Microsoft is taking Samsung to court over a breach of contract

Microsoft is not happy with Samsung and is taking them to court over Android patent royalties. The Redmond-based company claims that Samsung has violated its contract with Microsoft and as a result, Microsoft is taking them to court to battle it out.

This case, if it makes it to trial, will be a monumental fight for Samsung and Microsoft as they both have huge bank accounts and both must believe that they are in the right for it to have gone this far. Further, for Microsoft, they have been signing patent agreements with nearly everyone and if they were to lose this case, it would strip out a large revenue stream for patent royalties on Android-based devices.

Microsoft said in their post about the complaint:

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.

While Samsung will certainly publish a rebuttal to this accusation, it's a strong statement from Microsoft considering that Samsung makes quite a few Windows products as well. What sparked the complaint from Microsoft is that Samsung did in fact make its royalty payment, but that it was late, and they are refusing to pay the interest. They are also threatening to breach the agreement again. 

This letter is only the start of a very long fight, if Samsung does go to trial against Microsoft, we likely won't have a ruling on whether or not Samsung did breach the contract for many months, perhaps even years.

Source: Microsoft | Full Complaint (PDF)

The headline of this story and small parts of its content have been updated after we received the official complaint filed by Microsoft

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I have a Note 3 with 64GB card, anyone want to trade it for a Nokia 930 with Rogers LTE bands?

I'm done with Samsung...

Greedy Microsoft is using its PC dominance to extort money from the mobile sector knowing that people can't use their SD cards on Windows unless they're formatted in supported file systems.

yowanvista said,
Greedy Microsoft is using its PC dominance to extort money from the mobile sector knowing that people can't use their SD cards on Windows unless they're formatted in supported file systems.

I really wish that companies would just ship Ext4 Windows drivers with their devices for this purpose. Completely bypass Microsoft's FAT patent monopoly.

yowanvista said,
Greedy Microsoft is using its PC dominance to extort money from the mobile sector knowing that people can't use their SD cards on Windows unless they're formatted in supported file systems.

Phones are computers. They have to pay to use the technology. The fact that it's being used on mobile phones is irrelevant, especially since Microsoft has competed in that space far longer than Apple and Google.

If they didn't want to pay for FAT, they should stop using Microsoft's technologies. It's not like they couldn't ship a file system driver with the phone.

simplezz said,

I really wish that companies would just ship Ext4 Windows drivers with their devices for this purpose. Completely bypass Microsoft's FAT patent monopoly.

So why don't they?

Enron said,

So why don't they?

They would if it was just about FAT. The truth is that it's about way more than just FAT.

Wish people would stop bringing up FAT already, it's literally 2 or 3 patents out of well over 100, shockingly almost none of which have to do with a file system. And there's absolutely nothing stopping third parties from writing their own file system driver if they so choose, hint, it's already been done plenty of times, even Ext2/3/4. Save the "extortion" hyperbole for a case where it actually applies.

Max Norris said,
Wish people would stop bringing up FAT already, it's literally 2 or 3 patents out of well over 100, shockingly almost none of which have to do with a file system.

And yet it's always in the lawsuits and patent lists Microsoft uses to threaten competitors. It's probably the only patent that has stood up to scrutiny in some courts (US). That doesn't change the fact that it has prior art, or that it's obvious (short/long file names). Still, the US is known for granting vague, obvious, and existing ideas as patents, so it's nothing new.

Max Norris said,

And there's absolutely nothing stopping third parties from writing their own file system driver if they so choose, hint, it's already been done plenty of times, even Ext2/3/4.

I actually agree with you here. There's even an open source version already out there that I use. Although it's a bit buggy.

simplezz said,
And yet it's always in the lawsuits and patent lists Microsoft uses to threaten competitors.

Yes, along with over a hundred others. Even if FAT gets tossed, there's an awful lot more to keep them busy for quite a long time. Obvious as it may be, it's still a patent, until the law changes people can't pick and choose when they will or won't follow them. Microsoft's just playing the game just like everybody else, certainly not alone there.

simplezz said,
Although it's a bit buggy.

Probably the same one I've toyed with, kinda sorta works but.... there's paid ones that supposedly work very well but not something I personally need *that* badly.

Enron said,

So why don't they?

Because developing and supporting the drivers would cost more than FAT. And it makes their products a little harder to use.

simplezz said,

And yet it's always in the lawsuits and patent lists Microsoft uses to threaten competitors. It's probably the only patent that has stood up to scrutiny in some courts (US). That doesn't change the fact that it has prior art, or that it's obvious (short/long file names). Still, the US is known for granting vague, obvious, and existing ideas as patents, so it's nothing new.

You clearly do not know what you are talking about. Prior art doesn't mean that if something already existed, then any future patent is invalid. Patents are all about specific details. Yes, the summaries always sounds dumb "a method to (fill in the blank with something that already existed)" But read the details, it is the new method which is being patented. Is it possible to create a file system similar to FAT which does not use MS patens? Sure, it would be easy, and has been done many times. Is if frustrating to pay for IP from MS that you probably don't really want to use, but need to for Windows compatibility? Of course it is. Does that somehow make it a dirty business practice? Not at all.

Edited by sphbecker, Aug 2 2014, 9:28pm :

Samsung clearly doesn't give a damn about violating patents and agreements. Hope they get stung with their wallets.

I really don't think this is as cut and dried as some here seem to believe. Samsung are not going to risk it ending up in court and paying out millions (or even billions?) with the excuse of "MS bought Nokia so we decided not to pay them". There has to be more to it.

We need to hear both sides of the argument before we can even begin to form a judgement, although I realise people will jump to conclusions because this is a pro Microsoft site...

gameboy1977 said,
Maybe Apple would join Microsoft against the Samsung, so Apple, and Microsoft will become allies. Do you agree?

They already are... Their common enemy is Android.

gameboy1977 said,
Maybe Apple would join Microsoft against the Samsung, so Apple, and Microsoft will become allies. Do you agree?

they already are. apple and microsoft are a part of the rockstar consortium,which acquired the Nortel patents, and they have already filed lawsuits against samsung, google, huawei, and other companies.

gameboy1977 said,
Maybe Apple would join Microsoft against the Samsung, so Apple, and Microsoft will become allies. Do you agree?

Where have you been the past several years?

gameboy1977 said,
Maybe Apple would join Microsoft against the Samsung, so Apple, and Microsoft will become allies. Do you agree?

Apple and MS are always in bed together
They always X-patent each other stuff

TurboAAA said,
I'm bored of these lawsuits, can we get back to innovating?

I really wish Microsoft would. But it seems it doesn't matter who's in charge of Microsoft, they'll continue suing over dubious patents and trying to extort money from competitors (Android).

simplezz said,

I really wish Microsoft would. But it seems it doesn't matter who's in charge of Microsoft, they'll continue suing over dubious patents and trying to extort money from competitors (Android).

Dubious patents. Microsoft spend millions in R&D and Google and partners just rip off Microsoft and Apple. If you invented something would you give it away for free? I doubt it.

Clamdigger63 said,

Dubious patents. Microsoft spend millions in R&D and Google and partners just rip off Microsoft and Apple. If you invented something would you give it away for free? I doubt it.

Millions? More like billions. Microsoft spent $10+ billion on R&D in 2012 alone.

simplezz said,

I really wish Microsoft would. But it seems it doesn't matter who's in charge of Microsoft, they'll continue suing over dubious patents and trying to extort money from competitors (Android).


So MS stopped working on innovation? I must have missed that one.

Let's not take one part (i.e. arguments over patents) and then blow it up to be the only thing MS does. They actually do a lot.

I understand what you are saying, but the problem is that Microsoft IS a huge patent troll and have made it hard to respect their use of patents.

Right or wrong, if they signed an agreement, it's a breach of contract, plain and simple, not going to end well for them. Should have told MS to shove it before hand, it's a little late now.

Dear god, only a corrupt lawyer could extend something so cut and dry into a year+ lawsuit. Either they've been paying or why haven't. Simple as that.

recursive said,
Here's hoping MS lose. That will make them work for their money like everyone else.
not likely to happen. MS has a clear case here. Samsung made(signed) an agreement and they're refusing to follow it now

recursive said,
Here's hoping MS lose. That will make them work for their money like everyone else.

Their R&D works pretty hard...

recursive said,
Here's hoping MS lose. That will make them work for their money like everyone else.

Not a Mircosoft Fan.. I'm only on this site because I've become friends (real life, lol) with alot of members.. But, MS has a clear and cut case here.. I would love to MS go down.. but, this isn't it. I give it 10 years and they are out of the Workstation market.. Not because of Windows 8, because they don't have a real tablet option. Not being a fan boy.. but, when a company, and hey, it COULD BE MS, comes out with a true, full, 100% workstation replacement tablet that doctors, lawyers, ect can use at work.. It's done.. If MS does this, great.. but, not the way they are going.. And yes, I know that the Surface can be a "workstation replacement".. but people like the flow of the iPad.. I've worked for firms with 600 attorneys.. Worked for one of the largest hospitals in the world.. It isn't here yet.. But when it is.. Only one company is going to get it right and hopefully others will follow.. I can tell you this, no one has it right yet.

Brando212 said,
not likely to happen. MS has a clear case here. Samsung made(signed) an agreement and they're refusing to follow it now

So you have seen and read any confidential agreements between them? Cool, let us in on the secret! LOL

ir0nw0lf said,
So you have seen and read any confidential agreements between them? Cool, let us in on the secret! LOL

So you think they just shook hands on it, maybe a pinkie-swear? Real life doesn't work that way.

Max Norris said,

So you think they just shook hands on it, maybe a pinkie-swear? Real life doesn't work that way.

He's probably talking about everyone saying MS has a clear cut case but they haven't seen the contract to know if Samsung has a valid reason for not following the contract.

I thought it was pretty obvious.

Why accuse one or the other without hearing the whole story? Not saying who is right or wrong, but it is silly to decide who is guilty by hearing 1/2 the story.

techbeck said,
Why accuse one or the other without hearing the whole story? Not saying who is right or wrong, but it is silly to decide who is guilty by hearing 1/2 the story.

WUTANG

VHMP01 said,

Their R&D works pretty hard...

Not if that list the chinese released is anything to go by. I don't call taking decade old desktop OS related features, which I might add are omnipresent and obvious, and suing/threatening every Android OEM working hard. It's called extortion and patent abuse. But then again, this is Microsoft we're talking about here. If there's some way to hurt the competition, no matter how underhanded, they'll do it.

Edited by simplezz, Aug 1 2014, 10:22pm :

fusi0n said,

Not a Mircosoft Fan.. I'm only on this site because I've become friends (real life, lol) with alot of members.. But, MS has a clear and cut case here.. I would love to MS go down.. but, this isn't it. I give it 10 years and they are out of the Workstation market.. Not because of Windows 8, because they don't have a real tablet option. Not being a fan boy.. but, when a company, and hey, it COULD BE MS, comes out with a true, full, 100% workstation replacement tablet that doctors, lawyers, ect can use at work.. It's done.. If MS does this, great.. but, not the way they are going.. And yes, I know that the Surface can be a "workstation replacement".. but people like the flow of the iPad.. I've worked for firms with 600 attorneys.. Worked for one of the largest hospitals in the world.. It isn't here yet.. But when it is.. Only one company is going to get it right and hopefully others will follow.. I can tell you this, no one has it right yet.

Get real. Microsoft have the best tablet/laptop option it's called the Surface.

simplezz said,

Not if that list the chinese released is anything to go by. I don't call taking decade old desktop OS related features, which I might add are omnipresent and obvious, and suing/threatening every Android OEM working hard. It's called extortion and patent abuse. But then again, this is Microsoft we're talking about here. If there's some way to hurt the competition, no matter how underhanded, they'll do it.
Yet, back in the time those patents ware created, they where special features, that they are now common, doesn't mean the patent should be ignored.

simplezz said,
But then again, this is Microsoft we're talking about here. If there's some way to hurt the competition, no matter how underhanded, they'll do it.
yep, the recorded histories of Microsoft's deeds, shall agree with you.

simplezz said,
old desktop OS related features, which I might add are omnipresent and obvious

They're omnipresent because everyone copied them. If you built a better wheel, wouldn't you want some money for your work?

dvb2000 said,

Incorrect. MS has no case. Samsung has the case.
care to explain? no really, i'm open ears as not much is known right now

simplezz said,

Not if that list the chinese released is anything to go by. I don't call taking decade old desktop OS related features, which I might add are omnipresent and obvious, and suing/threatening every Android OEM working hard. It's called extortion and patent abuse. But then again, this is Microsoft we're talking about here. If there's some way to hurt the competition, no matter how underhanded, they'll do it.


Honestly, you could replace Microsoft with the name of almost any other tech company and your words would still apply.

simplezz said,

Not if that list the chinese released is anything to go by. I don't call taking decade old desktop OS related features, which I might add are omnipresent and obvious, and suing/threatening every Android OEM working hard. It's called extortion and patent abuse. But then again, this is Microsoft we're talking about here. If there's some way to hurt the competition, no matter how underhanded, they'll do it.

Some of the patents in question are over 20 years old, by today's standards, yes, they are obvious, almost anything would seem obvious once it has been used and understood for years. I am sure at some point people will start complaining about the touch screen patents everyone in the industry pays Apple for are somehow not valid. The fact that MS's IP from so long ago are still relevant today goes to show their success in the market place. Yes, there are better technologies available today, so use them if you don't want to pay MS anymore.

If isn't as if you can go to a car dealership and ask for a older used car for free. Why should IP become free just because it is no longer cutting edge? Paten law already allows for patens to expire. I will agree that I think tech patens should expire faster, but you can't fault MS for working within the laws. Lobby to have the laws changed if you want.

Well, if Samsung isn't following their agreement, there isn't much to fight over and this shouldl be over soon, in favor of Microsoft.

Studio384 said,
Well, if Samsung isn't following their agreement, there isn't much to fight over and this shouldl be over soon, in favor of Microsoft.

Of course... Or maybe Samsung' lawyers, who have the agreement and know what it says, believe there is something to denounce it. I did not read it therefore I am not venturing to proclaim who is right and who is wrong but clearly Samsung believe so.

As I understand it, Samsung has royalty and IP sharing agreements with both Nokia and Microsoft. The one with Nokia is on far better terms than that with Microsoft. Now that Microsoft own Nokia, Samsung is expecting to only have to honour the Nokia agreement.

It actually sounds quite reasonable to me. If Microsoft didn't do its due diligence on the Nokia takeover properly, then they deserve the suffer the consequences.

samsung thought they could breach the contract,and microsoft will do nothing because microsoft needs their support in the smartphone market. microsoft called their bluff and filed suit. watch,this won't even make it to trial,and will be settled soon with Samsung agreeing to honor the contract. if samsung really had a case, they would have taken it to court themselves and never made the last payment that was late. they didn't because they know they don't have a case.

dvb2000 said,
As I understand it, Samsung has royalty and IP sharing agreements with both Nokia and Microsoft. The one with Nokia is on far better terms than that with Microsoft. Now that Microsoft own Nokia, Samsung is expecting to only have to honour the Nokia agreement.

It actually sounds quite reasonable to me. If Microsoft didn't do its due diligence on the Nokia takeover properly, then they deserve the suffer the consequences.

This makes no sense. Nokia sold only its device division. It did not sell their IPs. Nokia still owns their patents, here services and their telecom infrastructure division.

dvb2000 said,
As I understand it, Samsung has royalty and IP sharing agreements with both Nokia and Microsoft. The one with Nokia is on far better terms than that with Microsoft. Now that Microsoft own Nokia, Samsung is expecting to only have to honour the Nokia agreement.

It actually sounds quite reasonable to me. If Microsoft didn't do its due diligence on the Nokia takeover properly, then they deserve the suffer the consequences.

That is not the way it works at all. If you have an agreement with company A and another with company B, then both agreements are still in place if company A buys company B. What you are saying is a little like a couple about to get married who each has a 1 year lease on apartments at the same complex, then expecting they only have to pay for one of them after getting married. Both contracts are still valid and both must be completed.