nichia broughtÂ against Seoul andÂ litigated to the finishÂ for a paltry $250 verdict.Â According to the complaint Nichia’s lawyers contrived a fake purchase of LEDsÂ from Seoul just to create a U.S. sale and establish jurisdiction for the lawsuit.Â The complaint states:
Â [Nichia] then invested over $10 million to prosecute its baseless lawsuit — worth only $62 in actual damages — not to collect the $62 but to deploy the heavy machinery of litigation to crush its smaller rival and thereby fence out competition in the fast growing world market for LEDs that Nichia had long dominated.
Indeed, in an order (order.pdf) denying Nichia attorney fees in that case Judge Maxine Chesney characterized Nichia’s actions in that lawsuit as “using a sledgehammer to kill a gnat” and suggested that Nichia’s persistence may have been an attempt to gain “some unstated ancillary advantage” over Seoul.Â
Here Seoul claims that the ancillary advantage Nichia sought was to “frighten customers from buying from [Seoul] and to frighten rivals from competing with Nichia.”Â Â To defend that patent infringement suit against Nichia, Seoul had to spend about $8 million. Â Frightening indeed.
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