Device operating systems

Microsoft & Samsung Bury Hatchet

Microsoft and Samsung have agreed to patch up their relations after falling out over royalty payments last year, when Microsoft demanded $6.9 million in damages after claiming the South Korean handset maker had reneged on a previous agreement.

In a joint statement, the companies revealed they had come to terms but said the details remained confidential.

"Samsung and Microsoft are pleased to announce that they have ended their contract dispute in US court as well as the ICC arbitration," read the statement signed by Jaewan Chi, Samsung's executive vice president, and Microsoft's deputy general counsel David Howard. "Terms of the agreement are confidential."

Microsoft Corp. (Nasdaq: MSFT) initiated legal proceedings in August, having argued that Samsung Electronics Co. Ltd. (Korea: SEC) was in breach of a contract signed in 2011 regarding the cross-licensing of intellectual property.

That contract covered payments for use of Google's Android operating system: Microsoft claims this uses a number of its patents and has been demanding royalty payments from various makers of Android handsets, including Taiwan's HTC and China's ZTE, besides Samsung.

Samsung, however, had maintained that Microsoft's acquisition of Nokia's devices business rendered its contract with the US software giant invalid. (See Microsoft to Axe 12,500 Ex-Nokia Employees, Microsoft Officially Closes Nokia Buy and Nokia: It's Really Happening.)

In response, Microsoft accused Samsung of using the Nokia deal as an "excuse" to avoid making royalty payments. In August, it pointed out that Samsung had not sought legal advice on the ramifications of the Nokia deal, "likely because it knew its position was meritless."

At the same time, Microsoft implied that Samsung had flourished as a result of using its intellectual property, shipping 314 million Android smartphones annually, up from just 82 million when it signed its cross-licensing deal with Microsoft in 2011.

The software player had been seeking $6.9 million in damages from Samsung, saying this reflected interest on a late payment of $1 billion in royalties.

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Samsung has been accused of ripping off intellectual property by a number of major technology vendors in Europe and North America.

In January 2014, the company ended a patents dispute with Swedish equipment maker Ericsson AB (Nasdaq: ERIC), agreeing to pay a one-off settlement fee and make ongoing royalty payments over the duration of a new multi-year deal. (See Apple, Ericsson Clash on LTE Patents.)

It is also still embroiled in an intellectual property fight with smartphone rival Apple Inc. (Nasdaq: AAPL). Although the companies agreed to end legal battles outside the US in August, they are still pursuing cases in US courts.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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