Telecom Lead India: Ericsson has sued Indian handset company Micromax claiming about Rs 100 crore in damages.
Economic Times on Tuesday reported that Ericsson may take legal action against a few other local cellphone companies as well. Local players selling low-cost handsets include Lava, Spice, Karbonn and Intex Technologies.
The telecom network equipment maker has moved the Delhi High Court claiming about Rs 100 crore in damages, saying it was taking legal action after three years of negotiations failed to yield a licence agreement on standards-essential patents.
The disputed handsets and tablets of Micromax include select models from its Ninja series, Funbook Talk, and the Canvas 2 series.
Since both parties will negotiate further, the move to approach HC will not impact sale of Micromax. According to CyberMedia Research, Micromax has 5.5 percent share in India’s mobile phone market in H1 2012 and it is the third largest player
Ericsson alleged that India’s largest domestic handset maker has refused to enter into a licensing agreement covering its patented innovations across several wireless technology standards such as GSM, EDGE and 3G.
“Ericsson has taken legal action against Micromax for refusing to sign necessary licences on FRAND terms. For more than three years, Ericsson has made numerous attempts to sign a licence agreement with Micromax for products compliant with the GSM, EDGE, and UMTS/WCDMA standards. Since this is a pending legal process, we do not have any further comments,” said Ericsson spokesperson.
Justice Manmohan of the Delhi High Court, in an interim order last week, asked Micromax to pay between 1.25 percent and 2 percent of the sale price of disputed devices and deposit the amount with the court.
The court also allowed Ericsson executives to join customs officials in inspecting Micromax’s consignments to check for devices violating its patents.
Executives close to Micromax, which accounts for about 5.5 percent of the 200 million mobile handsets sold annually in India, rejected the charges saying Ericsson failed to adhere to global commitments on providing its industry-essential patents to handset makers under fair, reasonable and non-discriminatory (FRAND) terms.
Ericsson had recently filed a similar suit against Samsung for failure to license standards-essential patents. Executives close to Micromax claimed that Ericsson, which is no longer a player in the handset space after it exited its JV with Japan’s Sony, was now trying to extort what they termed “irrational and inequitable licence fees”.
If the Delhi High Court upholds Ericsson’s suit, it will have an impact because it may significantly undermine the low-cost business strategy of several domestic handset and tablet companies. It may mark the beginning of a spate of litigation that may impact the Indian telecom handset and tablet space in the near future.
“Micromax is committed to negotiating a FRAND licence with Ericsson as has Ericsson undertaken to providing a FRAND licence to Micromax. Since the matter is pending before the honourable court, it would be incorrect for Micromax to make any further statements on the matter,” said Micromax spokesperson.
