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Viavi Settles Patent Issue With LG, Optrontec Faces Lawsuit

Zacks Equity Research

Viavi Solutions Inc. VIAV recently announced that it has reached a patent infringement settlement with the South Korean electronics makers — LG Electronics and LG Innotek — relating to the alleged unlawful use of its optical filters. The patent violation saga started last year when the California-based tech company registered a complaint with the U.S. International Trade Commission (“ITC”) and the United States District Court for the Northern District of California to launch an investigation against the defendants.

Viavi claimed that the Korean companies were involved in illegal trade practices of importing and exporting certain mobile phones and tablets, including LG G8 ThinQ, in the United States violating the former’s patents on optical filters and optical sensor systems. The filters are incorporated in advanced electronic devices featuring facial recognition technology. The terms of Viavi’s settlement with LG Electronics have not been disclosed.

The networking company also filed a complaint against Optrontec Inc. with similar patent infringement charges. Unlike LG, the South Korean optical products company is still facing legal action, as Viavi continues to seek equitable and damage relief from the regulatory bodies. In addition, Viavi requested the ITC and Californian legal authority to put an embargo on Optrontec from importing optical filter technology, used in the 3D motion sensing systems, to the United States.

Interestingly, Optrontec supplies optical filters for smartphone cameras to LG Electronics and Samsung Electronics whereas LG Innotek supplies the same to LG Electronics. Unbeatable in the domain of 3D motion sensing technology, Viavi is a supplier of optical filters to the tech giant, Apple Inc. AAPL.

Viavi boasts a comprehensive product portfolio of fiber testing products and state-of-the-art leakage solutions that offers end-to-end network visibility and analytics. This, in, turn, helps to build, test, certify, maintain, and optimize complex physical, virtual and hybrid networks to achieve maximum accuracy, reliability and efficiency amid growing network intricacy. Given its technology expertise, product depth and wide customer base, Viavi’s solutions are well positioned to meet the dynamic industry trends.

Impressively, with the industry’s complete range of fiber test solutions, Viavi reduces the complexity around new network architectures and ensures the delivery of high-speed, top-notch services and applications to enterprises, government and network equipment manufacturers. Further, strength in wireless & fiber test, 3D sensing products, optical transport, Ethernet, broadband access, video test and storage network testing markets is likely to boost its revenues in the long run.

Driven by a solid momentum in the network enablement business, the stock has rallied 49.7% compared with its industry’s rise of 16.6% in the past year. Viavi outpaced the Zacks Consensus Estimate thrice in the trailing four quarters, the positive earnings surprise being 15.8%, on average.



Zacks Rank & Stocks to Consider

Viavi currently carries a Zacks Rank #3 (Hold).

Few better-ranked stocks in the broader industry are SeaChange International, Inc. SEAC and Mitek Systems, Inc. MITK. While SeaChange International sports a Zacks Rank #1 (Strong Buy), Mitek Systems carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SeaChange International has a long-term earnings growth rate of 10%.

Mitek Systems has a long-term earnings growth rate of 15%.

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