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Ericsson Files Rs 100 Cr Patent Lawsuit Against Micromax; Implications


Ericsson Micromax

Telecom network equipment maker Ericsson has filed a patent infringement lawsuit worth Rs 100 crore against the local handset maker Micromax in Delhi High Court, reports The Economic Times. Read the Delhi High Court order here.

The report states that this lawsuit was filed by Ericsson after Micromax had refused to sign an agreement to license Ericsson’s patents across various wireless technology standards such as GSM, EDGE and 3G and a three-year negotiation with the company had failed. Among the products involved in this lawsuit include select models of Micromax’s Ninja handset series, the Canvas 2 handset series and its Android tablet Funbook Talk. Interestingly, the report also states that Ericsson is looking to file similar lawsuits against other local handset makers like Lava, Spice, Karbonn and Intex Technologies.

Micromax has however dismissed these charges to the publication and claimed that Ericsson has failed to keep up with its commitment of providing industry essential patents under fair, reasonable and non-discriminatory (FRAND) terms. FRAND allows companies to license standard essential patents from other companies, before it becomes a part of the standards approved technical standard.

Delhi Court Interim Order: In an interim order issued last week, the Delhi High Court has informed that the companies have agreed upon an interim arrangement till the next hearing on April 22, 2013. As per the agreement, both Ericsson and Micromax have agreed to negotiate a FRAND License Agreement by April 9, 2013 and Micromax will intimate Ericsson whenever a new consignment arrives at the Customs department within 24 hours, to allow them to inspect the consignment for possible infringement.

Further, Micromax will deposit an interim payment with the court, within five working days of the consignment arrival at the customs department. The payment details are as below-

- For GSM phones and devices – 1.25% of sale price.

- For GSM phones and devices with GPRS capabilities- 1.75% of sale price.

- For GSM phones and devices with EDGE and GPRS capabilities -  2% of sale price.

- For WCDMA and HSPA based phones and devices & tablets with calling capabilities - 2% of the sale price.

- For Dongles and data cards – $2.50

Implications: This lawsuit comes at a time when Micromax is reportedly prepping up for its Initial Public Offer (IPO) again. Micromax had previously filed a red herring prospectus in September 2010 and was planning to sell 10% stake for Rs 426 crore, however the company had later withdrawn its IPO offering, citing erratic market conditions.

If Ericsson wins this lawsuit, Micromax will probably have to pay a significant amount of damages, which might lead the company to increase the prices of its handsets in the country. It could also probably pave the way for more such lawsuits against low-cost handset makers in India.

Ericsson-Samsung Lawsuit: In November 2012, Ericsson had filed a similar lawsuit against the electronics major Samsung, after it had refused to renew a patent license agreement with Ericsson and a two-year negotiation with the company had failed. Samsung had previously licensed Ericsson’s patents in 2001 and had renewed it in 2007. Following this, Samsung had countersued Ericsson with its own set of patent infringements claims last week.