Microsoft Corporation Files Case against Samsung over IP Cross-Licensing Contract

by Marie Cabural - August 1, 2014

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Microsoft Corporation (NASDAQ:MSFT) filed a lawsuit against Samsung Electronics Co. Ltd (KRX:005935) (LON:BC94) for allegedly violating its intellectual property (IP) cross-licensing agreement.

In a blog post, David Howard, corporate vice president & deputy general counsel of Microsoft Corporation (NASDAQ:MSFT) said the software giant filed its case at the U.S. District Court, Southern District of New York “simply to enforce” it contract with Samsung Electronics Co. Ltd (KRX:005935) (LON:BC94)

Howard emphasized that the software giant spent months in trying to resolve its disagreement with the South Korean electronics company. According to him, In a series of letters and discussions, Samsung Electronics Co. Ltd (KRX:005935) (LON:BC94) made it clear that both parties have a “fundamental disagreement” about the meaning of their IP cross-licensing agreement.

According to Howard, the South Korean electronics company voluntarily signed a legally binding agreement with the software giant to cross-license intellectual property in 2011 after months of painstaking negotiations. He emphasized that the IP cross-licensing agreement has been extremely beneficial for both companies.

Microsoft Corporation (NASDAQ:MSFT) owns patents on technologies used in the Android operating system of Google Inc (NASDAQ:GOOG). Samsung Electronics Co. Ltd (KRX:005935) (LON:BC94) is the leading manufacturer of Android devices.

Howard noted that the South Korean electronics company shipped 82 million Android smartphones when it entered into the IP cross-licensing agreement with the software giant. In the first quarter this year, that number quadrupled. Samsung Electronics Co. Ltd. (KRX:005935) (LON:BC94) shipped 314 million Android smartphones.

“Samsung predicted it would be successful, but no one imagined their Android smartphone sales would increase this much,” said Howard. According to him, Samsung Electronics Co. Ltd (KRX:005935) (LON:BC94) was following the terms of the IP cross-licensing contract and paying Microsoft Corporation (NASDAQ:MSFT) to use its technology.

Howard said the South Korean electronics company decided to stop complying with the terms of the IP cross-licensing agreement late last year when it became the leading players in smartphone market worldwide. According to him, Samsung started using Microsoft’s acquisition of Nokia’s devices & services unit as an excuse to breach its contract.

Howard curiously stated that it is likely that Samsung did not ask the court to decide whether that Microsoft acquisition of Nokia’s devices and services unit invalidated their contract because it knew that its position was meritless.

“Microsoft and Samsung have a long history of collaboration. Microsoft values and respects our partnership with Samsung and expects it to continue. We are simply asking the Court to settle our disagreement, and we are confident the contract will be enforced,” emphasized Howard.

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