Flat panel licensing row awaits settlement

Camera maker ponders out-of-court settlement with flat-panel patent holder.

Nano Proprietary, a US technology firm that sued Canon over a patent licence for flat-panel displays, is waiting for the Japanese electronics giant to show a willingness to negotiate a settlement.

A US court ruled in February that Nano Proprietary could terminate a licence agreement it had for seven years with Canon, which had tried to share the technology with Toshiba, its partner in a flat-panel display joint venture.

The court did not address Nano Proprietary's fraud claims against Canon in the ruling, and is to assess the size of damages due to the Texas-based firm in April.

Legal experts have said the two sides may try to settle out of court, though a new licence could cost Canon, the world's top camera maker, many more millions of dollars than the earlier one for which it made a one-time payment of US $5.6 million.

"Although it is probably natural that we would disagree on the size of the settlement in dollar terms, it almost seems like there are non-business issues at work preventing a settlement, because I cannot even arrange a meeting with Canon", Nano Proprietary Chief Executive Thomas Bijou said in an e-mail response to questions from Reuters.

Tokyo-based Canon declined to be interviewed.

Bijou also said his company had made a comprehensive proposal to Canon for a new licence that would allow Canon and its partners to use Nano Proprietary's technology, including the right to outsource manufacturing of displays to other makers.

"When Canon is ready, we're ready to negotiate on that framework", Bijou said.

The dispute involves Nano Proprietary technology for surface-conduction electron-emitter displays (SED), which are said to generate brighter images and consume less energy than existing LCDs and plasma panels.

Canon Chairman and Chief Executive Fujio Mitarai said in a strategy briefing this month he expects to win the legal case against Nano Proprietary and pursue plans to enter the flat TV market, but analysts says his commitment to SEDs had weakened.

"In the past, we would have taken risks to commercialise SEDs soon as possible, but our current investment plan is based on a commitment to make the business profitable in three years", Mitarai was quoted by analysts as saying.

Mitarai reportedly said he is interested in other types of flat displays including organic light-emitting diodes (OLED), which Sony also develops.

The analysts quoted Mitarai as saying Canon is developing OLED technology with another maker and is also open to acquisitions.

Mitarai, who has helped Canon become one of the world's most successful electronics firms, wants it to make televisions after its success in digital cameras, camcorders, copiers and printers.

For Nano Proprietary, a venture with 200 patents and pending applications in nanotechnology ranging from materials to sensors, sealing new display deals is a priority to generate new royalty revenues and reverse decades of losses.

Bijou, a longtime investor in the company who became chief executive in December, aims to bring a "measurable" income for Nano Proprietary in 2008, against an operating loss of $4.7 million in 2005.

Although Bijou declined to comment on potential negotiations, South Korea's Samsung Electronics has shown an interest in SED technology, according to a media report.

Asked if Nano Proprietary would sell or sign exclusive patent deals, Bijou said the idea is "interesting" because it would give one player serious control in the display business.

"I guess that selling the patents or even the total company are possibilities, I would not rule out any type of deal as long as it represents fair value to the shareholders", Bijou says.

"I can only wait and see what types of proposals emerge".

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