Patent Dispute Ends Canon, Toshiba SED Joint Venture

Because of pending litigation against Canon Inc. over SED (surface-conduction electron-emitter display) technology, Japan-based Canon and Toshiba Corp. today announced the end of their joint ownership of SED Inc.

Canon is buying Toshiba's stake in the company, which is based in Japan and has 550 employees. SED Inc. will become a wholly owned subsidiary of Canon effective Jan. 29. Financial details of the transaction were not disclosed.

Kazunori Fukuma, the current president of SED Inc. appointed from Toshiba, will resign from Toshiba, after which he will be hired by Canon and continue to serve as SED Inc. president. Also, plans call for Toshiba engineers on loan to SED Inc. to continue their assignments for the transition period during which Canon will independently establish the SED panel business.

The companies said the decision to dissolve the joint venture was reached after discussing the prolonged litigation pending against Canon in the US with respect to SED technology, a next-generation flat-panel display technology jointly developed by Canon and Toshiba. The companies decided that Canon will carry out the SED panel business independently in order to launch commercial SEDs as soon as possible.

SED televisions generate light from electrons hitting a screen coated with phosphors, just like a conventional CRT (cathode-ray tube) television. But unlike a CRT, which has a large electron gun at the back of the tube, an SED uses thousands of microscopic electron emitters to generate the electrons, enabling the sets to be thinner and use less energy.

Austin, Texas-based Nano-Proprietary Inc. filed suit against Canon in April 2005, saying that the SED TVs Canon and Toshiba planned to produce are not covered under a 1999 patent license agreement it signed with Canon. Nano-Proprietary alleges that Canon improperly used the patented technology to produce SED screens and that the SED Inc. joint venture doesn't qualify as a licensed subsidiary under the 1999 agreement. The company said Canon improperly transferred its license rights to SED Inc. and that SED televisions fall squarely within the definition of excluded products under license.

A recent court ruling in Nano-Proprietary's favor resulted in Canon and Toshiba dropping plans to unveil a 55-in. SED television at the Consumer Electronics Show in Las Vegas this month.

"While the decision announced today represents a major change in the relationship between Canon and Toshiba, each company is expected to make every effort for the smooth launch of its television business based on the high image quality achieved by SED technology," the companies said in a statement.

SED television sets are to be introduced in Japan in the fourth quarter of this year as originally scheduled, although Canon will reassess its future mass-production plans for SED panels, the companies said.

For more information, visit: www.canon.com