Everlight ‘regrets’ court ruling

BATTLE NOT OVER::The company said a German court’s finding that it infringed on a Nichia Corp patent may be appealed and its business is not expected to be affected

By Kevin Chen  /  Staff reporter

Thu, Sep 12, 2013 - Page 14

Everlight Electronics Co (億光電子), the nation’s top LED chip packager, yesterday said it regretted a German court ruling that found that Everlight LED products infringed one of Nichia Corp’s patents, adding that it might appeal the case to a higher court.

Meanwhile, analysts said the German ruling is not final and Everlight had won the same patent battle against Nichia in Japan last year.

Even if Everlight lost the lawsuit, the injunction of the infringed products would cause little impact on the company because they are older generation products, they said.

“The German court ruling is truly a non-event and the market has truly overreacted given the lack of clarity and analysis,” Yuanta Securities Corp (元大證券) analyst Andrew Chen (陳治宇) said in a note to clients yesterday.

“The market concern about how the ruling would affect Everlight seems overblown to us,” JPMorgan Securities Taiwan Ltd analyst Narci Chang (張恆) wrote in another client note.

The remarks by Everlight and analysts came after Nichia announced on its Web site on Tuesday that the Dusseldorf District Court in Germany on Sept. 3 ruled in favor of the Japanese company’s complaints that Everlight and its German distributors had infringed on Nichia’s yttrium-aluminum-garnet (YAG) phosphor patent concerning certain white LED products.

“The court rendered judgements in favor of Nichia’s claims for permanent injunction, also rendering on accounting and damages,” Nichia said in its statement.

As for Everlight’s German distributors, Future Electronics Deutschland GmbH and REGO Lighting GmbH, Nichia said the court “ordered the recall of the products in question from their commercial customers and the destruction of the products.”

The judgments are not final and can be appealed, Nichia added.

In response, Everlight issued a statement yesterday, saying that it believes Nichia’s patent is invalid and that it filed an invalidity action at the German Federal Patent Court in March last year. The German Federal Patent Court is scheduled to give its judgment in February next year, Everlight added.

“The company is evaluating the possibility of filing for an appeal,” Everlight spokesman Liu Pang-yen (劉邦言) said, adding that the German court’s first ruling is not expected to affect the company’s business.

Yuanta estimated the affected products to contribute less than 1 percent of Everlight’s sales and earnings, while JPMorgan forecast the accumulated sales for the infringed products would be less than 0.5 percent of Everlight’s total revenue.

The company’s sales last month increased 10.14 percent month-on-month and 33.96 percent year-on-year to NT$2.41 billion, with cumulative sales during the first eight months expanding 25.55 percent to NT$15.51 billion from last year, according to its financial statement.

As Osram Opto Semiconductors GmbH’s terbium-aluminum-garnet (TAG) phosphor has become an important alternative for the application of white LED over the past 10 years, Everlight has changed its product design based on its cross-licensing with Osram to avoid infringement concerns with Nichia, analysts said.

“As a result, there will be no future impact on revenue and earnings and no impact on its recent acquisition of the German lighting fixture company WOFI,” Chang said.

In July, Everlight said it would acquire a 100 percent stake in Germany lighting firm WOFI Leuchten GmbH from Hannover Finanz GmbH and its subsidiary for 6.55 million euros in total in three installments.

Everlight shares rose 0.79 percent to NT$50.8 yesterday. The stock has risen 33.33 percent so far this year, compared with the broader market’s 6.62 percent increase over the same period, the Taiwan Stock Exchange data showed.