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12 February 2015

Microsoft and Samsung announce licensing truce

The welcome wave of peace that is sweeping over the smartphone patents world has spread to Microsoft and Samsung, which have settled a dispute over Android royalties.

Microsoft sued the Korean giant last year for allegedly breaking the terms of their licensing agreement for Microsoft Linux-related patents, which are used in Android. The Windows firm has licensing deals for these assets with most Android device makers and before the acquisition of Nokia’s device business, made more revenue from those arrangements than from its own Windows Phone (if the devices themselves are discounted, that will be even more true now that Microsoft has removed most licensing fees for its mobile OS).

It was the Nokia takeover which led to the latest legal spat with Samsung, which had signed a cross-licensing deal related to Android in September 2011. Samsung claimed the acquisition violated some of the provisions of that agreement and so withheld its licence fee payment for the second fiscal year of the arrangement, which ran from July 1 2012 to June 30 2013.

This payment fell due in October 2013. Samsung finally paid up a month later but Microsoft then sued it for a claimed interest amount of $7m and said that the handset maker was threatening to withhold fees for the subsequent year and thereafter, despite the deal having a seven-year lifespan.

Samsung filed a request for arbitration in October with the International Court of Arbitration of the International Chamber of Commerce. This seems to have born fruit, as on Monday, the two firms said they were “pleased to announce that they have ended their contract dispute in US court as well as the ICC arbitration. Terms of the agreement are confidential.”

The settlement also provides for credits and potential reimbursements for marketing expenses to Samsung for the development of smartphones and tablets running Windows, said the statement.