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Ericsson sues Micromax for patent infringement

Rs.1 billion sought as damages

Ericsson has sued local handset maker Micromax for patent infringement. The Swedish 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 claimed damages make it the largest patent suit in India's IT and telecom space, reckon patent experts. 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.

Justice Manmohan of the Delhi High Court, in an interim order last week, asked Micromax to pay between 1.25% and 2% of the sale price of the 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.

"Indian courts respond swiftly and with speed, if a strong case is made out. This case marks the arrival of big ticket patent litigation in India," said Ericsson's counsel Pratibha Singh. Executives close to Micromax, which accounts for about 5.5% of the 200 million mobile handsets sold annually in India, rejected the charges saying the Swedish company had failed to adhere to global commitments on providing its industry-essential patents to handset makers under so-called fair, reasonable and non-discriminatory (FRAND) terms.

They also point out that the litigation was not unique to Micromax as Ericsson had recently filed a similar suit against South Korea's 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 Ericsson's suit is upheld by the Delhi High Court, it will have a big impact.

If the Delhi Hight Court upholds Ericsson's suit, it will have a major impact because it may significantly undermine the low-cost business strategy of several domestic handset and tablet companies. It may also mark the beginning of a spate of litigation that may impact the Indian telecom handset and tablet space in the near future.

Ericsson is learnt to be mulling legal action against a few other local cellphone companies as well. Local players selling low-cost handsets include Lava, Spice, Karbonn and Intex Technologies.

Despite exiting the handset space, Ericsson continues to be among the biggest patent-holders in the mobile phone industry along with Nokia, Qualcomm and Samsung. "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," the Ericsson spokesperson said.

The Micromax spokesperson said the Indian company was committed to negotiate a FRAND agreement. "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."

The disputed handsets and tablets of Micromax include select models from its popular Ninja series, Funbook Talk, and the Canvas 2 series.

Executives close to Micromax said they would abide by the interim order and pointed out that the court had asked both parties to negotiate a FRAND licence agreement which would be valid till the next hearing. These executives said Micromax would deposit the interim payment with the court.

From Economic Times

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