US firm claims validated vs. Canon in nano patent ruling

February 23, 2007 – Nano-Proprietary Inc., an Austin, TX-based firm, says a US District Judge has granted its motion for summary judgment and was entitled to terminate its license with Canon Inc., regarding use of nanotechnology with potential application in displays.

The license termination stems from Canon’s relationship with Toshiba in a 50-50 JV to make and market a new display technology that is potentially the first significant opportunity to bring nanoelectronics into a volume-produced product. Canon took over full control over SED Inc. in January in an effort to smooth its dispute with Nano-Proprietary, but litigation had already begun in April, although the US firm has indicated that although the license has been terminated, it is willing to negotiate a new one.

In a 25-page ruling, the judge referred to a Nov. 2006 ruling that found “SED as it was initially configured was not a Canon subsidiary for purposes of the contract with Nano,” and was thus in breach of the licensing deal. In addition, a “direct reference to Canon’s licensing agreement with Nano shows that Canon intended to make Nano’s licensed technology part of the intellectual capital of the joint venture,” the judge wrote. Further, “breach is measured at the time it allegedly occurs, not at the time of trial,” according to the judge. “SED’s present configuration has no bearing at all on whether its alleged use of Nano’s patent technology in 2004 was a breach of the licensing agreement.”

The judge also ruled that Canon’s sublicense to the SED subsidiary, via a “plus-one-share” structure giving Canon final authority, essentially deprived Nano of that retained asset. The “neatly tailored drafting” was “intended specifically to circumvent the prohibition on sublicensing in the Canon-Nano licensing agreement,” thus breaching the original deal not to sublicense Nano’s patents, the judge wrote.

The dispute centers on a new display technology, surface-conduction electron-emitter display (SED) technology, which could promise better picture quality and consume less energy than current FPD technology such as liquid-crystal displays (LCD) and plasma. But high costs and price erosion have delayed the technology’s official introduction into end products for many months.

In January Canon said it still plans to introduce SED-based television sets in Japan in 4Q07 as originally scheduled, although future mass-production plans will have to be reassessed. The company plans to review a planned $1.49 billion SED factory at a site owned by Toshiba in Himeji, western Japan, and likely will make the displays on a smaller scale at its own plant in Japan, noted a Reuters story.


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