Swedish based telecom giant Ericsson has dealt a severe blow to the rising Indian smartphone maker Micromax with the Delhi High Court ordering the latter to pay up to 2 percent revenue earned from the sales of each disputed device to the court.
Ericsson in its litigation filed in the court has claimed that Micromax refused to make a license pact for patents rights usage regarding wireless technology standard innovations such as 3G, GSM (Global System Mobile communications) and EDGE (Enhanced Data rates for Global Evolution) and pressed for a ₹100 crore fine against the company as patent infringement damages.
After hearing the Ericsson's plea, the court passed an interim order against Micromax to cough up between 1.25 to 2 percent revenue from each sale of smartphones and other devices suspected to have infringed Ericsson patents. The company was ordered to deposit the amount in court until both parties come to agreeable terms over revenue share.
Delhi High Court Justice Manmohan also granted permission to Ericsson officials to join the customs department and check Micromax's devices that are suspected of patent violation. Some of the disputed devices include Micromax Funbook tablets series, Ninja and Canvas 2 smartphone series.
Pleased with the Delhi court order, Ericsson's counsel Pratibha Singh told Economic Times (ET), "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."
On the other hand, Micromax executives rejected the charges saying that Ericsson had failed to honour its commitment on providing industry-essential patents to handset makers under FRAND (Fair, Reasonable and Non-discriminatory) licensing terms, reported ET.
"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 a Micromax spokesperson.
Many market analysts have voiced concern that if the court upholds Ericsson's charges, it may bring severe repercussions to Indian electronics markets. Local manufacturers will then be bound to increase prices of their devices to increase profit margins as they will be forced to pay for patents. This may very well end the low-cost electronics business in the sub-continent.
According to reports, the Swedish company is also contemplating to sue other national vendors such as Karbonn, Spice, Lava, and Intex Technologies with similar patent-related cases.