A lawsuit filed by US firm Nano Proprietary could scupper Canon's plans to jointly produce a new type of television with Toshiba, according to Japanese press reports.

The televisions are based on SED (surface-conduction electron-emitter display) technology, which is a flat-panel display said to offer richer colours, faster response and generally better picture quality than both LCD (liquid crystal display) and PDP (plasma display panel) technologies. Canon and Toshiba have been promising SED-based televisions for some time but the launch of the products has been delayed because of problems perfecting the technology.

Current plans call for a limited launch in 2007 and wider availability in 2008. However those plans could be thrown into jeopardy leading to longer delays, according to weekend press reports.

At stake is whether the production joint venture, a company called SED Inc, is a Canon subsidiary. Canon owns 50 percent of the company plus one share while Toshiba hold the remainder. Because it holds the extra share, Canon believes the company is a subsidiary.

The question is an important one because part of the SED technology being used has been licensed to Canon by Nano Proprietary Inc, a Texas-based company. Nano Proprietary filed a lawsuit against Canon in Texas in 2005 asserting that SED isn't a subsidiary. Nano Proprietary argued that Toshiba still has decision-making capability over the unit, so the company doesn't qualify as a subsidiary.

That would mean the existing patent licence doesn't cover transfer of the technology to SED Inc and that an additional payment is required. In November the court declined to recognise the company as a Canon subsidiary.

As a result Canon is considering increasing its stake in SED Inc, according to a report in the Saturday morning edition of the Nihon Keizai Shimbun business newspaper. A report in Monday's Asahi Shimbun said Canon is planning to pull out of joint production plans and that an official announcement is due later in the month.

Both companies could not be immediately contacted due to the New Year holiday in Japan.