Millennium Post

‘India needs to check high patent royalty to foreign mobile firms’

India needs to check high patent royalty payments demanded by foreign firms and bring them in line with rates allowed by China and the US to ensure that its efforts to develop a robust local mobile manufacturing base are not derailed, says a report.

The Indian Cellular Association has submitted the report to various government departments including telecom, electronics/IT and industrial policy, highlighting the case of Swedish firm Ericsson which has demanded 2 per cent royalty of total value of mobile phone from Indian firms.

“This in complete contrast to regimes such as China, where 0.019 per cent royalty can be charged and USA, where the Courts have directed 0.52 per cent royalties to be charged on the value of smallest saleable practicing unit which is royalty on chipset value and not on the phone value,” it said.

The report added: “There can never be any manufacturing set up in India since the global giants have cartelised and self declared their patents and they would be charging these incredibly high rates only from the Indians and not from the international companies.” When contacted Ericsson India said in a statement that company’s rates for patents have been validated in over 100 agreements that it has entered into with other companies in the ICT industry, including other handset manufacturers.

“In the unfortunate event that, after numerous discussions, a license agreement cannot be reached, Ericsson seeks to have the court determine the appropriate royalty rate that should be paid for Ericsson’s patents,” it said.

Ericsson has sued Micromax and Intex seeking royalty on some of its patent technology used in mobile phones sold by these firms. The company has also sued Chinese mobile phone company Xiaomi in India on patent issue.

The ICA report claims however that if royalty rates sought by Ericsson are levied on Indian mobile phone makers, then other global players will follow suit pushing up production cost by 100 per cent, making them the most expensive companies of the world, it added.

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