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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