Lawsuits and penalty payments have become a regular day affair in the tech world. As we are racing towards the latest technological innovations, the requirement to stay on top of competition is becoming even more crucial. After several lawsuits between Apple (NASDAQ:AAPL) and Samsung (SSNLF), now the Korean phone maker got engulfed in another such suit with Microsoft (NASDAQ:MSFT). The Redmond based tech mammoth recently filed a case against Samsung, stating that the latter has violated its patent-licensing contract with Microsoft. Here’s what’s going on.
The Core Issue
All tech companies have patents related to one thing or the other and sharing of the rights is obvious after taking due permission and paying royalty for the same. However, this seems t be something that Samsung may be doesn’t believe in. This time, too, the allegation against Samsung is that it used certain patents owned by Microsoft without meeting norms.
The patent in dispute includes rights related to a certain feature being used in Google (NASDAQ:GOOG) Android operating system – how the device will display multiple windows while surfing the web. Samsung and Microsoft have a patent-licensing contract that allows the Galaxy maker to use the feature any pay for the same. But the Korean giant didn’t pay for the royalty on time, and even refused to pay the interest accrued as a result of late payment, forcing Microsoft to take the issue to the court.
So, does this mean Samsung is guilty and Microsoft is correct? Let’s take a look at the other side of the coin.
Samsung’s Counter Argument – The Reason Behind
It’s known to all that Nokia’s (NYSE:NOK) handset business got acquired by Microsoft a few months back, and this is something that caused Samsung to react in this manner. According to the company, Microsoft’s acquisition of Nokia’s mobile-devices business has violated the terms of the agreement that the two companies share, along with another business arrangement between the two, instigating Samsung to not honor the 2011 patent-licensing agreement. However, Samsung did pay the due amount, but paid it late.
What All This Boils Down To
Right now the issue has been reduced from not paying the royalty to not paying the late fee for late royalty payment. While some analysts believe this is not too big an issue and should be resolved through mutual understanding, industry experts believe an incident such as this can actually have long lasting implications for the Windows maker.
Through the lawsuit, Microsoft seeks to enforce the 2011 patent-licensing agreement and get a permanent solution for the claims made by Samsung. If the court rules that the Nokia acquisition should not have an effect on the licensing agreement, then Samsung will have to part with some money as a late payment fee.
For Microsoft, the fine that Samsung might have to pay is not as important as the ruling. The decision in the Redmond based company’s favor would mean an automatic win for the company in such future situations. Microsoft charges the OEM’s using Andriod OS for the patented features and this pulls up the cost of the devices. Automatically, retaliation comes from the OEMs. The company is already in dispute with many such manufacturers, including Motorola, and a win such as this can help counter all these disputes.
What remains to be seen is how all this will affect the terms between Samsung and Microsoft. Both the parties are dependent on each other. Samsung is a leading manufacturer whose devices are powered by Microsoft operating systems and features. Again, Microsoft is a global power when it comes to operating systems for personal computer. The wisest way for the duo would be to find out an agreeable solution and continue being friends (partners) and foes (rivals).