Microsoft is going into legal battle against the world's largest electronics manufacturer. Redmond has taken court action against Hon Hai, the parent company of Foxconn. Microsoft says the Taiwanese company has not stuck to a patent-licensing agreement struck in 2013.
In a court filing Friday, Microsoft claimed Foxconn did not give its agreed twice-annual royalty reports. The manufacturer was supposed to file the reports detailing unnamed products. Microsoft adds the company also failed to make royalty payments on time.
Microsoft filed its legal action with the U.S. District Court for the Northern District of California. The filing shows the company is seeking the royalty payment be made and with additional interest. Furthermore, Microsoft wants Hon Hai's books to be reviewed.
That latter request is interesting because Foxconn has previously agreed to be independently audited when it said Deloitte would conduct an audit in 2017. However, since then the company has not provided any files for the audit.
Details of the original patent agreement between Microsoft and Foxconn are still not known, but are likely to be made public if the case moves forward.
“Microsoft takes its own contractual commitments seriously and we expect other companies to do the same,” a Microsoft spokesperson told CNBC. “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 has been increasingly interested in expanding to the United States. In 2017, Foxconn chairman Terry Gou said the company would invest at least $10 billion in seven states: Ohio, Pennsylvania, Michigan, Illinois, Wisconsin, Indiana, and Texas.
The Wisconsin display facility will be the main focus of investment and will cost $7 billion. Apple has expressed an interest in investment and could bring iPhone manufacturing to the U.S. in the future.