Microsoft sues Samsung in U.S. over patent royalties

Fri Aug 1, 2014 7:16pm EDT

A visitor walks past a Microsoft booth at a computer software expo in Beijing, June 2, 2010. REUTERS/Stringer

A visitor walks past a Microsoft booth at a computer software expo in Beijing, June 2, 2010.

Credit: Reuters/Stringer

(Reuters) - Microsoft Corp (MSFT.O) sued Samsung Electronics Co Ltd (005930.KS) on Friday, claiming the South Korean smartphone maker refused to make a royalty payment last fall on patent licenses after Microsoft announced its intention to acquire Nokia's (NOK1V.HE) handset business.

The Microsoft lawsuit, filed in a Manhattan federal court, seeks monetary recovery from Samsung but does not publicly disclose the amount in dispute.

In a blog post on Friday, Microsoft deputy general counsel David Howard wrote that Microsoft "values and respects our partnership" with Samsung, but differs with Samsung over how to interpret the licensing agreement.

"Unfortunately, even partners sometimes disagree," Howard wrote. In a statement, Samsung said it will review the complaint "in detail" and determine an appropriate response.

Microsoft is trying to compete in the mobile market with products that run on Google Inc's (GOOGL.O) Android operating system. As part of that landscape, Microsoft has tried to raise the costs for Android handset makers by convincing them to pay Microsoft patent royalties.

Most large handset makers, such as Samsung, LG (066570.KS) and HTC (2498.TW), have agreed to pay. Motorola is one of the main holdouts, and that company has been in litigation against Microsoft since 2010.

Samsung made its royalty payments to Microsoft during the first fiscal year after they signed their 2011 agreement, the lawsuit said. However after Microsoft announced the Nokia deal last year, Samsung initially refused to make another payment, the lawsuit said.

In refusing to pay Microsoft, Samsung argued the Nokia deal breached its licensing agreement with Microsoft, the lawsuit said. Samsung eventually paid Microsoft late, the lawsuit said, but has refused to pay interest.

Samsung also claims smartphone products sold by Microsoft after the Nokia deal are not covered by the licensing deal, the lawsuit said. Microsoft has asked a judge to make an opposite finding.

The lawsuit in U.S. District Court, Southern District of New York is Microsoft Corp vs. Samsung Electronics Co Ltd, 14-6039.

(Reporting by Dan Levine in San Francisco; Editing by David Gregorio and Lisa Shumaker)

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