Lawsuit May Delay SED TV Plans

A lawsuit filed against Canon by a U.S. company could scupper the Japanese company's plans to jointly produce a new type of television with Toshiba, according to Japanese press reports.

The televisions are based on SED (surface-conduction electron-emitter display) technology, which is a flat-panel display said to offer richer colors, faster response, and generally better picture quality than both LCD and PDP technologies. Canon and Toshiba have been promising SED-based televisions for some time, but the launch of the products has been delayed because of problems perfecting the technology. Current plans call for a limited launch in 2007 and wider availability in 2008.

However, those plans could be thrown into jeopardy leading to longer delays, according to weekend press reports.

Potential Patent Issue

At stake is whether the production joint venture, a company called SED Inc., is a Canon subsidiary. Canon owns 50 percent of the company plus one share, while Toshiba holds the remainder. Because it holds the extra share, Canon believes the company is a subsidiary.

The question is important because part of the SED technology being used has been licensed to Canon by Nano Proprietary of Austin, Texas. Nano Proprietary filed a lawsuit against Canon in Texas in 2005 asserting that SED Inc. isn't a Canon subsidiary because, it argued, Toshiba still has decision-making power over the joint company.

That would mean the existing patent license doesn't cover transfer of the technology to SED Inc. and that an additional payment is required. In November the court declined to recognize the company as a Canon subsidiary.

Contradictory Reports

As a result Canon is considering increasing its stake in SED Inc., according to a report in the Saturday morning edition of the Nihon Keizai Shimbun business newspaper. A report in Monday's Asahi Shimbun said Canon is planning to pull out of joint production plans and that an official announcement is due later in the month.

Both companies could not be immediately contacted due to the New Year holiday in Japan.