Microsoft-Samsung Android Patent Deal Turns Sour

Alleging that the company is being stiffed by Samsung, Microsoft turns to the courts.

Android legal fight

Google's Android mobile operating system is once again the source of legal fireworks for Microsoft.

Microsoft, of Redmond, Wash., announced on Aug. 1 that it is pursuing legal action in a bid to force Samsung to adhere to the companies' Android licensing agreement. The lawsuit was filed with U.S. District Court's Southern District of New York, the same court that last week ruled against Microsoft in its case against the U.S. Department of Justice and the agency's controversial position regarding its jurisdiction over data stored abroad.

In September 2011, the companies entered into a cross-licensing contract. Under the terms of the deal, which remain undisclosed, Samsung agreed to pay Microsoft royalties on Android-based tablets and smartphones for access to its patents related to the mobile OS. At the time, Brad Smith and Horacio Gutierrez, Microsoft's general counsel and deputy general counsel, respectively, said in a statement that the agreement "gives both companies greater patent coverage relating to each other's technologies, and opens the door to a deeper partnership in the development of new phones for the Windows Phone platform."

Now, nearly three years later, Microsoft contends that the agreement has turned into a one-sided affair.

David Howard, deputy general counsel for Microsoft, suggested in a company blog post that Samsung is being stingy with royalty payments after enjoying massive success in smartphones. "Since Samsung entered into the agreement, its smartphone sales have quadrupled and it is now the leading worldwide player in the smartphone market," wrote Howard.

"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, citing market statistics from IDC. "Samsung predicted it would be successful, but no one imagined their Android smartphone sales would increase this much."

Last month, the market research firm noted that with a 25.2 percent market share during the second quarter of 2014, Samsung holds a commanding lead in the worldwide smartphone market. In total, the South Korean electronics giant shipped 74.3 million smartphones last quarter.

"After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft," stated Howard. The Microsoft-Nokia deal, which finally closed on April 25, also factored into the disagreement, he said.

After Microsoft announced plans to acquire Nokia's handset business last September, "Samsung began using the acquisition as an excuse to breach its contract," said Howard. "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."

Nonetheless, Microsoft doesn't expect this latest legal dust-up to shatter their long-standing partnership. "Microsoft and Samsung have a long history of collaboration," wrote Howard. "Microsoft values and respects our partnership with Samsung and expects it to continue."

Samsung did not respond to a request for comment from eWEEK.

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the network of...