No, the Nexus 7 LCD display is not defective! - What is being described is actually image persistence, and this is known to be somewhat more characteristic of IPS (In-Plane Switching) LCD panels like that used in the N7.  The trade-off is typically better clarity and viewing angles.  This type of persistence is caused by residual discharge effects, not "burn-in."  Here's a page that gives some technical background: http://support.lenovo.com/en_US/detail.page?DocID=HT051485 // By the way, Apple's new Macs with Retina display also use IPS technology, and image persistence has been reported on them also.  All technology has trade-offs!
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