Microsoft and Samsung make up in patent contract dispute

Samsung had allegedly threatened not to pay the royalties, claiming Microsoft's deal with Nokia violated an agreement

Microsoft and Samsung Electronics have settled a dispute over payment of royalties to the software giant, but the terms of the deal were not disclosed.

Samsung was sued by Microsoft last year for violating the terms of a licensing agreement. The software company holds that Google's Android operating system violates a number of its patents, and has asked makers of Android devices to sign licensing agreements with it. Samsung, HTC, ZTE, LG Electronics and Hon Hai are among the smartphone makers who have signed the licenses with Microsoft.

A September 2011 cross-licensing deal with Samsung apparently came unstuck after Microsoft's announcement in September 2013 that it planned to acquire Nokia's smartphone business.

Samsung claimed the acquisition violated some of the provisions of the agreement and did not make the payment for the second fiscal year, which ran from July 1, 2012 to June 30, 2013, when it fell due in October 2013, according to Microsoft's revised complaint last year in the U.S. District Court for the Southern District of New York.

Samsung refused to pay interest when it finally made the payment about a month later. Microsoft claimed Samsung owed it close to US$7 million in interest for that late payment of over $1 billion.

In its complaint, Microsoft alleged that Samsung was threatening to withhold payment for the subsequent year and thereafter. Samsung had agreed to pay royalties to Microsoft for seven years for the use of its patented technologies in smartphones and tablets that run Android.

Samsung filed a request for arbitration in October in the Hong Kong office of the International Court of Arbitration of the International Chamber of Commerce

On Monday, the companies issued a statement that they "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." The statement was attributed to Jaewan Chi, executive vice president at Samsung, and David Howard, Microsoft's deputy general counsel and corporate vice president.

The agreements between the two companies also provided for credits and potential reimbursements for marketing expenses to Samsung for the development of smartphones and tablets running the Windows operating system from Microsoft.

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John Ribeiro

IDG News Service
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