Microsoft Sues Samsung for Patent Revenue: Lawsuit Details

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By Sounak Mukhopadhyay | August 6, 2014 9:37 AM EST

Microsoft sued Samsung as it demanded a royalty for each smartphone the South Korean company sells. According to Microsoft, Samsung did not pay the negotiated revenue in fall 2013. Both the companies came to a patent-sharing agreement in 2011. Microsoft said that Samsung was not ready to pay interest for the late payment. The U.S. company also accused Samsung of threatening to hold future payments back as well.

REUTERS
An employee of Samsung Electronics walks past the company main office in Seoul in this April 6, 2010 file photo.

Samsung, according to the agreement in 2011, is supposed to pay an undisclosed amount of revenue to Microsoft for every smartphone it sells. Microsoft claims patents for several patents which Android works with. Microsoft's lawsuit against Samsung also included a claim that the South Korean tech giant considered it a breach of contract when Microsoft took over Nokia.

Microsoft thinks that Samsung is using the "breach of contract" as an excuse of not paying the dues. According to Microsoft's deputy general counsel and corporate VP David Howard, the company takes a lawsuit quite seriously. "We don't take lightly filing a legal action, especially against a company with which we've enjoyed a long and productive partnership," he wrote in a blog, "Unfortunately, even partners sometimes disagree."

Even though Samsung made an agreement with Microsoft in 2011 that allowed both the companies to use several of the patents on a mutual basis, the actual deal was never made public. According to estimates, Microsoft earns around $2 billion every year from the patent revenues. Considering that Microsoft had a profit of $22 billion over the last fiscal year, the revenue amount is more than 9 per cent of the entire sum --- a significant amount.

Microsoft also accused Samsung of trying to have an excuse to violate the deal. The Washington-based company made a note that Samsung's sales of Android devices quadrupled since it had the deal. Samsung eventually became the largest smartphone company in the world.

This is the second time Samsung meets a biggie on the other side of the legal table. It earlier had a harsh legal battle with Apple regarding patent issues.

Contact the writer: s.mukhopadhyay@IBTimes.com.au

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(Photo: REUTERS / Lee Jae-Won)
An employee of Samsung Electronics walks past the company main office in Seoul in this April 6, 2010 file photo.
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