News

Microsoft, Samsung Reach Agreement in Android IP Lawsuit

• By Kurt Mackie
• February 10, 2015

A dispute between Microsoft and Samsung over royalty payments related to the Android mobile operating system reached its conclusion this week.

The two companies announced on Monday that have reached a settlement in a U.S. court, though the terms of the settlement are being kept "confidential."

Microsoft filed suit against Samsung last fall, alleging that the Korea-based electronics manufacturer had breached a 2011 intellectual property contract. Samsung had agreed in the 2011 contract to pay Microsoft about $1 billion a year to use Android in its products, but later stopped its payments. In its lawsuit, Microsoft claimed Samsung owed $6.9 million in interest associated with the deal.

Microsoft has about 200 patents associated with Android use and has been very active in getting hardware manufacturers, including its partners, to pay it royalties for the use of Android, based on those intellectual property claims. Microsoft has claimed in court records that about 80 percent of Android-based smartphones used in the United States are licensed to use its patents.

This particular settlement announcement lacked any suggestion that Samsung renewed its royalty payments. It's possible that things may not have gone Microsoft's way this time around.

In its court papers, Samsung had stated that Microsoft's acquisition of Nokia had affected the terms of the 2011 deal. Microsoft had integrated Nokia's hardware manufacturing into its operations in April 2014 after acquiring the Finland-based smartphone maker in September 2013. Samsung pointed to its Business Collaboration Agreement with Microsoft as part of the 2011 deal, which prohibited the assignment of a contract in cases of "a merger with a party with a third party."

In the case of Nokia, Microsoft had acquired a competitor to Samsung, thus voiding the 2011 contract deal's terms. At least that was Samsung's legal argument, and it potentially could apply to other hardware vendors, too, if they had such clauses in their contracts. However, the trial's details don't appear to be in the public realm.

Typically, Microsoft inks cross-licensing deals with hardware manufacturers as part of its Android intellectual property deals, avoiding litigation. Sometimes, though, disagreements have spilled into the courts. Other notable court clashes with Microsoft over Android use have included lawsuits against Barnes & Noble (later settled) and Motorola Mobility, owned by Google.

The open source Linux-based Android mobile OS was fostered by Google. It's offered royalty-free to manufacturers but Google doesn't provide legal indemnity covering its use.