There is growing disquiet among UK lighting companies that have been approached by Philips to discuss infringement of its patents. Philips has asked a number of companies to sign a licensing agreement (after first signing a non-disclosure agreement) that would involve them paying royalties of three, four and five per cent respectively on net sales of single-colour, tuneable white and colour-changing luminaires.
Companies have been approached by email and also visited at exhibitions by representatives of Philips’ intellectual property and standards division, and asked to set up meetings to discuss the licensing agreement.
The Philips licensing programme involves more than 640 patents that have been granted worldwide, and 700 more that are pending. They relate to basic LED control and system-level technologies developed in the period 1997 to 2008 by Philips Lighting, or through its acquisitions of TIR and Color Kinetics.
The range of LED technology that Philips says is covered by its patents is causing some alarm among OEMs.
It involves dimming (including triac-based dimming), control and protection when changes in LEDs occur, tuneable white light, addressable colour control, LED feedback control, light mixing and distribution using primary and secondary optics, lighting system installation, efficient power control and achieving desired colour temperature in static or dynamic applications.
There are concerns among some of Philips’ competitors that the firm’s intellectual property could be regarded as applying to elements of LED technology in use by a number of other companies.
Bjorn Teuwsen, director of communications for intellectual property and standards at Philips Group Innovation, dismissed concerns that basic elements of LED technology fall under Philips’ patents as ‘simplistic’. ‘A royalty is only charged if a product uses all of the features of a claim – which is a description in words of an invention – of a granted patent,’ he said.
According to patent lawyer Jason Boakes, the complexity of patent law is such that it can only be dealt with by looking at each individual example. ‘Whether or not someone infringes the patent, you have to look at them on a case-by-case basis,’ said Boakes.
‘You have to go through the products one by one and compare each product against the claims in each of the patents and patent applications. Only when you’ve done that will you come out with an assessment of whether the company infringes a patent or patents or not, and only then can you say whether a company is right or wrong in making an allegation.’
Companies are also concerned that the licensing agreement is retrospective, which would involve not only extra cost but considerable administration. They also argue that by having to account for all the relevant fittings they sell around the world, they are opening up the details of their business dealings to Philips.
Teuwsen said that such information would be used ‘respectfully’ by the intellectual property team and not shared with other parts of the Philips business. ‘We have a Chinese wall between the IP department and the lighting organisation,’ he said.
Enabling faster adoption
The Philips line remains that it is enabling the faster adoption of LED technology which will benefit everyone, including the licensed companies. ‘The idea behind it is, sure, to get a return on investments that we’ve made in LEDs, but also to foster the growth of the entire LED industry,’ said Teuwsen. ‘We could be the only company with the right to use these technologies but rather than doing that we’re giving up part of our share to make possible that other people also use that intellectual property.’
Not all the MDs we spoke to were convinced by that line.
Teuwsen would not disclose how many IP lawyers are dedicated to pursuing patent claims. The issue is international although the UK seems to have been an area of focus in the past few months. So far about 200 companies have signed up to Philips’ licensing programme, including Cooper Industries, XAL, Zumtobel and Trilux.
Strength in numbers
There is talk of LED lighting companies grouping together as the only viable way to fund a court case to challenge Philips, in what has been described as a ‘David and Goliath issue’.