Samsung Electronics has asked the United States court to negate its previous licensing agreement with Microsoft (MS), asserting that latter’s purchase of Nokia’s handset division has raised anti-trust issues. The court filing originates from Microsoft’s lawsuit accusing Samsung of breaching a business collaboration agreement. The lawsuit, filed earlier this year in New York federal court, says South Korean smartphone manufacturer Samsung still owes $6.9 million in interest on more than $1 billion in patent royalties it delayed paying.
Samsung, along with a number of other device manufacturers that produce devices powered up by the Android operating system of Google, is in an agreement to pay Microsoft patent royalties for intellectual properties used in the technology of Android.
According to Reuters, Samsung said it agreed to pay Microsoft Android patent license royalties in 2011, but the deal also stated that Samsung would develop Windows phones and share confidential business information with Microsoft. If Samsung were to sell a certain number of Windows phones, then Microsoft would reduce the Android royalty payments. Microsoft’s Windows phones have failed to take significant market share from iPhone maker Apple Inc and devices running on Android.
Further, Samsung argued that since Microsoft acquired Nokia, it’s become a Samsung hardware competitor. This meant that Samsung could no longer share sensitive information without running afoul of US antitrust laws. In the filing, Samsung said that the agreements, now between competitors, invite charges of collusion.
Samsung previously looked upon Microsoft as an associate, with collaborations between the two companies including projects such as touch-screen computers. The two companies were not competitors until Microsoft purchased Nokia’s mobile phone business, turning it into a rival and complicating the relationship between the two companies. Antitrust regulators in the United States and other countries have approved Microsoft’s Nokia acquisition.
The licensing agreement between the two companies lasted for seven years, with Samsung paying an undisclosed amount to Microsoft for each Android-based device that the company sold. Microsoft strongly believes that it will be successful in defending against Samsung’s allegations, maintaining that its acquisition of Nokia is not valid grounds to have the agreements with Samsung invalidated. The lawsuit in U.S. District Court, Southern District of New York is Microsoft vs. Samsung, 14-6039.
