Technicolor of ‘Wizard of Oz’ Fame Loses LCD Patent Dispute

Technicolor SA’s (TCH) Thomson Licensing unit lost its U.S. patent-infringement cases over liquid-crystal displays in computer and television screens against Taiwanese manufacturers including AU Optronics Corp. (2409) and Chimei Innolux Corp. (3481)

The companies didn’t violate Thomson Licensing’s patent rights, the U.S. International Trade Commission said today in a notice posted on the agency’s website. Thomson had sought an order that would block imports of certain LCD products that infringe its patents, counting on the threat of an import ban to force the companies into a licensing agreement.

Patent licensing is the most profitable business for Paris- based Technicolor, which invented the color process used in “The Wizard of Oz” and other classic movies. The money-losing company is relying on its 40,000 video, audio and optics patents to finance a turnaround.

Thibault Peulen, a Technicolor spokesman, said the company had no comment.

Miaoli, Taiwan-based Chimei Innolux is Taiwan’s largest maker of LCDs and Hsinchu, Taiwan-based AU Optronics is second.

“This marks a complete victory for CMI at the commission, and we could not be more happy for them,” Chimei’s lawyer, Warren Heit of White & Case in Palo Alto, California, said in a statement.

MStar Semiconductor Inc. (3697), Qisda Corp. (2352), BenQ Corp. and Realtek Semiconductor Corp. also were named in the two complaints, which were consolidated because they involved the same issue and some overlapping patents.

Xerox Patent

ITC Judge Robert Rogers in January found that one of five patents in the case was infringed by certain Chimei products and any Qisda or BenQ monitors that incorporated the Chimei LCDs. The patent found to be infringed was issued in 1997 to Xerox Corp. and covers a way to reduce distortions in LCDs. The other companies were cleared by the judge.

The commission said there was no infringement of that former Xerox patent. It upheld a finding of no violation of three other patents, and said the fourth, which expires Aug. 26, wasn’t infringed, though it ordered the judge to review its validity.

Notice of the agency’s findings was posted on its electronic docket today. The full ruling will become public after both sides have a chance to redact confidential business information.

Competing Offers

Technicolor, which has been shifting business from outdated film processes to digital techniques and software for movie- making, helped with special effects for the Harry Potter film series.

Investors JPMorgan Chase & Co. and Vector Capital Corp. have made competing offers to boost their holdings in Technicolor to as much as 30 percent through a capital increase. Shareholders are scheduled to choose one of the two deals on the June 20 annual general meeting. Both investors have said they support management’s patent strategy.

The cases are In the Matter of Certain Liquid Crystal Display Devices including Monitors, Televisions and Modules, 337-741 and 337-749, U.S. International Trade Commission (Washington).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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