Microsoft sues Foxconn's parent company Hon Hai over patent payments

Microsoft has sued Hon Hai for patent royalties that it allegedly owes as a result of a 2013 patent-licensing deal it forged with Microsoft for unspecified Android and Chrome OS devices.
Written by Mary Jo Foley, Senior Contributing Editor
Credit: Microsoft

It's the era of the kinder, gentler Microsoft, but that doesn't mean the company is just giving in on patent payments. Microsoft has filed a suit against Hon Hai, the parent company of Foxconn, over alleged failure to make good on its patent-licensing agreement dating back to 2013. 

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Microsoft has accused Foxconn of failing to provide promised twice-yearly royalty reports and for failure to make owed royalty payments on time, as reported by CNBC over the weekend. Microsoft is suing for dued payments (with interest), a review of Hon Hai's books and lawyers' fees, according to its filing in the U.S. District Court for the Norther District of California.

In 2013, Hon Hai signed a patent agreement with Microsoft which covered unspecified Android and Chrome OS devices. From that announcement:

"Microsoft Corp. and Hon Hai, the parent company of Foxconn, signed a worldwide patent licensing agreement that provides broad coverage under Microsoft's patent portfolio for devices running the Android and Chrome OS, including smartphones, tablets and televisions. While the contents of the agreement are confidential, the parties indicate that Microsoft will receive royalties from Hon Hai under the agreement. Hon Hai joins a growing list of contract manufacturing and original design manufacturing companies with Android and Chrome patent licenses."

At the time this deal was forged, Microsoft had announced at least 20 such patent-licensing arrangements with various companies, primarily those making and designing Android, Linux and Chrome OS devices. Though Microsoft never went public with what it believed to be patent infringements by these vendors, the threat of potential legal actions seemed to be enough to get many companies to agree to patent deals with Microsoft.

A Microsoft spokesperson provided me with the following statement about the Hon Hai suit:

"Microsoft takes its own contractual commitments seriously and we expect other companies to do the same. This legal action is simply to exercise the reporting and audit terms of a contract we signed in 2013 with Hon Hai. Our working relationship with Hon Hai is important and we are working to resolve our disagreement." 

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Since Satya Nadella became CEO of Microsoft five years ago, Microsoft no longer publicizes patent deals it signs with Android and Chrome OS makers. In many cases, Microsoft instead highlights its cross-licensing partnerships with these vendors in lieu of its patent contracts with them.

Update (May 12): The head of Foxconn claims his company has never paid any patent royalties to Microsoft and said he didn't believe manufacturers should have to pay software royalties. 

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