Microsoft files Android patent-royalty suit against Samsung

Microsoft files Android patent-royalty suit against Samsung

Summary: Microsoft has filed a contract dispute suit against Samsung over Android patent-licensing royalties.

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Microsoft has filed a contract dispute suit against Samsung over what Microsoft claims is a breach of contract by Samsung involving Android patent royalties.

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Microsoft filed its complaint against Samsung in U.S. District Court in the Southern District of New York on August 1 following what Microsoft claims to have been "months" of attempts between the two companies to resolve their dispute.

Microsoft is seeking a ruling as to whether its acquisition of Nokia's handset and services business negates its intellectual-property licensing agreement with Samsung that dates back to 2011. Microsoft also is seeking unpaid interest from Samsung, resulting from the period of time last year when Samsung withheld patent royalties from Microsoft -- royalties which Samsung later paid.

"Samsung has made clear in a series of letters and discussions that we have a fundamental disagreement as to the meaning of our contract," said David Howard, Microsoft Corporate Vice President and Deputy General Counsel.

The contract in question is the September 2011 multi-year IP agreement Samsung signed with Microsoft via which Samsung has been paying Microsoft per-device royalties for its Android phones. Under that 2011 agreement, Samsung and Microsoft agreed to cross-license their intellectual property, with Samsung paying Microsoft an undisclosed amount for each Android-based phone and tablet it sold.

Based on Microsoft's blog post, Samsung decided late last year to stop paying Microsoft per-device royalities, using Microsoft's acquisition of Nokia's devices and services business as the stated reason. It's not clear from the post why Samsung contended the acquisition invalidated the contract. 

Update: Samsung and Nokia in November 2013 agreed to extend heir own patent-licensing deal through 2018, with Samsung paying Nokia undisclosed royalties. That extension was forged after Microsoft announced intentions to buy Nokia's handset business, and a few months before Microsoft officially took possession of that part of Nokia.

According to Microsoft's August 1 blog post, Samsung was shipping 82 million Android smartphones a year in 2011. Now it is shipping closer to 314 million, company officials said, citing IDC data.

"Samsung predicted it would be successful, but no one imagined their Android smartphone sales would increase this much," Howard contended in the blog post.

"Microsoft and Samsung have a long history of collaboration. Microsoft values and respects our partnership with Samsung and expects it to continue. We are simply asking the Court to settle our disagreement and we are confident the contract will be enforced."

Samsung is one of the more than 20 vendors with which Microsoft has signed Android and/or Chrome OS patent licensing agreements in the past few years.

Update 2: In a statement, Samsung said it will "review the complaint in detail and determine appropriate measures in response."

Topics: Patents, Android, Legal, Microsoft, Mobile OS, Smartphones

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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140 comments
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  • So, Samsung hasn't been paying their Android patent payments to MS?

    That's big news. Everyone had assumed that MS was raking in Billions from Samsung because the their contract with MS.

    And, likely to widen the split between Samsung and MS.
    Ian Easson
    • Billions?

      Try again, the Contract was only worth a couple hundred thousand last I read.
      Narg
      • Reference???

        AFAIK, such mutual licensing agreements are ongoing.

        It has been repeatedly stated in the blogosphere that Samsung is paying Billions to Microsoft. Of course, the blogosphere is notoriously unreliable, as we should all recognize.

        So, do you have any specific reliable information otherwise that you would care to share?
        Ian Easson
        • it's all about ridiculous, software, market abusing patents

          don't forget that this blackmailing is due to ridiculous, software, market position abusing patents that should be invalidated
          Microsoft+ Apple the biggest software ridiculous patent trolls in the world
          Jiří Pavelec
          • Hive defended

            Someone get some smoke
            MarknWill
      • couple hundred thousand?

        The per device license charges for larger patent protfolios are sometimes a couple dollars, sometimes quite a few cents.

        At 314 million devices per year, the license fee would need to be less than a third of a cent per device to end up with a charge of a couple hundred thousand dollars. That seems to be unusually low. Thousand times more is a lot more realistic.
        Sacr
        • The Trouble

          These agreements are confidential. But, we know that Microsoft was trying to add costs to using Android so as to bring it in line with the costs of its mobile Windows. I had heard 5-10 dollars per phone. That's 1.5 billion for 300 million phones on the low end. As it is a cross-licensing agreement and Samsung has patents, there may be an offset. Samsung also had WP phones, didn't they? Thousands would be surprisingly low.

          This suit is unlikely to be an exploration into the validity of any patent. As a cross-licensing agreement, neither party has an incentive to be specific or to request specificity. For a party to include the patents covered, they are necessarily excluding other patents, leaving one open to future claims.
          DannyO_0x98
      • Yeah, it's a lot more than that.

        The exact amount wasn't disclosed, but MS wanted $15 per device and Samsung offered $10 per device. I imagine they settled somewhere in between. At the very least the IP royalty fees Samsung pays each year is over $2 billion.
        blarelli
      • Couple Hundred Thousand?

        REally. Then why sue? I'm thinking that your information is flawed. MS will spend that much just suing them if all they are going to get is a couple hundred thousand. Please provide facts for that comment. You do realize that the contract is for all devices sold. And Samsung has sold millions of devices. I'm thinking realistically that that amount would at least be close to a couple million dollars or more. Even if they are getting .50 a device. They sell a million they are making 500K.
        say what
      • Using 80 million devices, and a contract worth a couple hundred thousand...

        That would mean Samsung was paying Microsoft 2.5 cents per device in royalties.
        Does that seem like a reasonable amount for this contract? I don't know the details of the contract.
        xuniL_z
    • Shamesung

      "Microsoft also is seeking unpaid interest from Samsung, resulting from the period of time last year when Samsung withheld patent royalties from Microsoft -- royalties which Samsung later paid."

      Sounds like Samsung did eventually pay last year, but are delinquent on their payments again.

      Basically Samsung is trying to force a renegotiation of terms since they know they have no legal standing here.
      cool8man
  • Microsoft's Patents Are Analogous To An Emperor With No Clothes...

    It's just a veiled threat they've been using and getting away with for years.

    Somebody needs to stand up and let the entire world know that the largest patent troll in the world is the one that makes the worst OS in history and is headquartered in Redmond.

    I sincerely hope Samsung follows through, and doesn't let this bully steal their lunch money!

    I smell desperation on Microsoft's part... 18-thousand layoffs, geesh.
    orandy
    • Don't let logic get in your way

      Samsung battled Apple all over the world and Apple has deeper pockets than Microsoft and many of their patents were invalidated.

      Yet you are crying that this same company (and nearly 20 others) do not have the courage to stand up to Microsoft and that Microsofts patents could easily be invalidated.


      Why do you think no one takes you seriously?
      Emacho
    • Your a plain idiot orandy.

      I'm so sick of you you seriously make me ill with you stoned dead brainless moronic comments.

      Go open a lemonade stand and stay away from IT. It dosnt suit you.
      Cayble
      • At Least I Know The Difference Between "Your" And "You're"

        "Your" as in "This is your moron test".

        "You're" as in "You are an idiot!"

        Ciao
        orandy
        • in a sentance

          You're an idiot like he said as proven by your douche comment there...

          Seriously take some pills or something cause every post is like a 2 year old chucking a tantrum because they couldn't get a toy they wanted so now its the worst toy in the world.
          aesonaus
          • @aesonaus: "Sentance" Is Actually Spelled as "Sentence" On Planet Earth...

            Why don't you finish kindergarten before asking your mother to use the computer before bedtime.

            Peace
            orandy
          • my bad

            I thought this was a tech site, not an English language site where ya learns the use of grammar and the spellings.
            aesonaus
          • He's gotta rubbish the language used

            Cause he can't argue the facts.
            Hey orandy, did you know we don't get marked on our grammar and spelling here?
            Get a life!
            martin_js
        • Step away from the stones

          Or don't build out of glass:

          Is it come back here to reality or your

          "Comeback here to reality" orandy 2 August, 2014 16:34

          Then
          "keep buy Microsoft's underpowered" orandy 1 August, 2014 21:57

          Do we assume you don't know the difference between come back and comeback or buy and buying? Everyone makes mistakes, if you don't realise that already, re-read your comments, it could be enlightening!
          Little Old Man