Nano-Proprietary Confident of Prevailing in SED Suit Vs. Canon

In May, a federal jury in Beaumont, Tex., rejected Nano- Proprietary’s bid for damages from Canon for breaching a licensing pact. The jury said Nano-Proprietary could keep the $5.5 million Canon paid for a nonexclusive license in 1999 and end the deal. Nano-Proprietary sued Canon in 2005, claiming it broke their contract by sub-licensing the technology to the SED Inc. joint venture it formed the year before with Toshiba. Canon and Toshiba, which developed 36- and 55-inch widescreen SED panels, parted ways on the venture this year. Canon said it would start pilot production by mid-year at its Hiratsuka, Japan plant.

“Even if they get their basic rights re-established, I'm not sure that will be sufficient to do what they want to do in the TV market, which is enabling others to sell TVs,” Bijou said of Canon. “If they make TVs, there is an opportunity because there will be competitors of theirs that want to make them and don’t have a license. They don’t own this marketplace themselves.” Canon officials weren’t immediately available for comment.

Nano-Proprietary signed a licensing pact with Taiwan’s Da Ling in 2006 to make carbon nanotube-based TVs, a project in limbo due to lack of funds, Bijou said. Da Ling needs about $25 million to establish a pilot line and a “couple of billion” dollars to add volume production, he said. “You need to figure all that out first,” he said. “I'm not sure they're the best partner for us and we are talking to others.”

Meanwhile, legal proceedings were suspended in Nano- Proprietary’s suit against inventor Till Keesmann as the sides “explore some alternatives,” Bijou said. Those talks don’t signal a settlement, he said. In February, a federal judge issued a preliminary injunction barring Keesmann from ending a Nano-Proprietary license for carbon-nanotube technology (CED Feb 20 p5). Nano-Proprietary paid Keesmann $1.2 million in 2004 under their agreement; a year later he asked for the right to auction off its interest in the pact. Keesmann sought to sell the patents to NPV Nano Patent Gmbh, arguing that nano-Proprietary didn’t “actively market” the three patents. Keesmann allegedly sought to license the patent to Canon. Keesmann bought the rights to the carbon nanotube invention from Hubert Grosse-Wilde in 1994 for $6,400 and a promise to pay 30 percent of future profits, according to court records. Nano-Proprietary signed an exclusive agreement with Keesmann in 2000.

Nano-Proprietary expects its first intellectual property royalty revenue by year-end, for use of carbon nanotubes in sporting goods, Bijou said. It has a development agreement with Japanese manufacturer Yonex, which has disclosed plans to build the technology into tennis rackets. Nano- Proprietary forecast $5.2 million in annual revenue this year, growing to $6.25 million in 2008. It had recorded about $2 million in revenue as of this month, he said.

Nano-Proprietary has about $5 million in funded research this year, producing about $1 million recurring royalty revenue, Bijou said. The research will yield IP that will “go to market” in printable inks, materials and hydrogen sensors for power transmission applications, he said. Funded research is expected to rise to $6 million in 2008, he said. The company tries to maintain six to 10 funded projects at any given time using its base of 25 researchers, Bijou said.

“This company has a history of being the one that was announcing it would have the next big deal,” said Bijou, who joined the company seven months ago. “It’s not like that in the digital business. It’s about going out everyday and finding multiple small applications that will yield multiple flows of intellectual property licensing revenue.”