The empeg's LED does use PWM as far as I remember. Everytime I read about the status of those patents in the lighting trade mags, they make no mention of consumer devices where LEDs are used as indicators. They seem to only be going after companies using PWM for lighting purposes. There is proof of a disco effect from the '70s that uses PWM. This is currently the most promising proof that the patent issued to Color Kinetics is invalid. I don't know how they can just take away a patent (don't know much about the process), but it seems it may happen.

EDIT: Here's an article I remember reading a couple months back. Link