"Recently, two Shenzhen LED (light-emitting diode) companies have encountered patent litigation overseas, and finally ended up with compensation for settlement." Shi Shirong, executive vice president of Shenzhen LED Industry Association, recently worried about this.
Similar to the past DVD industry, the core patent barrier is like a sword of Damocles hanging over the Chinese LED industry. Because core patents are controlled by overseas manufacturers, Chinese companies are at risk of core patent infringement.
An industry reality related to this is that more than 60% of China's LED companies are currently selling in overseas markets such as Europe and the United States.
“Because the global LED market is in its infancy, the patent litigation encountered by Chinese LED companies is still very limited.†Shang Song, executive director of China Optical Optoelectronics Industry Association, believes that with the expansion of the market, the Chinese LED companies face patents. The risk will be higher and higher.
"This time, we can no longer lose at the starting line." Shang Song reminded, in order to avoid the Chinese LED industry repeating the mistakes of the DVD industry: "In the LED patent war, Chinese companies should respond in advance."
On April 28th, the preparatory meeting for the Shenzhen LED Patent Alliance was held. More than 70 LED companies from Shenzhen gathered together, covering LED chips, lighting, backlights, and displays. This will be the first industrial alliance of LED patent technology in China.
Qi Shirong is also one of the founders of this alliance. He lamented: "The LED patent war, Chinese companies have great challenges, but the opportunity is still there."
LED patent barrier
According to our reporter, the core patent technologies in the field of LED upstream chips are mainly concentrated in several foreign-invested companies in Nichia, Philips and Osram.
For example, the mainstream technology of sapphire substrate technology and silicon carbide substrate technology for chip substrate manufacturing is currently only controlled by Japan Nichia Corporation and Cree Corporation of the United States. Most of the sapphire substrate technology used in Japan is used in Japan, but it needs to be sent to Japan. Nichia pays a lot of patent fees.
"Chinese companies want to break through the LED patent blockade in the upstream. In fact, it is very difficult." Feng Jun, chairman of E-Tech Lighting Co., Ltd., told this reporter that it is the foreign-invested manufacturer's control over upstream patent technology that has become its overseas market. Weighed on the "tools" of Chinese LED manufacturers.
"In the past year, the number of Chinese LED companies that have experienced patent litigation has increased significantly." Shang Song told this reporter that the "patent war" approach is not limited to simple litigation.
"The 'patent war' is only a means of market competition, so many foreign competitors with patents will send lawyers' letters directly to downstream customers suspected of infringing LED companies in China." Shang Song told reporters that due to downstream customers Fear of taking joint and several responsibilities, it will often stop purchasing Chinese LED products: "The result is that many Chinese LED companies, until they have lost their orders overseas, know that they have been sued for patent infringement."
In fact, from the distribution of the overseas market map of Chinese LED companies, the mark of “patent barriers†can also be seen. According to our reporter, at present, China's LED application products are mainly concentrated in Europe, South America and other major markets. In the Japanese market where LED demand is extremely high, Chinese brands have not been involved.
"In the Japanese market, Chinese LED companies basically rely on OEM OEM shipments, but no independent brands." Feng Jun analysis, one of the important reasons is that the Japanese market for patent infringement is extremely strict: "This makes many Chinese companies I have to take the initiative to give up this huge market."
Chinese opportunity for patent war
On the surface, the Chinese and foreign LED patent wars seem to be a contest of strength.
It is reported that in the core patent technology of LED, especially the key patents of white light, high-power LED lamp heat balance, long-lasting and efficient phosphor, have been monopolized by European, American and Japanese manufacturers.
"In terms of industrial structure, although foreign manufacturers have core patents, they do not have production advantages." Feng Jun told reporters that in the process of transferring foreign low-end electronic processing manufacturing to China, its industrial support has gradually shifted to China. For example, in the LED downstream integration industry chain of plastics, hardware, chemicals, molds, etc., China has a complete supporting advantage.
"The same LED application products, the foreign maturity cycle takes two years, and in China's industrial supporting environment only three months." Feng Jun said.
The result of an industry that cannot be ignored is that more than 70% of the world's LED application products are manufactured and manufactured in China – this is also the main weight that China has in the “LED Patent Warâ€.
"The technical advantages of China's LED companies are concentrated in downstream applications and integration." Li Zhijiang, chairman of Wanrun Technology, said in an interview with this reporter that from the perspective of the integration level and speed of application products, some Chinese LED application technologies have been Leading the world. For example, Wanrun high-power lighting fixtures have achieved industry-leading “zero light decay†during the one-year test period.
In this context, Chinese companies have accumulated a large number of patents in the field of LED downstream applications. According to the survey of the High-tech LED Industry Research Center, as of the end of 2008, China had a total of 26,071 LED-related patent applications, of which nearly 50% were in the midstream and downstream packaging and application.
"The industrialization of upstream core patents must be realized through the industrialization of downstream LED applications." Feng Jun believes that with the accumulation of patents for downstream technologies of Chinese companies in the future: "The industrialization of core patents of foreign manufacturers, even Can't get rid of China's underlying technology."
Regiving
Although in the downstream LED application field, Chinese companies have the corresponding patent "weight", but in the game with the upstream core patent foreign manufacturers, it is not evenly matched.
According to a survey by our reporter, some Chinese LED companies' patents are limited to extremely subdivided areas such as design and lighting design, and some are even niche technologies.
"Compared with the concentration and coverage of upstream core patents, the downstream application-level patents are relatively scattered." Wu Shirong told this reporter that the patents of individual Chinese LED companies are still limited, and it is difficult to form synergies in market expansion. The effect of the application is not obvious.
In this context, Chinese LED companies want to hold a group attack. Our reporter learned that the upcoming Shenzhen LED Patent Alliance will build the first LED patent database in China. Covers a wide range of applications including test packaging, lighting design, and backlight technology.
“The cross-licensing of patents between enterprises within the member can be formed to form a patent pool.†According to Qi Shirong, members of the LED Patent Alliance will establish a unified enterprise intellectual property management system to avoid independent development and redundant construction.
More importantly, in the patent battle with foreign LED manufacturers, the "patent pool" form will have stronger bargaining power. "After the establishment of the patent alliance, we plan to use the unified 'patent pool' to negotiate with the upstream core patent manufacturers to negotiate patents." Shi Shirong told reporters that on the one hand, the authorized price of core patents can be reduced; on the other hand, even Replacing a core patent form with multiple application patents reduces overall business costs.
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