IP Law Daily, PATENT—Fed. Cir.: Appellate court affirms dismissal of LED manufacturer’s indemnification claims against chip supplier., (May 14, 2026)

By Joe Cox, J.D.

The ruling was based on interpretation of a contract clause that limited indemnification responsibility to another jurisdiction.

The Federal Circuit Court of Appeals has affirmed a trial court's dismissal of indemnification claims made by an LED lighting product manufacturer against its LED chip supplier. The decision was based on the trial court’s finding that a limiting clause in the 2012 contract between the parties limited the scope of any indemnification responsibility to the jurisdiction where title passed in regard to the property in question—which was Hong Kong, in this case. The appellate court affirmed that reading of the documents and that conclusion ( Seoul Semiconductor Co., Ltd. v. Finelite, Inc., No. 25-1712 (Fed. Cir. May 13, 2026)).

Underlying history. Finelite manufactures LED-based lighting products and purchased LED chips from Samsung to use in those products. In 2022, Seoul Semiconductor and Seoul Viosys (Seoul) filed a patent infringement suit against Finelite related to LED and LED lighting technology. Finelite then filed a third-party complaint against Samsung for indemnification, asserting claims for breach of contract, breach of the California UCC, and declaratory judgment, on the grounds that Samsung supplied the chips and should be responsible for any infringement which may have occurred.

The contract which governed the relationship between Finelite and Samsung consisted of five pages (which were sequentially numbered), comprising a two-page credit application and agreement, a one-page financial authorization form, and a two-page contract of sale. A disputed statement in the credit application and agreement stated that Finelite agreed to the terms of sale and to pay service charges and reasonable attorney fees in the event of default. In essence, Fineline then sought to limit its exposure to service charges and reasonable attorney fees based on default.

Finelite’s position was that the 2012 agreement did not cover the four 2018-2021 LED chip sales between the parties. It disputed that all of the terms, including the limitation on indemnification, were integrated into the contract, and attempted to argue that the parties’ conduct had created a novation—and that certain purchase order contracts, provided by Finelite with its orders, did not provide for a limitation on indemnification and should control. The parties each filed motions for summary judgment, and the court ruled for Samsung. Seoul Semiconductor Co. Ltd. v. Finelite, Inc., No. 22-cv-2869-tlt (N.D. Cal. Sept. 26, 2023).

Appellate court ruling. The appellate court did not find the 2012 contract to be ambiguous, noting that the document’s structure made clear that all five pages were a unified whole and should be read accordingly. The court also found that Finelite’s argument of only partial incorporation of the terms of the document into the agreement was not supported by the document’s text and distorted its language.

Additionally, the court noted that Finelite’s interpretation should be rejected because it would render substantial portions of the agreement superfluous. The argument of a novation by conduct constituted inadmissible parol evidence in contradiction of the contract’s terms, which is prohibited under California law. Accordingly, the appellate court affirmed the trial court, finding that the contract’s limitation precluded indemnification from Samsung in an American legal action.

The Case is No. 25-1712.

Judge: Lourie, A.

Attorneys: Sean M. Selegue (Arnold & Porter Kaye Scholer LLP) for Seoul Semiconductor Co., Ltd. and Seoul Viosys Co., Ltd. Thomas J. Rechen (McCarter & English, LLP) for Finelite, Inc.

Companies: Seoul Semiconductor Co., Ltd., Seoul Viosys Co., Ltd.; Finelite, Inc.

Cases: Patent FedCirNews