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Microsoft sues manufacturing giant Foxconn over patents

Microsoft says Foxconn, which assembles products for Apple, Sony and others, failed to meet patent obligations.

James Martin/CNET

When you think tech lawsuits, you might recall Apple suing Korean tech giant Samsung for allegedly copying its designs for the iPhone. Or maybe you think of Waymo suing Uber, accusing the ride-hailing giant of stealing trade secrets used to develop self-driving cars.

This is not that type of lawsuit.

Instead, Microsoft on Friday sued the Taiwan-based manufacturing behemoth Hon Hai Precision Industry, also known as Foxconn Technology Group, for unpaid patent royalties and failing to file appropriate paperwork.

The move is just the latest escalating issue facing Foxconn. The company became a household name a decade ago when some employees committed suicide, drawing attention to working conditions in its manufacturing plants. More recently, the company's come under fire for backpedaling on its promise to build a $10 billion manufacturing facility in Wisconsin.

In the lawsuit, filed in San Jose, California, and first discovered by Axios, Microsoft says Foxconn has failed to follow its obligations under a patent agreement signed six years ago. As part of its license, Foxconn was supposed to file regular royalty reports to Microsoft, outlining the company's sales of any products covered under the agreement. Foxconn was also expected to pay royalties on those products.

"Microsoft takes its own contractual commitments seriously and we expect other companies to do the same," a Microsoft spokesperson said. "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."Microsoft said in its filing."

A spokesperson for Hon Hai argued the company "upholds the highest level of international business standards." "We will continue to honor our contractual obligations while maintaining the absolute trust of our customers, as well as protecting the confidentiality of third party information," the company's statement said. "We remain confident that the current legal matter will be resolved swiftly. Further updates on this matter will be provided in due course, as appropriate."

Read the full lawsuit below:

(If you're in crisis, please call the National Suicide Prevention Lifeline at 1-800-273-TALK (8255), or contact the Crisis Text Line by texting TALK to 741741).

First published March 11 at 5:05 p.m. PT.
Updated March 12 at 11:08 a.m. PT: Adds Hon Hai statement.