Canon Acquires Toshiba Share Of SED Venture

TOKYO — In an effort to sidestep a lawsuit against Canon by Nano-Proprietary, Canon has agreed to buy out Toshiba's stake in a surface-conduction electron-emitter display (SED) TV joint venture, SED, Inc.

Exact details of the buyout were not disclosed, but Toshiba is to continue lending engineers to the venture and plans to become a customer of SED panels.

Executives from Toshiba's U.S. consumer electronics sales operations were still awaiting information on the development from corporate headquarters in Japan early last week.

Nano-Proprietary's lawsuit claimed that its 2005 agreement with Canon gave Canon the right to use Non-Proprietary's field-emission display (FED) technology through a wholly owned subsidiary but not to sub-license the technology to another company.

The new arrangements would make SED, Inc. a wholly owned Canon subsidiary.

Toshiba hastily changed plans to show a 55W-inch SED prototype at the recent International CES days prior to the event. The same prototype previously had been highlighted at Japan's CEATEC Show last summer.

The technology offers many of the picture performance advantages of CRT technology — ultra-high contrast, fast motion response, wide viewing angles and low power consumption — in the flat-panel form factor of a plasma or LCD TV.

Under the new arrangement, current SED, Inc., president Kazunori Fukuma will become a Canon employee, and Toshiba will continue lending engineers and resources to the operation, according to a statement from Canon.

Toshiba and Canon said in statements out of Japan that they still plan to introduce products in the Japanese market in the fourth quarter.

In a statement on the proposed buyout, Nano-Proprietary CEO Tom Bijou said, "Restructuring of Canon's ownership position does not resolve the pending litigation which goes to trial in a few weeks. We have terminated Canon's license as a result of breach of contract. Moreover, our complaint against Canon includes other counts, including fraud unrelated to the ownership of SED. We are, however, willing to enter into a new license agreement with Canon on reasonable terms."

Canon will put 550 employees into SED, Inc., and will begin pilot production around the middle of the year, producing 1,000 unit per month. It now says it will reassess mass production plans after that.

Earlier, the companies said they expected to have a 55W-inch SED TV in the Japanese market late in 2007, with a U.S. product to follow sometime after that.

Any further delays in bringing a product to market could prove problematic for a new technology launch, given rapidly declining prices for large-screen plasma and LCD TVs. At the same time, both technologies continue to make improvements in picture quality and power consumption.