CREE vs. China – China vs. CREE
While most investors would expect a company like CREE (CREE) to be the aggressor in IP lawsuits, and that is certainly the case with CREE, the Chinese government, or an entity related to the Chinese government has filed an IP infringement lawsuit against CREE and its Chinese production subsidiary that it established in 2009. The Shenzhen Chinese Academy of Sciences Intellectual Property Investment Co, Ltd, a state-owned entity formed in 2009 to “establish a smooth and efficient transfer of intellectual property”, is part of the Chinese Academy of Sciences, and manages the vast IP portfolio of the 104 institutions under the CAS heading. The CAS has invested in or created over 430 technology enterprises, with Lenovo () being the most recognizable to US investors and a fellowship to CAS is considered the highest honor for Chinese scientists.
At the crux of the IP battle are two patent families owned by CAS, which it believes are being infringed by CREE, with the CASIP asking for damages and a permanent injunction, citing the huge amount of R&D spending done by the CAS to develop the patents. The CAS is asking CREE to stop infringing and work together with CAS to “promote industrial progress” and establish a more “fair and reasonable market” (aka licensing).
Cree has battled with a number of Taiwan based LED manufacturers, a number of which have production facilities on the Chinese mainland, with Harvatek (6168.TT) and Kingbright (pvt) both settled in 2016. These lawsuits have made smaller Chinese LED producers fearful of CREE and other major LED players like Philips (PHG) and OSRAM (OSR.GR), and have awakened the Chinese LED Patent Association, who said it was working with other Chinese patent offices to plan potential responses. Whether the CREE lawsuit is such a response remains to be seen, but the CAS is said to be a formidable player in the Chinese IP world, particularly as it represents such a vast number of potential IP holders, and similar entities in Taiwan and Korea have battled successfully to enforce local IP in both the US and foreign courts.
At the crux of the IP battle are two patent families owned by CAS, which it believes are being infringed by CREE, with the CASIP asking for damages and a permanent injunction, citing the huge amount of R&D spending done by the CAS to develop the patents. The CAS is asking CREE to stop infringing and work together with CAS to “promote industrial progress” and establish a more “fair and reasonable market” (aka licensing).
Cree has battled with a number of Taiwan based LED manufacturers, a number of which have production facilities on the Chinese mainland, with Harvatek (6168.TT) and Kingbright (pvt) both settled in 2016. These lawsuits have made smaller Chinese LED producers fearful of CREE and other major LED players like Philips (PHG) and OSRAM (OSR.GR), and have awakened the Chinese LED Patent Association, who said it was working with other Chinese patent offices to plan potential responses. Whether the CREE lawsuit is such a response remains to be seen, but the CAS is said to be a formidable player in the Chinese IP world, particularly as it represents such a vast number of potential IP holders, and similar entities in Taiwan and Korea have battled successfully to enforce local IP in both the US and foreign courts.
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