Nanoco draws line under Samsung IP spat with $150m settlement

Nanoco has reached a settlement over a long-running intellectual property spat with Samsung, which will see the Korean tech giant pay the AIM-listed firm $150million (£122million).

The move draws a line under the legal battle which saw Manchester-based Nanoco accuse Samsung of stealing its unique patented techniques to create tiny specialist semiconductors.

But Nanoco shares crashed as much as 25 per cent to 27.7p in early trading, suggesting investors were unimpressed by the size of the settlement.

Settlement: Nanoco sued Samsung at the start of 2020 over an intellectual property dispute

The ‘no-fault’ settlement, which the firms agreed to finalise in order to avoid further costly court proceedings earlier this month, ends all global litigation with Samsung, ‘fully validates’ Nanoco’s IP, and guarantees the group ‘full freedom to operate in all markets, territories, products and material types’.

Under the terms of the deal, Samsung has purchased ‘non-core’ Nanoco patents and agreed a ‘global, perpetual, fully paid up licence agreement’.

Nanoco will receive $65million as part of an IP Licence agreement and $85million for an IP Sale agreement, payable in two equal tranches by 5 March 2023 and by 3 February 2024.

The group said it expects to retain ‘over 60 per cent’ of the $150milllion, ‘after deducting legal and litigation funding costs’, as well as a ‘modest’ tax liability.

Chairman of Nanoco Group Chris Richards 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 that the allocation of the proceeds of the agreement will need to ‘balance any investment needs of Nanoco’s growing organic business with a firm intention to deliver a material return of capital to shareholders’.

CEO 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.’

In a separate trading update published on Friday Nanoco said its operational performance in the six months to 31 January had been ‘ahead of expectations’, while revenues and cost management were in line with management forecasts.

Tenner said: ‘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.’