Foxconn rejects Microsoft patent lawsuit, says never had to pay royalties

TAIPEI (Reuters) – Taiwan’s Foxconn (2317.TW) on Tuesday responded to a patent infringement lawsuit filed against it by Microsoft Corp (MSFT.O), saying as a contract manufacturer, it has never needed to pay royalties for the U.S. giant’s software.

Terry Gou, founder and chairman of Foxconn, attends a forum on industrial internet at the fifth World Internet Conference (WIC) in Wuzhen, Zhejiang province, China, November 8, 2018. REUTERS/Jason Lee

Microsoft filed the complaint against Foxconn subsidiary FIH Mobile Ltd (2038.HK) in the Northern District of California on Friday. It is claiming unpaid royalties for patents used in devices for clients including a top Chinese smartphone vendor.

Foxconn founder and Chief Executive Terry Gou told an impromptu news conference in Taipei that “patent infringement” is not an issue for his group, which “will suffer almost no any loss” as a result of the lawsuit.

Foxconn “has never paid any patent fees to Microsoft,” Gou said.

Neither Microsoft nor FIH could be immediately reached for comment.

Foxconn, formally Hon Hai Precision Industry Co Ltd, rose to global prominence as assembler of Apple Inc’s (AAPL.O) iPhone.

It received notice of the lawsuit on Tuesday, said a person with direct knowledge of the matter, who was not authorized to speak with media and so declined to be identified.

Guo was “furious” and will fight back, the person said.

In a Facebook post earlier on Tuesday, Guo questioned why a software firm would not earn patent royalties from vendors that made use of software.

“They should not pick on manufacturers,” Guo said at the news conference.

Shares of both Hon Hai and FIH were up around 1 percent in afternoon trade, roughly in line with the benchmark share price index .TWII.

Reporting by Jeanny Kao and Yimou Lee; Writing by Anne Marie Roantree; Editing by Richard Borsuk and Christopher Cushing

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