Microsoft, Samsung settle patent fee fight

Microsoft and Samsung have avoided court by settling a contract dispute over patent royalties in a confidential agreement.

Microsoft sued Samsung last year in a federal court in New York, accusing Samsung of breaching a collaboration agreement by initially refusing to make royalty payments after the US company announced its intention to acquire Nokia's handset business in September 2013.

The lawsuit claimed Samsung still owed US$6.9 million in interest on more than US$1 billion in patent royalties it delayed paying. Samsung has countered that the Nokia acquisition violated its 2011 collaboration deal with Microsoft.

In 2011, a technology analyst at Citigroup estimated that Microsoft was getting US$5 per Android handset sold by phone maker HTC under a patent agreement, and that Microsoft was looking for up to US$12.50 per phone from other handset makers it had yet to come to an agreement with. 

Microsoft has never confirmed those figures, but has also refused to publicly state whether the estimates are inaccurate.

To apply the US$5 price to Samsung, the Korean company could be paying Microsoft about US$1.6 billion per year, based on Samsung's sales of 318 million smartphones in 2014, according to IDC shipment numbers.

Samsung said it had agreed in 2011 to pay Microsoft royalties in exchange for a patent license covering phones that ran Google's Android operating system. Samsung also agreed to develop Windows phones and share confidential business information with Microsoft, according to court filings.

Once Microsoft acquired Nokia, it became a direct hardware competitor with Samsung, the filings said, and Samsung refused to share some sensitive information because of antitrust concerns.

Antitrust regulators in the United States and other countries approved the Nokia acquisition.

Today's settlement also ends Samsung's request for arbitration with the Hong Kong office of the International Court of Arbitration of the International Chamber of Commerce.