Microsoft Sues Samsung Over Android Patent Royalties

Pulkit Chandna

Each year, Microsoft earns billions in patent royalties from Android device vendors

Microsoft is suing Samsung for breach of contract over the non-payment of Android patent royalties. The matter pertains to a 2011 patent licensing agreement requiring the South Korean electronics heavyweight to make annual patent royalty payments to Microsoft in exchange for the right to use the latter’s patented technology in its Android-based smart devices.

According to a complaint filed by Microsoft in the Southern District of New York on Friday, Samsung initially refused to make the “fiscal year 2 royalty payment” that it was scheduled to make last fall, and when it did relent, it refused to pay the interest on its late payment. Now, Microsoft claims, the South Korean company “is threatening to breach the license agreement again with respect to its ongoing royalty payment obligations.” Apparently, Samsung views Microsoft’s acquisition of Nokia’s handset business as constituting a breach of the 2011 agreement, and therefore an adequate ground for non-payment.

“We don’t take lightly filing a legal action, especially against a company with which we’ve enjoyed a long and productive partnership. Unfortunately, even partners sometimes disagree. After spending months trying to resolve our disagreement, Samsung has made clear in a series of letters and discussions that we have a fundamental disagreement as to the meaning of our contract,” David Howard, Microsoft’s deputy general counsel and corporate VP, wrote in a post on the Microsoft on the Issues blog Friday.

“Since Samsung entered into the agreement, its smartphone sales have quadrupled and it is now the leading worldwide player in the smartphone market. Consider this: when Samsung entered into the agreement in 2011, it shipped 82 million Android smartphones. Just three years later, it shipped 314 million Android smartphones,” he added. “After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft.”

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