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Originally published August 1, 2014 at 8:09 PM | Page modified August 3, 2014 at 3:19 PM

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Microsoft files suit against Samsung over royalties

Microsoft filed a lawsuit against Samsung, seeking to enforce an agreement in which the hardware manufacturer pays royalties to Microsoft for each Android phone it produces.


Seattle Times technology reporter

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Microsoft filed a lawsuit Friday against Samsung, seeking to enforce an agreement in which the hardware manufacturer pays royalties to Microsoft for each Android phone it produces.

Microsoft contends that certain features in the Android operating system uses patented Microsoft technology. The software giant has reached agreements with a number of hardware manufacturers in which the manufacturers pay Microsoft royalties for each Android device they produce.

Samsung was one of those companies after it reached a cross-licensing agreement with Microsoft in 2011 that gave Samsung the right to use certain patented Microsoft technologies in its Android smartphones and tablets. The agreement also gave Microsoft the right to use certain patented Samsung technology in Microsoft’s products.

Initially, Samsung made the royalty payments. But last year, the company was late with its annual payment and did not pay Microsoft interest for those late months.

Microsoft is also concerned Samsung will not make its payments in the future, contending Samsung is using Microsoft’s acquisition of Nokia’s phone business as “an excuse to breach its contract,” David Howard, a Microsoft deputy general counsel, said in a blog post.

“Upon hearing the formal announcement of Microsoft’s intended Nokia acquisition ... Samsung claimed that Microsoft’s agreement to acquire Nokia’s Devices & Services Business had breached the license agreement in various ways,” Microsoft contends.

It is unclear on what grounds Samsung is claiming that Microsoft’s acquisition of Nokia invalidates the agreements between the two companies.

Microsoft’s complaint says Samsung has asserted “an ever-expanding list of reasons why the announced acquisition allegedly violated” its agreements with Microsoft, but the complaint does not list those reasons.

Microsoft is seeking a court judgment that its acquisition of Nokia’s phone business does not invalidate its agreement with Samsung. And it’s seeking interest on the late payment.

In addition, Microsoft is seeking a court judgment that the 2011 agreement allowing it to use certain Samsung patented technologies also applies to the Nokia businesses it acquired. Microsoft says in the complaint that Samsung is claiming that smartphones made or sold by Microsoft after the Nokia acquisition are not covered by the license agreement and that Samsung is therefore entitled to seek damages for patent infringement.

In response to a request for comment, Samsung said in a statement, “We will review the complaint in detail and determine appropriate measures in response.”

Microsoft’s Howard said in his blog post that the company doesn’t take a legal action lightly, “especially against a company with which we’ve enjoyed a long and productive partnership.”

But, he said, Samsung has “made clear in a series of letters and discussions” that there is a fundamental disagreement over the contract.

Microsoft believes that Samsung originally agreed to make royalty payments back when it was a smaller player in the smartphone market, but is balking now that its smartphone sales have quadrupled since 2011 and is now the world’s largest smartphone manufacturer.

The lawsuit was filed in the U.S. District Court, Southern District of New York.

Microsoft has never disclosed how much it gets in royalties but Brad Smith, the company’s general counsel, said in 2011 that $5 per device “seems like a fair price.”

Microsoft has reached Android-related patent-licensing agreements with more than 25 companies. It is embroiled in court battles with Motorola over such patents.

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com



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