Microsoft sues Samsung over Android royalties

|About: Microsoft Corporation (MSFT)|By:, SA News Editor

Microsoft (NASDAQ:MSFT) has sued Samsung (OTC:SSNLF) for alleged breach of contract over unpaid Android royalty payments related to the companies' 2011 licensing deal.

Microsoft suggests Samsung stopped paying per-device royalties in late 2013 due to the Nokia deal, with Samsung arguing the deal nullifies the 2011 pact. Microsoft wants a ruling on Samsung's claim, and is also seeking unpaid interest.

Likely at issue: Samsung and Nokia have a patent cross-licensing deal in place for each others' patents, one that was extended for 5 years last November. Though the deal involves payments from Samsung to Nokia, Nokia's phone unit (now a part of Microsoft) has made use of Samsung's IP through it. That opens the door to Samsung arguing a new/separate cross-licensing deal with Microsoft is needed.

The financial implications of the legal spat could be big: Though struggling a bit lately, Samsung still had a 25.2% Q2 smartphone unit share (per IDC).

Surging Android royalties led Microsoft's "Windows Phone" revenue to rise $1.2B in FY13 (ended June '13). With Samsung apparently halting payments midway, "Windows Phone" licensing revenue grew by $822M in FY14 to $2.54B. Nokia payments accounted for $382M of the total.