NEW ORLEANS (CN) – Canon breached an agreement with a smaller technologies firm, but the agreement between the two companies cannot be broken, the 5th Circuit ruled.
Nano Technologies started working with Canon in 1998 on ways to license Nano’s patents for the technology used in flat-screen television.
Canon did not mention that it was also working with Toshiba, a fellow Japanese corporation. Canon formed a joint venture with Toshiba in 2004 called SED Inc.
Nano Technologies sued Canon for violating the exclusive patent agreement between the two companies.
The district court ruled that SED was not a subsidiary of Canon.
Nano responded by terminating its agreement to allow Canon to use its patent technology. Canon bought out SED from Toshiba and again claimed that SED was its subsidiary.
The district court approved Nano’s termination of the agreement, stating that Canon’s creation of SED “was effectively an attempt to sublicense its rights to the Nano patents.”
Judge Benavides upheld the decision that Canon did not have the right to sublicense the Nano patents. However, it ruled that Nano and Canon are bound together by the terms of their patent license agreement, which includes the words “perpetual” and “irrevocable.”
“Based on the unambiguous meaning of irrevocable, we find the (agreement) could not be terminated, notwithstanding a material breach of the agreement,” Benavides wrote.