Microsoft And Samsung Settle Mobile Contract Kerfuffle

Microsoft and Samsung announced that they had settled their legal difficulties, which began last year when Microsoft filed a lawsuit against Samsung for refusing to pay royalties.

According to blog posts from both Microsoft and Samsung, the two companies have managed to reach an agreement. "Samsung and Microsoft are pleased to announce that they have ended their contract dispute in U.S. court as well as the ICC arbitration. Terms of the agreement are confidential," said Samsung's Jaewan Chi and Microsoft's David Howard.

Starting in 2011, when Microsoft decided to revamp its efforts in the mobile world, Microsoft and Samsung signed an agreement granting Samsung the right to use Microsoft's IP inside of products. In exchange, Samsung was required to pay royalties to Microsoft.

Last year, however, Samsung decided it didn't like the old agreement anymore. The company continued to use Microsoft's IP but stopped further payments. In 2013 alone, the royalty payments to Microsoft added up to $1 billion.

In response, Microsoft had fairly reasonable demands, which included payment of unpaid royalties, interest, and late fees on the unpaid royalties. At the time the dispute started, this was equivalent to $6.9 million.

Samsung refused, stating that Microsoft's buyout of Nokia and plans to use Nokia to sell Windows devices invalidated the contract. Microsoft did what any corporation would do at that point and filed a lawsuit against Samsung.

Statements from David Howard, Microsoft's Vice President, suggest that Samsung is attempting to end the agreement in order to end production of its Windows mobile devices. "Samsung predicted it would be successful, but no one imagined their Android smartphone sales would increase this much," said Howard. "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."

Howard also indicated hope for continued collaboration with Samsung. "Microsoft and Samsung have a long history of collaboration. Microsoft values and respects our partnership with Samsung and expects it to continue. We are simply asking the Court to settle our disagreement, and we are confident the contract will be enforced."

It stands to reason that Howard's assumption might be true, suspecting Samsung wants to focus attention on its Android-based devices, which have more sales and are likely more profitable. While it's a good plan for Samsung, it works out terribly for Microsoft, which is still struggling to gain a strong standing in the mobile world.

Because the agreement is confidential, it is difficult to say what the continued relationship between Samsung and Microsoft will be.

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Michael Justin Allen Sexton is a Contributing Writer for Tom's Hardware US. He covers hardware component news, specializing in CPUs and motherboards.
  • washmc
    "Microsoft and SONY...."
  • mrjhh
    One possible problem is that Samsung would have had a patent cross-licensing agreement with both Microsoft and Nokia. Once they became one, the question becomes whether Samsung has to pay both Microsoft and Nokia, and whether Microsoft pays on the Microsoft schedule or the Nokia schedule. I'm sure they both wanted the best of the two contracts.
  • littleleo
    What Samsung doesn't want to sell mobiles with Windows 8x, I wonder why?
  • falchard
    Not about selling Windows 8x phones. Its about selling android phones since all android devices have Microsoft and Nokia intellectual property in them. Pretty much every android device you buy has $35 going to Microsoft. On the other hand, every Windows Phone device you sell does not have as much go to Microsoft and none to Google.
  • Rhinofart
    What Samsung doesn't want to sell mobiles with Windows 8x, I wonder why?

    Because they are stupid. I know the Windows 8 phone doesn't have a big footprint in the market, but that would definitely change if more people actually gave the Windows 8 phones a try. The company I work for is dropping over 2000 Samsung Android phones because they suck, and are bringing in the Lumina 835 Windows phone. The Androids are buggy, don't work well with enterprise applications, and MDM solutions. The fact that iOS is now the market leader by a slim margin (atleast it was the other day) is showing that people are realizing the problems in the Android ecosystem, and going back to more user friendly systems. The dorks who automatically pick Android phones because they think they are cool because they can "root" their phone are really loosing ground. Needing Anti-Virus for you phone is ridiculous. Yes, there are genuinely some "expert" users who root their phone for legit reasons, but the vast majority of the users who "root" their phone have just enough knowledge about their devices to be dangerous to themselves. The fragmentation of the OSes, and carriers, etc Android is a nightmare to support in an Enterprise. My work phone is currently an iPhone and it works perfectly for everything we need. The new Windows phones that are replacing the Androids are even better yet. They are snappy, good sized screen, and have expandable storage. Not to mention, they work perfectly with ALL of our Enterprise Applications, and our MDM solution. The WinPhone ecosystem does need more applications, that's for sure. That is the ONLY area in which Windows Phone is lacking. It kicks all of the others butts in every other regard. At least from my experience in supporting over 5000 phones in our company.
  • alextheblue
    Yes, there are genuinely some "expert" users who root their phone for legit reasons, but the vast majority of the users who "root" their phone have just enough knowledge about their devices to be dangerous to themselves.

    "HOW DO I SHOT WEB- I mean, root my phone?"