Samsung Sued by Microsoft After It Stops Paying Android Royalties

Samsung microsoft

Microsoft has sued Samsung over an Android royalties dispute. David Howard, Corporate Vice President & Deputy General Counsel at Microsoft explained the case yesterday in a company blog post.

Samsung had signed a contract to license Microsoft patents to use towards its Android-based handsets. However, as Microsoft details, Samsung decided to stop paying royalties late last year:

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, Samsung began using the acquisition as an excuse to breach its contract. Curiously, Samsung did not ask the court to decide whether the Nokia acquisition invalidated its contract with Microsoft, likely because it knew its position was meritless.

Redmond-based Microsoft says over 25 companies currently license their patents, including the likes of Acer, ZTE and Samsung, which covers about 80 percent of Android smartphones sold in the U.S., according to the Washington Post.

The Post also notes after Samsung decided to make late payments on royalties (after deciding to not make any payments at all), they didn’t bother paying interest on the owing amounts:

After initially refusing to pay royalties in the second year of the deal, Samsung made a late payment in November but did not add on interest, according to a redacted copy of the complaint filed in federal court in New York and provided by Microsoft.

The complaint also alleged that Samsung has asked South Korean competition authorities to change the contract to reduce or eliminate its payments to Microsoft.

Who does that? Sign a contact and just refuse to pay? This action by Samsung reminds me of the Vanity Fair piece which invested the company’s shady business practices, which included using countersuits when sued as a defense strategy, all while sucking time as it grabs marketshare from competitors:

But that may have been Samsung’s intent all along. According to various court records and people who have worked with Samsung, ignoring competitors’ patents is not uncommon for the Korean company. And once it’s caught it launches into the same sort of tactics used in the Apple case: countersue, delay, lose, delay, appeal, and then, when defeat is approaching, settle. “They never met a patent they didn’t think they might like to use, no matter who it belongs to,” says Sam Baxter, a patent lawyer who once handled a case for Samsung. “I represented [the Swedish telecommunications company] Ericsson, and they couldn’t lie if their lives depended on it, and I represented Samsung and they couldn’t tell the truth if their lives depended on it.

Stay classy, Samsung.

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  • FragilityG4

    What a joke. No integrity or ethics at all. Your last line sums it up … Stay classy.

  • Stephen Or

    Let’s all wait and see before jumping to childish tantrumlike conclusions like the author of the above rant. For one thing, Microsoft has always been tightlipped on what these patents are. It should be noted that there is much debate in the coding community as to whether or not one should be able to patent software. The slide to unlock debacle should be evidence to a neutral mind of the ridiculousness of such patents. Bill Gates once famously likened the computer business to the auto industry. Imagine if they had the kind of patents in the early auto years as abound in the mobile software arena these days.
    What’s that Ford? You want the doors to open so that people can actually get inside your machine? Well then you owe GM a trillion bucks because that’s one of the patents they aquired when the Horse & Cart company went under a few years back.
    And Chev, what were you thinking? A car that can go both forward and backwards? Better get out your chequebook.

    Ill untongue my cheek when Mr. Ng writes like a grownup.

  • Stephen Or

    More details can be found in this Reuters article:

  • IstvanFekete


  • Hi Stephen, thanks for commenting here and joining this discussion.

    The bottom line here, which Microsoft emphasized, is they signed a contract with Samsung for the latter to pay royalties for using Redmond’s patents. As per the source articles, Samsung decided to just stop paying.

    The bottom line, a contract both parties agreed to was nulled by Samsung because they felt like not paying. Those are the facts.

  • What other info does this article provide specifically that we did not cover? Samsung breached the contract and stopped paying. What’s there to argue about?

  • Ryguy

    It shows that there is the possibility that Samsung has a legitimate beef and reason not to pay the royalties if there was a breach of the agreement by MSoft in acquiring Nokia. It shows that the situation is more nuanced then your article let on.
    Your article is written like a fan boy and at least some of your sources are questionable at best. If you actually did get a comment from a lawyer who previously acted for Samsung and also acted for one of Samsung’s direct competitors and who said what you say he said, that is unethical behavior for a lawyer IMO and anything he says on the matter is questionable.