Motorola (NYSE:MOT) and Samsung Electronics are thinking small -- really small -- when it comes to displays. As a result, these Goliaths could face a litigious David in the near future.

Motorola and Samsung recently unveiled flat-panel displays that, because of their reliance on nanotechnology, surpass conventional screens. Carbon nanotubes, the revolutionary substance responsible for a number of nano-breakthroughs in the past decade, figure in both.

Motorola uses nano emissive display (NED) technology -- whereby carbon nanotubes are grown directly on glass -- in its 5-inch-screen prototype. Samsung demonstrated a 40-inch organic light-emitting diode (OLED) display.

Because nanotubes are what's used to emit light in these displays, Motorola and Samsung are likely to encounter turmoil. A micro-cap company, Nano-Proprietary (OTC BB: NNPP), claims the basic patent for several emissive display technologies, including those using carbon nanotubes.

Basic patents differ from design patents and process patents because they claim all rights over a concept regardless of how it's designed or which process is involved. For example, a basic patent covers the intermittent window wipers on a car. Although there are multiple variations on this technology, makers of every type pay a royalty to the owner of the patent, who first conceived of the concept.

Having basic patent rights over nano-displays gives Nano-Proprietary a powerful advantage in what's potentially a multi-billion-dollar market. There's a good chance screens of the type Motorola and Samsung are talking about will take off because carbon nanotubes lead to thinner and more power-efficient screens.

Samsung may start making nano-displays in 2006. Motorola was a pioneer in the television business, but it stopped making displays years ago. As a result, it plans to license its NED technology to third parties. Motorola has been coy about a time frame.

Nano-Proprietary has a tiny market cap of around $234 million. Its business model is built entirely around a portfolio of 240 issued or pending patents. The company is already defending its patent turf, having recently sued Canon (NYSE:CAJ) over yet another display technology, surface-conduction electron-emitter displays (SEDs).

The dispute relates to the fine print of their agreement, which Canon has allegedly infringed by sublicensing patents to its joint venture with Toshiba. That venture plans to invest $1.7 billion in a new production plant for SEDs, providing a huge incentive for Nano-Proprietary to play hardball.

The courts may ultimately decide whether Nano-Proprietary's management is right to be bullish about the future. The company expects to break even by the end of this year and sees profits in 2006 thanks to SED royalties.

Companies beyond Canon will have to decide whether to license Nano-Proprietary's patents or go to court. Investors in Nano-Proprietary should be increasingly excited about its prospects, but we'll wait for the courts to weigh in before we consider the company a prospective Rule Breaker. We risk missing a surge in Nano-Proprietary shares by waiting, but we can hop on board later based on commercial reality.

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Carl Wherrett and John Yelovich do not own any of the companies mentioned above. The Motley Fool has a disclosure policy.