Microsoft and Samsung Settle Their Breach of Contract Dispute

Microsoft sued Samsung in August 2014, alleging breach of contract for unpaid royalties on technology patents owned by Microsoft.  The gist of the parties’ contract was that Microsoft allowed Samsung to use certain patented technologies in its smartphones beginning in 2011. Microsoft alleged in its lawsuit that Samsung breached the contract by not paying interest on late payments, and by threatening to withhold future payments under the contract.  Some think that Samsung simply became unhappy with the amount of the royalties it was paying. Samsung shipped 82 million smartphones In 2011, the first year of the contract, and this number increased to 314 million in 2014.  Based on certain documents obtained in the litigation, analysts estimate Samsung was paying about $3.41 per device, resulting in  just over $1 billion of royalties in 2013, so this breach of contract action has some high dollar suspense.

Samsung attempted to argue that Microsoft actually breached the parties’ contract by purchasing Nokia’s cell phone business in April 2014, because the purchase made Microsoft a competitor, and the requirements imposed under the contract resulted in a violation of antitrust law, thus relieving Samsung from allegedly breaching the contract.  It was about the time of this transaction that Samsung stopped making payments due under the contract.  However, this theory was not tested as the parties were able to settle their dispute in February 2015, on confidential terms.  You can get more details on the Microsoft – Samsung breach of contract lawsuit here.


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