Nichia abandons the 404 patent

March 9, 2006
Date Announced: 09 Mar 2006 Nichia Corporation announced today that it has recently abandoned its rights to the so-called '404 Patent (Patent No. 2628404 "Method of Depositing Nitride-based Compound Semiconductor Crystal Layer") and all of its corresponding patents outside of Japan. This recent action by Nichia pursuant to its patent administration practice to save the amount of governmental patent fees by abandoning or letting lapse any of its patents it no longer needs to maintain. The '404 Patent is a patent well known inside and outside of Japan because of a high profile lawsuit filed by one of its former employees, Mr. Shuji Nakamura against Nichia Corporation in the Tokyo District Court in 2001, in which he asserted that, among other things, as the inventor of the invention covered by the '404 Patent he was entitled to at least JPY 20 billion (approximately US $174 million) compensation therefor. The fact is that the invention covered by the '404 Patent only enabled Nichia Corporation to catch up with the level of technology already developed by others, and because of various problems involved in it Nichia Corporation ceased using it completely during the first-half of 1997, replacing it by a better technology invented by its other employees. Although the '404 Patent was included in many patents Nichia Corporation cross-licensed to a number of LED manufactures in and after 2002, none of those manufactures has ever practiced it. Following the Tokyo High Court's recommendation, a comprehensive settlement was reached last year between Nichia Corporation and Mr. Nakamura regarding any and all inventions Mr. Nakamura was involved as Nichia Corporation's employee which included 191 registered patents, 4 registered utility models and 112 pending patent applications and their respective foreign counterparts as well as unpublished know-how. Since the '404 Patent was one of those 191 patents, it has become unnecessary for Nichia Corporation to continue maintaining it any longer. Incidentally, according to the comprehensive settlement, the amount attributable to the '404 Patent is considered to be no more than some JPY 10,000,000 (approximately US $87,000) given the calculation method included in the High Court's recommendation, which is vastly different from JPY 60,430 million (approximately US $525 million) which the District Court found Mr. Nakamura was entitled to as compensation for the '404 Patent, out of which the District Court ordered Nichia Corporation to pay JPY 2 billion (approximately US $174 million), the amount Mr. Nakamura demanded in his complaint as a partial payment to be made by Nichia Corporation.Despite its discontent with the terms of the settlement, Nichia accepted the court's recommendation because the regular business is more important for Nichia than arguing the amount of compensation in court.The '404 Patent was not a "diamond in the rough" as Mr. Nakamura claimed.

Masayuki Kinoshita Business Planning,Nichia Corporation Tel:+81-884-22-2311 Fax:+81-884-23-7752

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