Patent infringement dispute might act as a massive hurdle for BS-VI compliant Royal Enfield motorcycles if the company does not resolve the issue with Flash Electronics in the US court, reports Livemint.
Flash Electronics had filed a lawsuit against the Chennai-based brand in a court of Wisconsin, US, over patent infringement by the latter. Flash Electronics claims that Royal Enfield infringed its patent on the component by sourcing it from Varroc Group. The regulator rectifier is a mandatory component for all BS-VI compliant products.
The Indian two-wheeler brand will have to find a new supplier, which will most definitely push the input cost higher and affect the final prices in the US and Europe. This will also affect the exports, which have been continuously fuelling the sales for the two-wheeler brand while domestic numbers continue showing negative performance.
Speaking to Livemint, people close to the matter said:
Most original equipment manufacturers (OEMs) have a multi-vendor policy and Royal Enfield also might move to another supplier. However, there is a question of cost involved in this. Also, this component will have to be used while rolling out the BS-VI products and given the already increased prices and subdued demand for the past one year, this might be a problem for the company.
The new update can be cited as one of the factors behind the negative effect on Eicher Motors’ (Royal Enfield’s parent company) share prices on the NSE.
Commenting on these developments, Sanjeev Vasdev, Managing Director, Flash Electronics, said:
Since resolution talks continued from 30 May to 23 July, Flash had put on hold further legal action, which has now been re-initiated. Flash would ensure Royal Enfield stops infringement and is penalized and is forced to stop production. As regards to Flash patent, it is clear that Royal Enfield internally recognizes the same and that’s the reason for the offer of 100% international business but their ego is preventing them to stop at that.
The BS-VI compliant Royal Enfield models have been spotted in the past and most of them appear to be ready for production.