Print 55 comment(s) - last by Reclaimer77.. on Aug 5 at 10:29 AM

Microsoft says Samsung used "meritless" "excuses" to back out of deal after Nokia Devices purchase was announced

After three years of relative peace between Microsoft Corp. (MSFT) and Samsung Electronics Comp., Ltd. (KRX:005930) (KRX:005935) over patents, war has broken out.  On Friday Microsoft filed a lawsuit against Samsung in the U.S. District Court, Southern District of New York (USDC-SDNY).  In the suit, it alleges that the top Android phonemaker has broken its promises it made in a 2011 contract in which Samsung agreed to pay Microsoft a per-device licensing fee on Android phones, tablets, and Chrome OS laptops it sells.

I. Broken Promises

Microsoft -- who produces the rival Windows Phone platform -- was careful to praise Samsung in its press release.  It wrote:

In 2011, after months of painstaking negotiation, Samsung voluntarily entered into a legally binding contract with Microsoft to cross-license IP – an agreement which has been extremely beneficial for both parties. Samsung had been complying with the contract and paying to use Microsoft’s IP.


Since Samsung entered into the agreement, its smartphone sales have quadrupled and it is now the leading worldwide player in the smartphone market. Consider this: when Samsung entered into the agreement in 2011, it shipped 82 million Android smartphones. Just three years later, it shipped 314 million Android smartphones. [Source: IDC, WW Quarterly Mobile Phone Tracker – 2014 Q1, Published: May 2014] Samsung predicted it would be successful, but no one imagined their Android smartphone sales would increase this much.


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.

Indeed, Samsung produces a number of premium Windows laptops/ultrabooks and has dabbled in Windows Phone with devices such as the Ativ S.

Samsung Ativ S

But according to Microsoft, Samsung forced its hand when it willfully breached its contract following Microsoft's September announcement of its pending purchase of Nokia Devices, a division of Finland's Nokia Oyj. (HEX:NOK1V) .  Microsoft writes:

We don’t take lightly filing a legal action, especially against a company with which we’ve enjoyed a long and productive partnership. Unfortunately, even partners sometimes disagree. After spending months trying to resolve our disagreement, Samsung has made clear in a series of letters and discussions that we have a fundamental disagreement as to the meaning of our contract.


After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft. In September 2013, after Microsoft announced it was acquiring the Nokia Devices and Services business, Samsung began using the acquisition as an excuse to breach its contract. Curiously, Samsung did not ask the court to decide whether the Nokia acquisition invalidated its contract with Microsoft, likely because it knew its position was meritless.

Samsung has yet to comment on the suit.

II. A Popular Target

As a titan of smartphone and tablet sales, Samsung has been a popular target for patent litigation, a form of legal strife which has increasingly haunted the smartphone market in recent years.

Samsung's most publicized struggle has been against Apple, Inc. (AAPL) who accused Samsung of "slavishly copying" the iPhone in an April 2011 lawsuit.

A jury ruled in 2012 that internal Samsung documents indicated it indeed shifted its designs to imitate the look and certain features found in the iPhone.  won the first round, After some minor recalculations Samsung was ordered to pay $890M USD in damages for willful infringement.

Most recently, in May the pair wrapped up a second trial.   This time around Samsung enjoyed a much better outcome when a jury ruled in U.S. federal court that both Apple and Samsung's recent devices were guilty of stealing patented features.  The jury ordered Apple to may $158,400 USD for "accidental" infringement of one key Samsung patent, while Samsung was ordered to pay $119.6M USD for willful infringement of two patents across most of its device lineup, and infringement of another Apple patent across parts of its device lineup.

Samsung vs. Apple trial
Apple and Samsung fought to a draw in a second court trial this spring. [Image Source: Reuters]

While Apple scored more money in the jury verdict, it was a major moral loss as it was to be found guilty of stealing, something it had accused Samsung of doing for so long.  Apple's awarded damages were also a mere tenth of what it sought.  The pair have yet to solve their dispute.

Besides Apple, Samsung has faced off against a couple of proxies of or close allies of Microsoft, despite its 2011 licensing pact with Microsoft itself.  

Samsung and a number of fellow Android phonemakers were sued in Texas federal court by a patent pool called the Rockstar Consortium.  The Rockstar patent holding company was formed to monetize a major portfolio of patents Microsoft, Apple, and other founding members purchased in mid-2011 from bankrupt Canadian telecommunications firm Nortel.  The other co-owners of Rockstar include a a single Android OEM -- Japan's Sony Corp. (TYO:6758) -- and a number of other familiar names: BlackBerry, Inc. (TSE:BB), Sweden's Ericsson AB (STO:ERIC.AERIC.B), the Mass.-based EMC Corp. (EMC).

Google has filed a countersuit to try to shield Samsung and other partners, but legal experts say the tactic used has a low success rate on the appeals circuit.  The fight between Samsung and Rockstar is ongoing.

Samsung also clashed with Nokia -- long the biggest Windows Phone licenser -- but settled the legal dispute with a cross-licensing deal in November.

III. Is Samsung Eyeing a Better Contract?

While it has at times clashed in court with Microsoft subsidiaries, Samsung has long enjoyed relative peace with Microsoft itself.  Samsung is likely the most lucrative component of Microsoft's Android patent licensing business that is believed to earn the veteran operating system maker over a billion dollars annually.  

At least 21 other OEMs have entered similar licensing agreements.  A breached agreement by the largest licensee is an alarming precedent for Microsoft who probably fears that other OEMs could follow in suit.

It's unclear what Samsung's reasoning in breaching the contract is.  One possibility is that Samsung is looking to renegotiate its licensing rate.  Samsung was one of the first Android OEMs to agree to licensing with Microsoft and it reportedly pays one of the highest rates -- as much as $15 USD per premium Android smartphone.

Samsung Galaxy S5
The Samsung Galaxy S5

It's possible that the licensing deal with Nokia may preclude it from needing to license certain patents from Microsoft.  Also, Samsung in January signed a licensing deal with Google Inc. (GOOG), which might help protect Samsung in the event of a breach of its Microsoft contract.

The 10.5-inch Galaxy Tab S

One thing's for sure -- Microsoft's report clearly indicates that it engaged in a lengthy internal dispute with Samsung over the last year or so after Samsung decided to stop paying.  With its own smartphone efforts bleeding cash, it's not about to let Samsung off the hook so easily.

Source: Microsoft [press release]

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By p05esto on 8/1/2014 7:41:35 PM , Rating: 5
Love Windows Phone myself. A breath of fresh air compared to iOS/Android. Each to his own, But WP has really matured and the interface is hands down my favorite (you have to actually use it to feel this way).

Pay up Samsung, MS was good enough to let you license and didn't just prevent sales like Apple does. MS is a very fair corporate player, mature. Apple is like a teenager and Samsung is like a shifty 26yr old that does crack. Man I love me some Samsung TVs though.

RE: love
By Reclaimer77 on 8/1/14, Rating: -1
RE: love
By Nortel on 8/1/2014 10:25:18 PM , Rating: 5
Samsung agreed to pay... was paying... and then decided to stop paying for 'no reason'. This is a breach of contract, no need to call this anything other then what it is. Reclaimer, I swear you must be paid by Samsung to be constantly defending this Korean company.

RE: love
By Nightbird321 on 8/3/2014 3:10:39 PM , Rating: 4
The article hints upon it... if other OEMs are paying less per device in licensing fees, Samsung might simply be doing this to save money. During a trial, the current market price would be use for arbitration purposes.

My guess is Samsung asked for a discount based what others are paying, Microsoft said no, so Samsung decided if this would be more favorably settled in court and stopped paying (waiting for MS to sue).

RE: love
By wifiwolf on 8/3/2014 3:40:35 PM , Rating: 3
Exactly what I thought too.
If I'm paying more than the others, add to it 2 other new license agreements with other companies - one of them bought by the first one. Which means I'm paying twice for the same software to same entity. Why would I still pay the same? So I'd want to renegotiate. Either that or I pay you nothing and we dispute.

RE: love
By mustaka on 8/4/14, Rating: 0
RE: love
By Reclaimer77 on 8/4/14, Rating: -1
RE: love
By mustaka on 8/5/14, Rating: 0
RE: love
By Reclaimer77 on 8/5/14, Rating: 0
RE: love
By testbug00 on 8/1/2014 11:06:34 PM , Rating: 3
EXcept, these patents clearly are valid, otherwise, Samsung would not have agreed to pay *rolleyes*

Also, this is not patent trolling... This is MS going for the monies they are owed given the contract signed, along with some interest.

RE: love
By w8gaming on 8/1/2014 11:49:24 PM , Rating: 3
The "no reason" part would have to be argued in the court. Not sure what the details is.

RE: love
By stm1185 on 8/2/2014 1:51:44 AM , Rating: 2
Apparently its MS buying Nokia, how that is a reason to stop making contractually agreed upon Android royalty payments is beyond me.

Well maybe they had a clause that made the contract void if MS became a first party competitor against them in the smartphone market. But I highly doubt that, because Samsung would be shouting about it by now.

RE: love
By testbug00 on 8/2/2014 10:15:37 AM , Rating: 2
if that was true, Samsung could have sued for MS breach of contract... That is my understanding, of course.

RE: love
By Reclaimer77 on 8/2/14, Rating: -1
RE: love
By damianrobertjones on 8/2/2014 8:33:56 AM , Rating: 3
If only reviews were impartial or, heck, paid for adverts never existed.

They agreed to pay.. end of.

RE: love
By vXv on 8/2/2014 9:06:47 AM , Rating: 2
How would you feel if you neighbor said one day that you had done something wrong against him, but he won't tell you what, and that unless you pay him $500 a month he's going to sue you or call the police?

Tell him to fuck off? Seriously if you pay everyone $500 that says "I'd sue you otherwise" you wouldn't have much money left.

RE: love
By Reclaimer77 on 8/2/14, Rating: -1
RE: love
By vXv on 8/3/2014 8:04:00 AM , Rating: 3
Well there patents are not as much worth as they made everyone to believe:

Some of them are even expired (!) ...

The end result will be that Microsoft's Android patent portfolio will face legal and business challenges in the coming year. There is more than enough doubt about these patents' "value" that competing companies will start opposing Microsoft's licensing deals in both the courtroom and the boardroom.

Seems to be what Samsung is currently doing.

RE: love
By atechfan on 8/2/14, Rating: 0
RE: love
By Reclaimer77 on 8/2/14, Rating: -1
RE: love
By atechfan on 8/2/2014 2:17:50 PM , Rating: 3
Reading comprehension really isn't one of your strengths, is it? That article states that MS did not make the patents public knowledge. Nowhere did it state that the licensees did not know what they were licensing. What idiot would agree to license patents that they did not know what they were? You seriously think Samsung agreed to pay millions or tens of millions without seeing what they were paying for?

RE: love
By Reclaimer77 on 8/2/14, Rating: -1
RE: love
By kidboodah on 8/2/2014 3:08:09 PM , Rating: 2
I don't normally even bother posting in the comments as I don't really care that much LOL -- but reading your comments on how Microsoft is forcing OEMs to enter into licensing agreements without even knowing what patents they are possible infringing on...I'm sorry man but that's just silly. I think that you maybe read Barnes and Noble's legal response to Microsoft -- where they said that Microsoft asked them to sign a non-disclosure agreement to have detailed talks about the patents and how B&N specifically infringed -- and B&N refused to do so...resulting in Microsoft only generally talking about the patents with them. B&N refused to sign the non-disclosure because all US Patents are PUBLIC knowledge. The patents in question are: U.S. Patent Nos. 5,778,372 (the “’372
patent”), 6,339,780 (the “’780 patent”), 5,889,522 (the “’522 patent”), 6,891,551 (the “’551
patent”), and 6,957,233 (the “’233 patent”). Every single company that Microsoft has "gone after" knows exactly what patents they are being told they infringe on. There are no secret patents that Microsoft isn't divulging information on. They don't have to tell the company how they believe they think the company is infringing on the patents -- it's the company possible infringing that needs to decide if they are or aren' base the decision if they want to enter into a licensing agreement OR go the legal route to fight the infringing claims.

Samsung knew exactly what the patents covered -- and they CHOSE to enter into the licensing agreement with Microsoft VERSUS fighting the claims of infringement in a court of law. They entered into a legally binding agreement and, according to Microsoft, have breached the terms of that agreement. It doesn't even really matter, at this point, if the patents are even worth licensing or if Samsung was infringing at all -- what Samsung has done at this point was allegedly violate the terms of the agreement that they agreed to.

RE: love
By ritualm on 8/2/2014 3:40:14 PM , Rating: 3
Dude you do this all the time. You ask for evidence, then argue against it.

ROFL @ Reclaimer77 trying to attack someone for doing what he's doing all along.

Going back to one of your previous posts:
WHy not just compete on the open market? Why not let the best products win?

To both of those questions: Because you operate at a disadvantage from the get-go. Personally I prefer to see them do just that, however it has never been the case - Comcast vs Netflix being a very recent example, Intel Netburst vs AMD Athlon64 being a historical one.

The best products very seldom win. Marketing does. Only certain sections of the market own the best stuff (say, OnePlus One... owned by Oppo, a relative unknown player in NA). The inferior stuff i.e. SGS4's, Beats headphones etc.? They're everywhere.

The patent system is fundamentally broken, there's no argument aginst that. To argue that they should all compete on a level playing field, when it's already lopsided in favor of those with substantial patent chests and preferential access? Not gonna work.

Android is a laggard in the patent game, relative to iOS and Windows Mobile/Phone. It also has the most market share. Barring some exceptions (I'm looking at you, HTC), most major Android device makers are business units of larger, highly diversified companies.
The patents were kept from EVERYONE, including the OEM's.

Except they are not secret.
I support MS way before I would support Apple

Says the guy who regularly bashes Windows Phone every time it's mentioned, with substantial subliminal cheerleading towards Android alternatives in tow.

RE: love
By Cheesew1z69 on 8/2/14, Rating: 0
RE: love
By superPC on 8/3/2014 6:48:40 AM , Rating: 2
Microsoft kept secret the patent themselves from the general public, but obviously the licensee of those patents knew exactly what they are. Why pay otherwise? To even suggest that Samsung doesn’t know which patent they’re licensing from Microsoft is beyond moronic.

Anyway, Microsoft vs. Motorola patent dispute shed a lot of light in which patent MS uses to get licensing fee from android manufacturers: and as we can all see, those are not junk patent.

Obviously, you can argue that in desktop system all the equivalent software patents disputed there had been filed and approved of but this is mobile devices and not desktop. That is distinction enough for the patent office, and it should be distinction enough for us.

Anyway, because Microsoft vs. Motorola patent dispute shed a lot of light in which patent MS uses to get licensing fee from android manufacturers: and as we can all see, those are not junk patent.

Obviously, you can argue that in desktop system all the equivalent software patents disputed there had been filed and approved of but this is mobile devices and not desktop. That is distinction enough for the patent office, and it should be distinction enough for us.

RE: love
By EricMartello on 8/3/2014 2:06:52 PM , Rating: 2
Samsung and other OEM's were never given the choice to determine if they were valid or not. Microsoft threatened them for patent violations, but kept the actual patents secret.

It is possible to look up patents via the USPTO...they can't be "secret" unless the govmint believes them to pose a risk to national security.

Yes they "agreed" to pay, but Microsoft never negotiated in good faith by keeping the patents secret. It's just legalized extortion. I HATE this kind of things.

I don't think that would qualify as bad faith. Extortion is something like income tax - pay or go to jail. Samsung wanted this deal - it was voluntary on their part to deal with MS in the first place. If they thought the deal was bad they could have walked away. MS was under no obligation to detail the contents of their patents, something that Samsung could have done on their own if they deemed it relevant, in order to make the deal happen.

WHy not just compete on the open market? Why not let the best products win?

Ideally that's what would happen, but the bloated laws make this 'competition on merit' alone quite improbable. The law only gets more convoluted when they're international.

How would you feel if you neighbor said one day that you had done something wrong against him, but he won't tell you what, and that unless you pay him $500 a month he's going to sue you or call the police?

I'd tell him to go right ahead and sue me, to which I'd respond with a counter suit. It's not an issue of "right and wrong", it's more of an issue of who has the better hand and the court system gets to decide this.

RE: love
By Reclaimer77 on 8/2/14, Rating: -1
RE: love
By Labotomizer on 8/2/2014 8:45:52 PM , Rating: 2
I read the article. Not once does it say that Microsoft didn't disclose the patents in question to the OEMs. It never made it public knowledge as they wanted an NDA, that these companies signed. The companies KNEW what they were paying for but we did not. That's what was at question.

As for the fact that Android is violating Nortel passwords, the group that purchased all those patents invited Google to join them. Google passed on joining the group and tried to win the Nortel patents for themselves. Do you think they would have let other people use those patents and not gone after them? Well, you probably do. You wouldn't believe Google wouldn't go after money they're legally entitled to.

Of course, none of that matters. Samsung signed a contract. And they stopped paying for a while. They are paying again. Samsung believed that Microsoft buying Nokia nullifies the contract. Maybe they're right, maybe they aren't. It's a gray enough area that mediation didn't work and it's going to court.

Why is that so hard for you to wrap your head around? Oh, it's Google... blinders in fully effect. Are you sure you aren't Tony Swash's alternate personality? Stephen Colbert's republican to John Stewart's democrat?

RE: love
By Reclaimer77 on 8/3/14, Rating: -1
RE: love
By superPC on 8/3/2014 6:53:41 AM , Rating: 3
They only disclosed what the patents were AFTER they agreed to pay. That was the deal, or else they would be sued.

OK you said that. Give us some proof. If you can't than it's just your word against Microsoft (since Samsung is not saying anything) and I tend to believe MS.

RE: love
By Labotomizer on 8/3/2014 7:56:14 AM , Rating: 3
If Samsung signed a licensing deal without knowing what they were paying for first then they need a brand new legal staff. And quite a few executives. That's not the case though. In no way, shape or form is that true. Someone else pointed out the fact this all came up when B&N wouldn't sign the NDA prior to agreeing to a licensing deal. Samsung and MS have the NDA in place.

The Chinese company that leaked the list of patents BROKE the NDA. And it also has nothing to do with Samsung. Samsung SIGNED A CONTRACT. You don't get to go "Oh, I signed it but now I don't agree with it so I'm going to stop." That's not how a contract works. If there is some wording in the Nokia purchase that enables Samsung to get out of the contract then Samsung was right to stop paying, but not because of the validity of any of Microsoft's patents. However if that language doesn't exist then they need to continue to pay until the end of the contract. At that point they can go back and fight the validity of the patents if they feel they can win.

They already felt they would lose once. And even if the existing contract is invalid they'll have to sign a new one or fight the patents. And if Samsung thought the patents were strong enough the first time then they'll likely still think they are.

I really can't believe you would think that Samsung would sign into a licensing agreement without knowing what they're paying for. They wouldn't... Samsung's legal team isn't stupid. I'm only amazed there are people dumb enough to believe that, despite not ONE reputable source saying as much. Including the article you keep linking to. They don't ever say the OEMs didn't know what they were paying for. Only that WE don't.

RE: love
By superPC on 8/3/2014 8:00:30 AM , Rating: 3
They only disclosed what the patents were AFTER they agreed to pay. That was the deal, or else they would be sued.

Frankly what you suggest here is illogical, irrational, (possibly even illegal) and frankly it make you seems like someone who never read a legal contract.

Let’s just assume (for argument sake) that this is what really MS and Samsung did back in 2011 (essentially Samsung pay a licensing fee for MS patents that Samsung never even know of before it pay for it). Why didn’t Samsung renegotiate the contract as soon as MS reveal the entire patent that Samsung got on that licensing contract (IF Samsung thought that those patents worth less and difficult to enforce in court)? Why wait 3 whole years for that? If it can’t renegotiate, why didn’t Samsung pay the penalty for breaking contract and drafted new contract terms with more favorable fees as soon as Samsung learn which patents it got on the licensing contract (IF Samsung consider MS patent worth less than it pays for)?

The fact that Samsung didn't do any of that before now, suggest something: initially, Samsung thinks MS patent were valuable to license and can protect it from litigation by other party (since now it's MS that has the obligation to face litigation if there is patent dispute with other party since Samsung is only a licensee holder)

I am a mechanical engineer in a construction company. I help build apartment complex, factories, office tower, processing plant, etc. I have experience in dealing with legal contract. So please, do yourself a favor and read a couple of legal contract and then come back and argue what is legal or not.

RE: love
By Reclaimer77 on 8/4/2014 12:13:01 PM , Rating: 2
I believe that Software Patents only serve to harm innovation. Whats more nearly every book on the subject states it is best to not even search for a patent due to the extra punishment for knowingly violating a patent. So every company ignores the patent system because there are so many garbage patents out there that it is impossible to write software without violating someones patent.

You might be a "legal contract" wizard, but you don't know sh*t about software patents.

RE: love
By superPC on 8/4/2014 3:15:34 PM , Rating: 2
Actually I agree that software patent is harming innovation. Just like genetic patent.

Software patent and genetic patent as implemented right now, are like patenting Carnot Thermodynamic Cycle and preventing every other patent in internal combustion engine. That's just stupid. Patents are for engineering implementation, not scientific fact.

But still you can't blame MS for doing something just like all the other company (including Google).

RE: love
By damianrobertjones on 8/2/2014 8:32:43 AM , Rating: 1
Imagine if you OWNED Microsoft but were only a small company... then Samsung AGREED to pay you cash.

Then they stopped...

RE: love
By Reclaimer77 on 8/2/14, Rating: -1
RE: love
By tonyswash on 8/2/14, Rating: 0
One way to solve this im sure samsung.....
By peterrushkin on 8/1/2014 7:30:04 PM , Rating: 2
drop android and promote windows phone.... XD

RE: One way to solve this im sure samsung.....
By stm1185 on 8/1/2014 7:34:28 PM , Rating: 2
Well seeing how the contract is based around Android patent infringement that would work. I wonder if Tizen is included in it.

Of course they still would need to honor the terms of the contract up until that point. No one forced them to sign it. They didn't even try to fight it in court, and it is not like they did not have the lawyers to do it.

By Gungel on 8/2/2014 7:50:36 AM , Rating: 2
Tizen is basically dead. Samsung said that the Tizen phone to be released this year will be delayed indefinitely.

RE: One way to solve this im sure samsung.....
By Labotomizer on 8/3/2014 7:59:43 AM , Rating: 2
They didn't fight because they felt the patents were strong enough they wouldn't have been able to fight them. It's that simple. Look at how Samsung fought Apple. If Samsung thought they even had a chance of winning they would have fought Microsoft tooth and nail.

RE: One way to solve this im sure samsung.....
By vXv on 8/3/2014 8:04:43 AM , Rating: 2

Does not look like "strong" patents to me.

RE: One way to solve this im sure samsung.....
By Labotomizer on 8/4/2014 9:08:43 AM , Rating: 2
You could have saved yourself time and just linked to one of Reclaimer's posts about Microsoft. SJVN is extremely biased. Samsung's legal and technical teams felt that they were strong enough to hold up in court or they wouldn't have agreed to pay.

RE: One way to solve this im sure samsung.....
By Reclaimer77 on 8/4/2014 11:02:53 AM , Rating: 1
In your own words you are "one of the most pro-MS people here".

So since you're self aware enough to admit that, I find it curious you feel you're impartial enough to accuse others of being "extremely biased".

I don't know if SJVN is biased or not. However I know that you are probably not the best person to make that determination, as you're far from a neutral person yourself.

Also I have to say, that was a pretty low blow you aimed at me. And it's only Monday! :P

RE: One way to solve this im sure samsung.....
By Labotomizer on 8/4/2014 11:09:07 AM , Rating: 2
I thought the John Steward/Stephen Colbert with Tony Swash was way worse. ;) But funnier.

By Labotomizer on 8/4/2014 11:09:34 AM , Rating: 2
Stewart that is...

RE: One way to solve this im sure samsung.....
By Reclaimer77 on 8/4/2014 11:24:31 AM , Rating: 3
Look I don't feel I'm anti-Microsoft. I just have a strong objection to the way Apple and Microsoft have used patent trolling and "licencing" in order to harm competition.

And I would like who "wins" or loses to be based on consumer choice and successful products, not who has the biggest "warchest" of software patents.

The fact that it's even being called a "warchest" should kind of tell you guys that the patent system has been twisted. It was never intended to be used as a weapon against someone.

RE: One way to solve this im sure samsung.....
By Labotomizer on 8/4/2014 11:47:34 AM , Rating: 2
And I don't disagree with you and I have a problem with bogus patents as well. I also have a problem with companies that are nothing but patent trolls, that buy up patents no one has ever made and then goes after companies for what was never previously produced. That's insane.

Google could have joined the Nortel consortium that purchased those patents and protected their OEMs from some of this. They chose not to. They went after it themselves but were outbid by the group of companies that decided to go in together.

Other patent violations are of patents that Microsoft spent R&D on and has implemented. While I do think that software patents need serious reform I also don't think a company should spend their time and money on something only to have another company use it without having to invest the same time and money. If I invented some cool new way to interact with a device or a new file system that made everything way better I wouldn't want Google, Apple or Microsoft just using it without being compensated for the work I put in.

The patent system was designed to keep things fair. That said it doesn't always work and with the modern age it has some fairly glaring holes. Patenting things like "UI bounce when reaching the bottom of a page" is absolutely insane. Or the shape of a device.

All that said, this article was about a possible contract violation that Microsoft is seeking the court's assistance in resolving. The court will decide if Samsung was justified in breaching the contract. It's that simple. Samsung's legal and technical teams reviewed the patents, felt that what Microsoft wanted was reasonable compared to their chances in court and decided to go into a contract for licensing said patents. It really is that simple. They didn't break the contract because they thought the patents were invalid. They broke the contract because they felt Microsoft purchasing Nokia's device division constituted violation of the terms of the contract. Maybe they did, maybe they didn't.

Once the court makes their decision there will be two options going forward, if Samsung wins. Samsung will sign a new, perhaps more favorable, licensing deal with Microsoft. Or Samsung will fight Microsoft in court over the validity of the patents. If Microsoft wins then Samsung will continue paying royalties, will pay back royalties and will pay interest on the royalties they didn't pay.

RE: One way to solve this im sure samsung.....
By Reclaimer77 on 8/4/2014 12:09:30 PM , Rating: 2
The thing is most of these software patents don't represent any real "work" or R&D. They just patent software concepts for things that have been done in nature or elsewhere and tack on "on a phone" or "to interface with a touch-screen" at the end of the wording.

As far as the FAT32 patent...well I don't know many people who still think that's worth what Microsoft does.

RE: One way to solve this im sure samsung.....
By Labotomizer on 8/4/2014 12:20:14 PM , Rating: 1
While I don't disagree on FAT32 being an aged file system, it's still the default for most devices despite exFAT being superior and free. I have no idea why that's the case.

And yes, you're pointing out that there are some bogus patents. But I would play by the rules spelled out in the law, regardless if they're right or not.

RE: One way to solve this im sure samsung.....
By Reclaimer77 on 8/4/2014 1:09:39 PM , Rating: 2
Nobody goes by the law. You can't even do a search for patents beforehand, because doing so means you're eligible for extra fines if you "knowingly" violate a patent.

The state of software patents have gotten to the point that it's LITERALLY impossible to release a commercial software product without violating a patent, or multiple ones. So companies just ignore patents altogether for the most part.

When someone invented a carburetor another person wasn't prevented from developing a competing carburetor. Where as software patents prevent you from developing a competing software procedure. Take Amazon's infamous 1-Click. At it's surface it is blindingly obvious. So should have been prevented from receiving patent protection. Further if it was patented then it goes to reason other parties should be able to invent their own form of 1-click. But the way software works there is no way to NOT violate Amazon's Patent.

By atechfan on 8/4/2014 8:25:11 PM , Rating: 2
"Everybody else does it" as a defense will not likely hold up in court. Samsung is lucky you are not their lawyer.

Google is the one abusing the patent system here
By atechfan on 8/4/2014 8:39:25 PM , Rating: 2
Google knowingly violated patents with Android, then saddled the OEMs with the licensing of said patents. Google is the one that rightfully should have been sued for patent infringement, but it would have been hard for Microsoft to collect had they won. It would not have been possible to collect a per-device royalty, as Google did not make the handsets, other than the failed Motorola division. Since Google did not sell Android licenses, MS couldn't go after royalties there as well.

Google knew this. That is why they were so brazen with their IP theft. They knew that they would not be the ones paying for it. While it sucks for Samsung and the others to be stuck paying royalties that Google should have been paying, Microsoft had to go after someone. Contrary to what Reclaimer thinks, Microsoft spends billions of R&D and they are obligated to their shareholders to collect revenue on the fruits of this R&D.

On top of that, patent holders are obligated in general to defend their patents. To not defend a patent against infringement is to allow that patent to be invalidated.

That said, Samsung is also obligated to their shareholders to maximise profits. If they think that they can use this to negotiate lower royalty rates, then it is in their best interests to follow this course of action. Samsung is taking a big gamble here, should the arbitration go against them and they be forced to pay all the overdue royalties plus interest. But if they win, and get a reduced royalty, or even no royalty at all, the risk will have been well worth it. It is a sensible move as the potential benefits of winning outweigh the drawbacks of losing.

By GatoRat on 8/4/2014 10:43:20 PM , Rating: 2
This isn't a patent dispute, it's a breach of contract dispute. Samsung signed a contract with Microsoft and then broke it. Frankly, this is pretty slam dunk. This is really about how much Samsung is going to pay--I predict a lot more than they offered.

"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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