Microsoft filed suit against the parent company of global manufacturing giant Foxconn, alleging it failed to live up to its end of a licensing agreement to manufacture a series of unnamed devices.
Microsoft and Hon Hai Precision Industry Co., the parent of Foxconn, agreed on a technology license deal in 2013. However, Microsoft alleges in the lawsuit that Hon Hai “continually failed to honor its obligations under that contract,” including not submitting royalty reports or payments and resisting an audit of its books.
According to the suit, filed in federal court in Northern California over the weekend, “Microsoft granted a worldwide patent portfolio license that permitted Hon Hai to (among other things) make, have made, use, sell or otherwise dispose of certain “Covered Products” for a defined period.”
The agreement required “Foxconn to submit Royalty Reports to Microsoft that provided specific information about Hon Hai’s sales of Covered Products on a per-unit basis, to make certain per-device royalty payments to Microsoft for the license term, and to submit to an audit by an independent public accounting firm, if requested by Microsoft, to resolve any contract disputes.”
The lawsuit references the licensing agreement, however it is being filed under seal, so it is unclear which devices are covered under the agreement.
Microsoft issued the following statement about the 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.”
Foxconn representatives did not immediately respond to a request for comment.
Microsoft is asking the court to force Foxconn to open up its books and award damages in line with royalty payments owed, with interest.
Here is the full complaint: