Not surprisingly, LSG has taken out a royalty-bearing license to the Philips LED-based Luminaires and Retrofit Bulbs licensing program (see related News story).
Also, Philips will make a limited equity investment in LSG, which is publicly traded. The investment of five million United States dollars is in the form of a convertible note that will convert to preferred shares upon LSG’s planned rights offering.
According to the press release, the agreement also calls for intensification in trade in LED lighting products between the companies.
The commercial relationship involves mutual sourcing and supplying of LED components and products. The details concerning the commercial arrangement and the patent license agreement are confidential.
The agreement also provides for mutual releases for all claims relative to the past, including all intellectual property (IP) and commercial claims. All the pending cases between the companies will be dismissed.
The dispute between LSG and Philips dates back to spring 2008 when the companies filed lawsuits against each other – see News.
At the core of the dispute were patents and IP owned by LED Effects, which became part of LSG in October 2007, and by Color Kinetics, which was bought by Philips in June 2007.
A further complication is that Govi Rao, now CEO and chairman of LSG, was the former general manager of the North American Solid State Lighting Luminaries business of Philips. Rao moved from Philips to LED Effects around the time when Philips bought CK.
In its pre-CK days, Philips in North America did not have the capability to develop or make its own products, but instead teamed with smaller, specialist LED companies such as LED Effects. Using products built with LED Effects' proprietary technology, Philips was able to compete successfully against CK on various projects.
LED Effects has a long history in the LED lighting space, pre-dating by several years the formation of Color Kinetics. For this reason, LSG executives privately told LEDs Magazine back in 2008 that they were very confident of their position in the dispute with Philips.
Several companies have previously tried to challenge the somewhat controversial patent portfolio amassed in the USA by Color Kinetics. One challenger, Super Vision, was comprehensively defeated, while another, TIR Systems, was bought by Philips and ended up on the same team as CK.
With this latest announcement, we can conclude that LSG took their own dispute as far as possible and then accepted a deal which leaves the Philips/CK patent portfolio unchallenged.