Electronics giant Samsung agrees to pay $150m to Nanoco in IP litigation settlement

Runcorn-based Nanoco is to receive a $150m payout from South Korean electronics giant Samsung in its long-running litigation case, it announced this morning (February 3).

The University of Manchester spin-out, which develops materials used in the manufacture of monitors and TV screens, said it will retain more than $90m after litigation costs.

The $150m cash settlement is to be paid in two equal tranches, by March 5, 2023 and February 3, 2024.

Nanoco said the settlement ends all global litigation with Samsung, with Nanoco’s IP fully validated by the legal process. Nanoco also retains full freedom to operate in all markets, territories, products and material types.

The company instigated legal action over its intellectual property against Samsung in North America, and later in China and Germany.

Chris Richards, Nanoco Group chairman, said: “This has been a long and hard battle for Nanoco. The outcome is remarkable, given the relative scale of Nanoco and Samsung.

“The settlement value is almost three times our own low case damages model; settling now avoids the risks associated with further litigation and the adverse impact from the time value of money in an appeals process that would have extended for years. Even more importantly, it validates Nanoco’s core IP, which we will continue to defend vigorously.

He added: “In deciding the allocation of the net proceeds, the board will balance any investment needs of Nanoco’s growing organic business with a firm intention to deliver a material return of capital to shareholders.”

Chief executive, Brian Tenner, said: “Today marks the start of a new chapter for Nanoco. We have successfully validated our core IP against one of the world’s biggest electronics companies, who were advised by one of the most expensive law firms in the world. Others operating in our space should take note.

“We, therefore, remain vigilant to other potential infringement activity, as well as opportunities to pro-actively deliver new licence agreements. The confirmation of the validity of our IP is already encouraging more commercial interest in Nanoco as a supplier of leading edge nano-materials.

“We have also generated a transformational amount of value for our stakeholders, whilst providing the funding for investment in the business.

“We have done this while transforming Nanoco and positioning ourselves for significant organic growth in the near term. Most importantly, we have a foundation on which to focus on the organic business as we continue to build on the significant positive momentum achieved in the last few years.”

Nanoco began its legal case against Samsung on February 17, 2020, when it filed a patent infringement lawsuit against various Samsung entities in the United States District Court for the Eastern District of Texas.

Then, in August last year, Nanoco filed a lawsuit against Samsung in Germany, and said it was considering further cases in other territories where Samsung has significant sales.

This resulted in further action against Samsung, announced in October, last year, this time in the Chinese markets.

In a separate interim update to the stock exchange today for the period to January 31, 2o23, Nanoco said it had continued to build on the significant positive momentum achieved in the last few years.

During the period it experienced an increase in demand for volumes of development materials and is on track to deliver two fully validated production materials for use in infra-red sensing.

The business also completed its relocation from Manchester to Runcorn on budget and slightly ahead of time.

The group said revenue remains comfortably in line with the board’s expectations, and active cost management is delivering costs also comfortably in line with the board’s expectations.

As a result, together with foreign exchange tailwinds, the adjusted EBITDA loss for the year is now expected to be narrower than – and therefore ahead of – the board’s expectations.

Net cash consumption in the period was £0.8m, leaving a cash balance of £6m, also comfortably in line with the board’s expectations.

The company expects to announce its interim results for the half year ended January 31, 2023, on March 28. The financial impact of the litigation settlement will be included in the company’s results from the second half of this financial year, onwards.

Brian Tenner said: “In the first half, we have continued to build on the significant positive momentum achieved in the last few years, positioning ourselves for significant organic growth in the near term.

“For potential customers, the validation of our IP and the funding that the litigation settlement announced separately today cements the viability of Nanoco as a robust and reliable supplier operating in huge international electronics markets.”

Shares in the group fell by 23.64% to 28.10p per share, from last night’s 36.80p close, in early trading this morning. Some shareholders had expected the settlement to be nearer $200m.