Microsoft: Samsung Owes $6.9 Million in Royalty Dispute
- Updated: October 4, 2014
Microsoft Corporation (NASDAQ: MSFT) is demanding that Samsung Electronics (OTC: SSNLF) pay $6.9 million in unpaid interest pertaining to licensing. The dispute between the two companies stems from smartphone patent royalties, this according to an unsealed lawsuit filed in US District Court, Southern District of New York – Microsoft Corp versus Samsung Electronics Co, Ltd, 14-6039.
A 2011 royalty agreement was executed by both parties but according to court documents, Microsoft claims that Samsung owes a licensing royalty for each Android Galaxy tablet or phone.
Also mentioned in the initial lawsuit filed last year is Microsoft’s request for the court to rule that no business collaboration agreement with Samsung was breached in connection with purchase of Nokia’s devices, as well as the service division.
In the unsealed 2013 lawsuit, documents revealed that Microsoft had been paid $1 billion in royalties by Samsung. However, reportedly the second year royalty payments were not paid according to the contract timeline.
After making the first payment, Samsung refused to hand over additional monies, arguing that the licensing agreement had been breached due to the Microsoft’s acquisition of Nokia’s handset business, a smartphone manufacturer competitor. Eventually, Samsung paid but without any interest included.
Successful arguments were made by Microsoft, pointing out that some of its technology is utilized by Google, Inc.’s (NASDAQ: GOOGL) Android mobile system. Therefore, the majority of hardware makers to include Samsung Electronics agreed to pay patent royalties on Android handsets. One of the primary holdouts is Motorola, which has been in litigation since 2010 against Microsoft.
To achieve closure, Microsoft filed a redacted version of the 2013 lawsuit in August. After reaching out for a formal statement, Samsung did not respond. Even with legal issues looming overhead, Microsoft and Samsung have been playing nice as noted in a recent agreement to use the Microsoft Office suite over Samsung’s solution.
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