Royalties disagreement between Microsoft and Samsung

Samsung and Microsoft
reached an agreement on a cross-licensing deal
for Android phones and tablets, which
included Samsung agreeing to pay Microsoft a set
amount of royalties for specific patents used. Fast-
forward to the end of 2013, which is when Microsoft
announced that they would be purchasing Nokia’s
mobile division for 7.2 billion dollars. Interestingly
enough, Nokia went with Microsoft instead of Android
because they feared Samsung would dominate the
market if Nokia also ran under the Android name.
Samsung did however did go on to dominate the
market, Nokia didn’t do so well, and here we are now.
So why exactly is Samsung refusing to pay previously
agreed upon royalty fees?
To understand the reason behind this, you have to
keep in mind that back in 2011 when a cross-licensing
deal was reached, the two companies also reached an
agreement on something else: To cooperate in the
marketing and development of Windows Phone. That
naturally would involve Samsung sharing some
sensitive information with Microsoft. The deal also
stated that royalty fees for Android would be reduced,
provided that Samsung could reach specific sales
targets for Windows phones.
Crying foul
Samsung is now crying foul, stating that the purchase
of Nokia has now made Microsoft a direct hardware
competitor. Because of this, Samsung feels that
cooperating with Microsoft and openly sharing
sensitive information is no longer possible, and that it
directly violates the terms of the original 2011
agreement. Samsung also stated that it could create US
antitrust issues, and filed that “The agreements, now
between competitors, invite charges of collusion”.
Microsoft is so far very
confident that the original
agreement will stick, and
stated that they feel they
have a very strong case.
The Redmond company is
also seeking around 7
million dollars in damages as punishment for
Samsung’s late payment of the billion dollar royalty
fee from last year.
I can certainly understand both sides in this issue.
Microsoft is entitled to royalties, as there are Microsoft
patents in use with most Android devices. But did the
original agreement reached in 2011 stipulate that
Microsoft becoming directly involved in mobile
hardware would be grounds for voiding the deal
entirely? Samsung, who currently has their fair share
of problems , also has a point. How can Samsung, the
most dominant Android manufacturer in the world,
share hardware secrets with a partner/now competitor
company that develops their own hardware and
software within the mobile sector?
Via : Engadget