Microsoft sues Hon Hai over missed royalty payments and denying audit

Microsoft sues Hon Hai over missed royalty payments and denying audit

Reports suggest that tech giant Microsoft is suing Hon Hai, the Taiwanese parent company of Foxconn, for an alleged failure of the consumer-electronics manufacturer in complying with a patent-licensing agreement. Apparently, the suit was filed at the Northern District of California, in the U.S. District Court.

Further from the reports, Microsoft accused Foxconn, in a lawsuit which was filed on March 9, 2019, that it failed in providing twice-yearly royalty reports with regards to certain unspecified products, and that it did not make royalty payments on time.

A spokesperson from Microsoft was quoted saying that the company takes its own contractual commitments very seriously and it also expects other firms to do the same. The legal action is simply for exercising the reporting and audit terms of a contract that the company had signed with Hon Hai in 2013.

The filing noted that Foxconn had agreed on getting audited by a third party, Deloitte, in 2017, however the company has still not submitted any of the requested documents. The report added that subsequently, Microsoft is suing the Taiwanese firm for the royalty repayment with interest, attorney fees as well as a review of Hon Hai’s books.

The spokesperson further said that the working relationship of Microsoft with Hon Hai is crucial, and the company is working towards resolving its disagreement. The products which are covered under the agreement are still unclear, but Microsoft in 2013 had stated that the company has a patent agreement with Hon Hai for Chrome and Android OS devices.

Supposedly, a copy of this agreement was submitted to the court, which still remains under seal. The largest contract electronics manufacturer in the world, Hon Hai Precision Industry Co., has seen its revenue falling over 35 per cent in the month of February, in comparison to a month earlier.