Samsung Owes Microsoft Over $1 Billion

Back in 2010, Microsoft started bringing legal action against Android stakeholders, which resulted in various licensing deals. The company refused to announce what was being licensed to the stakeholders – 25 of them, including Foxconn, HTC, ZTE and Samsung. The stakeholders themselves were also blocked from revealing any details, due to a legal agreement.

Last year, Microsoft made $3.4 billion from its patent licensing – including $1 billion from Samsung alone, according to Florian Mueller of FOSS Patents. However, financial institution M-Cam has now found that the majority (as many as 80%) of Microsoft’s Android patents are not commercially relevant. In fact, according to Mueller, “If we look at it in terms of Microsoft patents that are presently (after four years of litigation) enforceable against Android devices, there’s only one, and it covers the scheduling of meetings from a mobile device”.

It is possible that Microsoft’s purchase of Nokia may have invalidated its agreement with Samsung (although Microsoft, of course, asserts that it is the kind of acquisition that is ‘explicitly permitted’ by the document). Sources close to the issue have said that they expect Microsoft’s Android patents to be directly attacked in court, if Samsung cannot evade paying the ($6 million) interest on last year’s $1 billion payment, as well as its payment for this year.

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Patent deals are very tricky to comment on, especially if they are dealing with confidential agreements, like this one. While Samsung is certainly the largest – if the $1 billion per year payment is correct – there are also others that will follow the events closely. Now keep in mind, each and every deal is a confidential business agreement between two partners, which will most likely include requirements to keep the details of the agreement private.

A new article in the Korea Joongang Daily ( claims that Microsoft has filed a lawsuit against Samsung, seeking payment of $6.9 million that it said it is owed. Samsung then filed a petition at a New York court, saying that it is seeking arbitration in Hong Kong; Microsoft responded that the agreement states that the arbitration location is New York. Wow. Talk about issues with contract interpretation.

The point, though, is that business contracts and patents have one serious flaw: they are only useful if one is willing to go to court and fight for them. We learned this lesson in the Apple vs. Samsung war and from the looks of it, we may see an instant replay here.

Contracts are always up for interpretation. This is especially true for agreements between companies from different countries and respective legal systems. Added to that the importance of smartphones in our day to day lives and the related expansive patent landscape, patent claims seem very difficult to fight for in court. Just ask Apple.

We will never be able to really understand what is behind these legal actions other than they are about money. Analysis, like this article, is based on press releases and information of the involved companies. It is easy to see that both parties will just release information that is likely to help them in court and in public opinion, but not necessarily the complete truth (NH).