The agreement covers patents held by both organisations involving blue and white diodes as well as control systems and products.
Chuck Swoboda, Cree chairman and chief executive, said: "This agreement demonstrates the breadth and depth of both companies' intellectual property as well as the fundamental nature and value these patents bring to the market."
He added that the deal represents these firms' commitment to encouraging growth in the LED sector while respecting the importance of intellectual property.
Dutch-based Philips, the world's largest luminaire manufacturer, expects diode luminaire to make up three quarters of the market in the next ten years and claimed the technology will overtake conventional offerings by 2015, Reuters reported.
Cree currently runs an LED lighting initiative involving several universities in the US, Canada and China, encouraging those institutions to adopt low energy innovations that can save money.
