Technology giant Microsoft is suing phone maker Samsung in a dispute on patent royalty payments. Samsung pays Microsoft a royalty for each Android phone sold, but the two companies will now settle their disagreements over royalties through the courts.
In a blog posted on the company website on August 1, Microsoft's deputy general counsel David Howard said: 'Today’s legal action is simply to enforce our contract with Samsung.' The software manufacturer filed the legal action against Samsung in the US District Court for the southern district of New York.
Three years ago, Samsung entered into a contract with Microsoft to cross-license IP and had been paying to use Microsoft’s IP. Since entering into the agreement, its smartphone sales have quadrupled, making it the world leader in the smartphone market today.
When Samsung entered into the agreement in 2011, it shipped 82m Android smartphones, said Howard. 'Just three years later, it shipped 314m Android smartphones.' Samsung predicted it would be successful, but no-one imagined their Android smartphone sales would increase this much, he stressed.
Microsoft had asked Android smartphones manufacturers to pay Microsott patent royalties. Samsung, LG, HTC and other phone makers have agreed to pay the royalties. Samsung paid the royalties in the year following the 2011 deal, but initally refused to make further payments. It later made payments to Microsoft, but did not pay any interest.
Howard explained: 'After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft.'
In September 2013, after Microsoft announced it was acquiring the Nokia devices and services business, Howard said that 'Samsung began using the acquisition as an excuse to breach its contract'.
Samsung argued that the Microsoft-Nokia deal breached its own license agreement with Microsoft.
According to the lawsuit, Samsung is claiming that smartphones being sold by Microsoft following its agreement with Nokia are not covered under the licensing agreement.
Mobile contacted both Microsoft and Samsung for comment.
Microsoft directed Mobile to the blog post and the complaint published on its website.
Meanwhile, a spokesperson for Samsung told Mobile: 'We will review the complaint in detail and determine appropriate measures in response.'