Home Theater: Lawyers Strangle SED

A promising new video display technology suffered a potentially fatal setback last week. SED stands for Surface-conduction Electron-emitter Display. Whether marketers would come up with a sexier name for the ultra-flat tube technology is something we won't find out in the near future because a federal judge has ruled that Nano-Proprietary, the licensor, can wiggle out of its agreement with Canon. The agreement dates from 1999. Subsequently Canon brought Toshiba into a joint venture that would have brought SED to market. That made sense—if you want to sell TVs, you work with a TV company. Meanwhile, with an eye on the burgeoning market for flat panels, N-P apparently became unhappy with the arrangement. So the company argued that by bringing in Toshiba, Canon had violated the licensing agreement. N-P refused to call off its legal pit bulls even after Toshiba sold its stake to Canon and cancelled plans to show an SED prototype at the Consumer Electronics Show two months ago. If N-P wins the appeals, Canon will have to negotiate a whole new licensing agreement with N-P, if it chooses, possibly in competition with Samsung. Fun facts:

Nano-Proprietary is based in Texas.
The judge sits on the federal district court in Texas.
Canon is not based in Texas.
Toshiba is not based in Texas.

In other words, the provincial judge favored a local company over the big bad foreign multinationals. Prognosis, optimistic: When SED finally hits the shelves, it will wow videophiles with its black-level performance and shake up the maturing market for flat-panel DTVs. Prognosis, pessimistic: The market will have matured so much by the time SED hits that its moment will have passed. Leave it to a Texas cowboy to shoot himself in the foot.

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Reader Comments

Posted Sat Mar 3, 2007, 10:32 AM — By Tom Thompson

Is it something about the water in Texas that brings us these character plays reminding me of old Greek tragedies? Between the debacle of redistricting the state and the every unpopular GWB, there is little to be said, other than a shake of the head.

Posted Sun Mar 4, 2007, 8:36 PM — By Fred Reed

The news about SED is bad enough. Is it really necessary to always link something bad to GWB, though? What if the court had been in Mass? Would we be blaming the Kennedys? Please leave the political whining and finger pointing out.

Posted Sun Mar 4, 2007, 9:45 PM — By Mark Fleischmann

I'm an equal-opportunity jester. If the court had been in Massachussetts, I'd have said leave it to a Boston drunk to drive SED off a bridge.

Posted Mon Mar 5, 2007, 2:39 PM — By Tom Thompson

Dear Mr. Reed, I have sadly mourn the loss of civility and the sense of humor America used to show; not just to others but about ourselves as well. There is a strong case for levity, it often takes us out of the shadows and morass of everyday life to look anew at our problems and their solutions. Frankly, with all the debacles occurring in Washington, I would have hoped you could see the humorous intent as there are so many other current and delightful items that could have been referenced. As for the Honorable Justice in this case, and the great State of Texas; if it had occurred in Mass. I would indeed have linked it to the Kennedy clan. They too have created many moments best handled with the same levity.

Posted Tue Mar 6, 2007, 8:55 PM — By Aron

I wouldn't blame the lawyers, I'd blame the people that hired them. If you wanted a title suggesting one side was the bad guys, I'd suggest: "Nano-Proprietary strangles its own SED technology." More importantly, I'd say that, for this story, more facts would be helpful. Is it simply that Nano-Proprietary got greedy and wanted more out of the deal than they originally negotiated, and the only way they could do that was by playing legal games? Or is it that Nano-Proprietary had been misled by Canon about what they were planning to do with the technology (and the attendant market size), and thus agreed to a degree of compensation that really was much less that what they would have agreed to had they known the truth? That's the kind of detail I'd like to see this magazine offer in its coverage of this story.

Posted Wed Mar 7, 2007, 2:01 PM — By Mark Fleischmann

Good point about the lawyers. As for your two scenarios, I think they're both valid. Nano's financial statements refer to, among other things, "fraudulent inducement and fraudulent non-disclosure related to events and representations made during our negotiations on the license." In other words, Nano says Canon didn't play fair. But I don't think we can dismiss the possibility that Nano just wanted more money, since the company lost $3.2 million in 2006. There are no hard facts available on Nano's true intent aside from what's on the public record. Finally, here's something I haven't yet reported: Nano is also in litigation with a German national named Till Keesmann who licensed patents relating to carbon nanotube technology (perhaps a distant cousin of SED?) to Nano in 2000. Nano has won the latest round. For more details see Nano's SEC filing at http://sec.edgar-online.com/2006/08/01/0001188112-06-002287/Section3.asp. That's the closest we'll get to hard

Posted Wed Mar 7, 2007, 2:04 PM — By Mark Fleischmann

Oops, last sentence of previous post cut off.... I was about to say: That's the closest we'll get to hard facts in on any of this stuff.

Posted Wed Mar 7, 2007, 4:46 PM — By Aron

more info. on this story: http://www.afterdawn.com/news/archive/8806.cfm

Posted Mon Mar12, 2007, 6:37 PM — By Aron

And another perspective, from an Australian website, suggesting this mess was Canon's fault (for sharing Nano-Proprietary's patents with other firms without Nano's permission): http://www.smarthouse.com.au/TVs_And_Large_Display/SED/X2X4P5T7

Posted Mon Mar19, 2007, 10:08 AM — By Mark Fleischmann

My sympathy goes entirely to the people who set up an assembly line to produce this product and weren't allowed to use it. Theirs was the greatest investment and it was in vain.

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