News Room

Jul. 31, 2024

Nichia Defeats DSS's Patent Monetization Scheme

On July 12, 2024, the District Court for the Central District of California (“CDCA”) dismissed with prejudice a patent infringement case brought by DSS, Inc. (f/k/a Document Security Systems, Inc.) (“DSS”), which does not have a business selling LED products, against Nichia Corporation and Nichia America Corporation (“Nichia”). Nichia is pleased to report that this decision (currently on appeal) should put to rest a series of litigation-funded infringement allegations made by DSS against Nichia.

On November 14, 2016, DSS entered into an agreement with Brickell Key Investments LP (“BKI”), in which BKI financed an aggregate of $13,500,000 toward a patent purchase and monetization program relating to a portfolio of LED patents owned by Intellectual Discovery Co., Ltd. Thereafter, on December 7, 2017, DSS filed a patent infringement suit against Nichia in the CDCA, asserting infringement by numerous Nichia LED products of U.S. Patent Nos. 6,949,771; 7,256,286; 7,524,087; 7,652,297; and 7,919,787. Through a combination of inter partes reviews (“IPRs”) before the Patent Trial and Appeal Board (“PTAB”), appellate work at the Court of Appeals for the Federal Circuit (“CAFC”), and motion practice in the CDCA, Nichia achieved complete dismissal of the litigation by late 2023.

As that first action was falling apart, on September 20, 2019, DSS filed a second patent infringement suit against Nichia in the CDCA, asserting infringement of U.S. Patent No. 6,879,040 (“the '040 patent”). From the beginning, Nichia asserted that the '040 patent was obviously invalid as being impossible to practice. And, during an IPR of the '040 Patent brought by Nichia, the PTAB and CAFC construed the asserted claims in a manner that confirmed Nichia's view. On July 12, 2024, after the conclusion of the IPR, the CDCA granted Nichia's motion to dismiss on the ground that the claims are invalid.

DSS has litigated against Nichia for nearly seven years, notwithstanding the merits of its cases or the value of its patents. Nichia decries this type of monetization scheme, in which outside investors fuel patent litigation divorced from a plaintiff's business operations and irrespective of legal merits.

Nichia believes patent litigation can be an appropriate mechanism for a company to differentiate its technology from competitors and to seek compensation from those benefitting from its R&D investment. However, Nichia remains proud of its original technologies and committed to disputing unwarranted patent litigation. This case, in particular, illustrates Nichia's uncompromising policy against patent claims lacking merit, even through a lengthy legal battle.