SED is an acronym for surface-conduction electron-emitter display. It uses a light beam technology reminiscent of the classic cathode-ray TV, but consumes less energy than current flat panel TVs, while delivering a brighter image.

Nano-Proprietary sued promptly when Canon and Toshiba established their joint venture, SED Inc.

"Based on the assumption of prolonged litigation pending against Canon in the United States with respect to SED technology," Canon has decided to buy Toshiba out of SED Inc. The value of Toshiba's stake is estimated to be around $83 million. But the transition, besides money changing hands, is largely cosmetic. SED Inc. president Kazunori Fukuma will resign from Toshiba and will be hired by Canon for the same role. And Toshiba will continue to loan engineers to SED Inc. during the "transition." Toshiba has said that it plans to buy SED panels from Canon in the future to sell under its own brand.

Canon is now reviewing, though has not canceled, its previous plans to build a $1.49 billion SED factory on a Toshiba-owned site in Himeji, Japan. Canon says that it will manufacture displays at its own Hiratsuka, Japan plant, albeit on a smaller scale. Canon is hoping to be in production for introducing SED TV sets to the Japanese market in Q4 2007.

Nano-Proprietary may not be mollified so readily. "Restructuring of Canon's ownership position does not resolve the pending litigation which goes to trial in a few weeks," said Tom Bijou, CEO of Nano-Proprietary. "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."