A month after Microsoft took its cross-licensing dispute with Samsung to court, the lawsuit has been unsealed and the details of the contested agreement have spilled out.
Samsung is implying that Microsoft's purchase of Nokia nullified its cross-licensing agreement, but Microsoft says the terms of the seven-year contract still stand and the Korean tech company needs to pay roughly $1.07 billion to bring current the annual royalty payments.
"We are confident that our case is strong and that we will be successful," Deputy General Counsel David Howard said on Oct. 3. "At the same time, Microsoft values and respects our long partnership with Samsung, is committed to it, and expects it to continue."
An unsealed, redaction-free copy of the lawsuit was posted by Re/code on Oct. 3. Per the terms of the seven-year-long agreement, which was filed back in 2011, Samsung consented to paying royalties to Microsoft for the right to use patented Microsoft technology in Samsung mobile devices.
The deal entitles Microsoft to royalties from Samsung on any Android smartphone and tablet the Korean firm manufactures using Microsoft technology. Microsoft also agreed to package annual credits along with the use of its patented tech.
"So what changed," asks Howard. "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."
Samsung paid Microsoft $1 billion in royalties for the first fiscal year of the deal, was late in remitting payment for the second year and has refused to pay up for the third year. Citing interest on the late payment for fiscal year two, Microsoft is seeking $6.9 million from Samsung in addition to the third-year royalties.
Samsung argues the cross-licensing agreement was nullified when Microsoft purchased Nokia, which brought the Redmond, Wash.-based company a handset division. Microsoft argues that the license agreement provides for the acquisition of subsidiaries, dismissing Samsung's argument by stating the following in the lawsuit:
"To the contrary, as Microsoft has repeatedly reminded Samsung, the License Agreement contains explicit provisions (Sections 3.1 and 3.2) that grant a license to the patents covered by the License Agreement to both Samsung's and Microsoft's after-acquired subsidiaries, assets and/or and business units/divisions -- such as those acquired through the Nokia acquisition -- and thereby bars any such infringement claims."
Samsung also faces a lawsuit from Nvidia, which is seeking a court order to halt shipments of Galaxy mobile devices that use either Samsung Electronics' Exynos or Qualcomm's Snapdragron processors in the U.S. market. Nvidia alleges the devices infringed on seven of its patents related to graphic processing unit technology.
