Last Friday, tech giant Microsoft entered federal court in San Jose, California to sue a unit of Taiwanese contract manufacturer Foxconn over unpaid royalties on the consumer devices it makes for others.
Microsoft has a patent license with Foxconn that demands the latter make payments for smartphones, tablets and other devices, as well as to provide an annual audit to Microsoft. The software giant says the company has defaulted on both counts in recent years.
In this suit, Microsoft disclosed that Foxconn had last submitted a report in 2014 but that it was an inaccurate one. It produced no further reports and paid no royalties for 2015-2018.
It is surprising why Foxconn stopped keeping its obligations. Taiwan's Foxconn on Tuesday responded to Microsoft’s patent infringement lawsuit by saying that as a contract manufacturer, it has never needed to pay any royalties to the software giant.
Following this suit, it now seems that Foxconn needs to own up to its defaults and pay back the outstanding royalties to Microsoft. However, the software giant still wants to work through the disagreement.
Historically, Microsoft has received significant royalties on Android-based phones and tablets from most key manufacturers.