For all the economic development talk about biomedical research and nano-technology, Oregon is still way behind the leading states when it comes to expertise in these industries. But one area where the state does have a superior lead in hand -- not one conjured or hoped for -- is in display technology.

The bulky, boxy television sets we grew up with are on the way out and svelte, flat-panel displays are turning up in their place. Their bright, ultra-clear images are also opening up new uses in health care, travel and business. And that, in turn, may lead to new opportunities for Oregon to recruit related businesses and develop a reputation as a hub of legal and technological expertise in the field.

Oregon's display technology companies have been around for years, but the industry is heating up and prices are sinking -- even Wal-Mart has added flat-panel TVs to its inventory. And as the displays become hotter, so does the technology behind them.

Working together, Oregon's display companies have an advantage both offensively, in co-developing cutting-edge products, and defensively, in guarding against legal challenges mounted by giants in the industry.

For now, next-generation TVs have settled on three technology standards -- liquid crystal display (LCD), plasma and rear projection. But the technology is also moving into the wilds of wearable and organic-based displays. In these applications, the raw technology has not yet been standardized.

Oregon's advantage lies in the expertise of companies bunched in a cluster stretching from Vancouver, Wash., south to Wilsonville. Tualatin-based Pixelworks, for example, provides electronic processing power with chip systems that convert television signals to digital signals. Planar Systems of Beaverton develops displays for digital X-ray imaging, high-end televisions and desktop computers.

Wilsonville's InFocus made a name for itself with its high-end digital projectors and is now developing high-end displays of up to 61 inches using its projector technology. And Camas, Wash., is home to Sharp Microelectronics of the Americas, which develops LCD screens from 1.5 inches to as big as 45 inches and is working on new technology to make displays thinner, better and cheaper.

DISCUSSIONS ABOUT OPPORTUNITY lurking in the state's display cluster have been droning on for years. Paul Gulick, CEO of Clarity Visual Systems, another industry player, got sick of it.

"We're a de facto cluster but we've never leveraged that strength. We never acted like a cluster," Gulick says. "You go to enough of these business meetings and after a while you get tired of talking about it. Let's go do something."

Thus the Oregon Display Systems Consortium was born. An evolving, loosely defined group, ODSC aims to promote the companies already located in the state, recruit new companies to relocate here and encourage new businesses. The group's official mission is still in flux, but Gulick says business cooperation has come up in early discussions: Possible items on the agenda include joint marketing arrangements, buying consortiums and perhaps construction of a technology testing lab that all the companies could use.

It's not difficult to imagine the companies working closely together, given that the DNA of many of the businesses is intertwined. "Tektronix begat Planar, Planar begat InFocus, InFocus begat Pixelworks and Clarity Visual," is how Pixelworks spokesman Chris Bright puts it.

While folks at the Oregon Economic and Community Development Department have been actively trying to promote the cluster as a recruiting tool to lure other companies in the industry to set up shop here, Bright says the cluster is more likely to evolve at its own pace. "I'm a believer in clusters that are more organic than bioengineered."

Manufacturing for Oregon's cluster mostly happens overseas in places such as China, Japan and Taiwan -- a factor that limits the potential for local economic impact.

Still, clustering has its benefits. The new displays are complex devices. Digital projectors have thousands of tiny mirrors and novel sources of light; they run on computer chips and put their images up on specialized screens.

Al AuYeung, intellectual property specialist at Portland law firm Schwabe Williamson & Wyatt, sees opportunity in the combination of close proximity and specialization. "If all the companies in Oregon collaborated on different pieces of a product -- the chips, the optical engine, the design, the mirrors, the screen -- an integrated system could compete a lot better with the giants in the industry."

Collaboration like this already occurs on some levels. Chips from Pixelworks power displays sold by Clarity Visual and Planar Systems. Clarity, whose big, bright displays provide information in a growing number of airports, buys a light engine made by InFocus to use in its large-screen products, and InFocus sells a 61-inch rear-projection display made by Clarity. Says Gulick, "There are a number of companies that are good at different pieces of the puzzle."

ANOTHER AREA OF COLLABORATION for the display companies in coming years may involve navigating the legal issues that crop up in emerging marketplaces.

"There's room for all kinds of legal mayhem," says Bill Campbell, chairman of Ater Wynne, who works with many of the cluster companies. "It's a converging industry. Televisions, computers, digital imagery -- they're all colliding in a whole new area."

Graciela Cowger, shareholder at law firm Marger Johnson & McCollom, suggests that as the display industry heats up, more lawsuits will be filed by companies trying to make sure that the patents they own aren't being violated.

"Companies are averse to litigation because it diffuses the focus of a company," Cowger says. "The more you can avoid lawsuits, the better off you are."

One advantage of a cluster strategy is that companies collaborating on products can jointly own the intellectual property associated with their partnership. "You show strength in numbers," Cowger says. "If you have a powerful cluster, you have a more powerful voice in the industry."

That voice is amplified when new standards are set in an emerging marketplace.

"In a setting like a cluster, there should be some level of patent cross-licensing to allow everyone to flourish together," says Ater Wynne's Campbell. "In essence, that's what standards bodies do."

Speaking with one voice, Oregon's cluster could be a powerful standard-setter as the next round of display technologies enters the market.

Meanwhile, the scramble for customers continues. Both Planar Systems and InFocus have started selling their flat-panel wares to consumers this year, battling formidable competitors including Phillips and Sony. Legal issues may fester, but they won't get in the way of progress. "The legal questions will pop up," Campbell says. "And the technology will be five years ahead of them."

STILL, LAWSUITS ARE A FACT of life in the technology industry. Schwabe's AuYeung says, "It's a badge of honor to be sued. It's a sign you're successful."

A badge was bestowed earlier this year on InFocus, a Schwabe client, when 3M Precision Optics filed a lawsuit claiming that InFocus' light engine, used to illuminate the new television screen, infringes on a 3M patent. A few months later, InFocus countersued, alleging that 3M has infringed on an InFocus patent that covers a safety feature on its projectors.

"3M purchased some optical technology and is trying to elbow into the projection business," AuYeung says. "It's a lucrative market and the big guys want to come in."

If companies in the Oregon cluster collaborate on a product they could jointly own some of the intellectual property and launch a more formidable defense against litigation. "They're not going to rally together just because we're all Oregonians and it's a good thing for Oregon," AuYeung says. "They're only going to do it if there's an economic motivation."

In Gulick's mind, tangling in court to defend intellectual property isn't a key part of his business plan. As he puts it: "Ultimately, you need to stay ahead of the curve and make sure you're winning first in the marketplace and second in the court of intellectual property."

If you have comments about any articles you've read in Oregon Business magazine, e-mail us at feedback@oregonbusiness.com.

Copyright 2004 Oregon Business magazine