21 Oct 2002
Luxell Technologies and Cambridge Display Technology are heading for the courts to contest a USD 25 million lawsuit.
Luxell Technologies of Toronto, Canada, has filed a USD 25 million lawsuit against Cambridge Display Technology (CDT) of the UK for breach of Luxell's "Black Layer" license and has terminated the agreement.
The license was granted in November 2001 giving CDT exclusive rights on the contrast enhancement technology for the worldwide polymer OLED market. CDT paid USD 1 million but did not make the next scheduled payment of USD 1 million in August of this year on the grounds that the company had not succeeded in replicating the application of the technology to commercial polymer OLED production.
Luxell claims that CDT's actions have impaired Luxell's licensing program affecting its revenues and reputation in the OLED industry.
CDT, for its part, says that it had been offering since June to work with Luxell to sort out manufacturing problems proposing that the agreement be suspended pending resolution but that the offer had been refused.
Stewart Hough, CDT's vice president of business development, told Optics.org that CDT had no choice now but to countersue on the basis that Luxell represented Black Layer as a mature technology ready to be licensed to CDT's manufacturing partners for commercial production.
Luxell CEO Brian Kennedy says that the high damages claim is based on the fact that CDT has had an exclusive license for the whole polymer industry for a year. "We ceased to have any contact with polymer manufacturers. Now we have to start again and re-establish all those relationships," he said.
Luxell's revenues for the nine months ended May 31 were USD 3.3 million, up 67% thanks largely to CDT's initial payment, producing a net loss of USD 3.6 million for the same period.
The litigation and technical problems are likely to hit polymer OLED development hard. Many of CDT's licensees had expressed interest in Black Layer technology because potentially it is much cheaper than other contrast enhancing methods such as polarizing films.
Kennedy says that Luxell currently has about USD 11 million in cash resources - sufficient to fund operations for 20 months or so. But given the share price of less than 10% of what it was at the beginning of the year, the company could be exposed and ripe for a takeover. An obvious candidate could be … CDT.
Phillip Hill is editor of Displays Europe magazine.