Canon buys Toshiba stake in SED

Canon will buy Toshiba’s stake in SED Inc., a joint venture they formed to develop large-screen, low-power flat panel televisions. The companies hope the move will put an end to a patent lawsuit brought against Canon in the U.S.

SED will build televisions using Surface-conduction Electron-emitter Displays (SEDs). The displays generate light from the collision of electrons with a phosphor-coated screen, just like a conventional CRT (cathode-ray tube) television. However, SEDs are flatter and use less energy because the electrons are generated by thousands of individual emitters, one behind each phosphor dot on the screen, rather than by one giant electron gun at the back of the tube.

Canon began working with Toshiba on the commercialization of SED technology in 1999, the same year that Nano-Proprietary Inc., a patent-licensing company based in Austin, Texas, says it licensed technology to Canon for use in such displays.

Toshiba and Canon finally set up a joint venture, SED Inc., in October 2004, to manufacture and sell the displays. Then in April 2005 Nano-Proprietary filed suit against Canon and its U.S. subsidiary Canon USA Inc., claiming that SED Inc. was not covered by their licensing agreement, and was therefore not entitled to use the technology.

Nano-Proprietary has said it intends to see the case to trial: a court date has been set in March.

On the assumption that the technology would be the subject of prolonged litigation in the U.S., Toshiba agreed to sell its stake in the joint venture, Canon said.

The sale will close on Jan. 29, and the joint venture’s president, Kazunori Fukuma, will resign from Toshiba, where he is now employed, to join Canon on Jan. 30. Toshiba engineers seconded to the joint venture will also continue their work there for the time being, Canon said.

Despite the changes, Canon still expects television sets containing SEDs to go on sale in Japan in the fourth quarter, the company said.