Microsoft is suing yet another Android device maker – but this time it’s a very different case than their usual protection money scheme. Microsoft claims that Samsung has stopped complying with a patent sharing agreement between the two companies.
After becoming the leading player in the worldwide smartphone market, Samsung decided late last year to stop complying with its agreement with Microsoft. In September 2013, after Microsoft announced it was acquiring the Nokia Devices and Services business, Samsung began using the acquisition as an excuse to breach its contract. Curiously, Samsung did not ask the court to decide whether the Nokia acquisition invalidated its contract with Microsoft, likely because it knew its position was meritless.
Interesting, if true. This is what happens when you stop paying protection money – the burly men with clubs show up.
Well, that’s Microsoft’s side of the argument. What is Samsung’s? I bet they don’t think its merit-less or maybe they think they were forced into the agreement. Glad to see someone fight Microsoft on this issue.
According to the Microsoft document Samsung is shipping 300+ million’s of android devices a year. So its not small amount of money in royalties being paid on each device to Microsoft.
Given the recent collapse in Samsung’s profitability (http://www.bbc.co.uk/news/business-28578781), there will be pressure, especially shareholder pressure, for Samsung validate that they need to be paying Microsoft this money, instead of the shareholder –
http://investors.morningstar.com/ownership/shareholders-major.html?…
Its all about the money, accounting, profits and shareholders and nothing about Samsung being the gallant flag bearer for Android.
Edited 2014-08-02 11:02 UTC
Beside the claims of Microsoft named in the linked blog there where some more unnamed changes that could be relevant.
1. Microsoft buys Nokia’s Phone segment and turns into direct competition with Samsung.
2. Microsoft does produce and sell smartphone devices now. That means they depend and use Samsung IP. Samsung had crosslicense-deals with Nokia but that Nokia doesn’t exist any longer. The new MicroNokia needs to get on the table with Samsung and things need to be rearranged again taking the new situation into account.
3. The patents Microsoft used to tax Android got finally public cause of the Nokia-takeover thanks to China. There was lot feedback from the public including new arguments, like priot-art, that may make it possible, easier, less expensive to invalidate at least some of this patents making the whole deal more cheap for Samsung.
4. WP crashed and Samsung does not need any special WP conditions from Microsoft, if that was part of the deal, any longer. They are not worth anything now that Microsoft is in direct competition with them.
5. Microsoft payed a huge sum to Nokia at the takeover to use there patents in there, now own, Lumia productset. They did pay nothing to Samsung. Why should Samsung accept that? Newcomers, and Microsoft is one at making and selling smartphones, need to pay the oldies who hold tons of patents. Thats how that broken patentsystem works.
Edited 2014-08-02 15:49 UTC
Probably Samsung looking at the list of patents published by the Chinese and saying “we don’t really need it”, and they’ll probably say they were forced into the existing agreement “under duress” because of how Microsoft went after everyone to get people to pay it to start with.
So yes, expect a long court battle that either side will win; possibly with both sides winning in different countries and districts.
If there are documents signed by Samsung that agrees to pay to MS, then, Samsung is toasted.
That is just silliness – your making this out to be a contract dispute, when that is not what it is…
If that were the case, the worst that would happen to Samsung would be they have to pay up the remainder of the contract at the agreed rate, plus possibly some damage calculation and legal fees. I promise you if that was all that happened Samsung could not care less, that is peanuts.
Its about the patents. They want to put MS into a position where they might have to defend those patents in court. Samsung will counter sue, wait a few days…
MS does not want to risk defending those patents because they may lose them… They will cave after the lawyers go back and forth for a while and offer better terms to avoid it.
This is just corporate negotiation – all the suits will be dropped in due time. It won’t go anywhere…
Edited 2014-08-01 22:21 UTC
the worst that would happen to Samsung would be they have to pay up the remainder of the contract at the agreed rate, plus possibly some damage calculation and legal fees
That’s what I mean, Samsung has little chances to win this one if documents exists.
Well of course not, its kind of cut and dry, they broke the agreement (obviously documents exist)…
But they are not even going to try to win – this will never end up in front of a judge. They are going to counter sue over the patents.
Then MS will offer them better terms and they will sign new agreements and move on as if nothing happened…
There are lawyers at Samsung right now coming up with an invalidation offense for one or more of the patents. Prior art, lack of standing, whatever – it doesn’t matter. It doesn’t have to actually work, just be credible enough to scare the MS lawyers a bit…
Edited 2014-08-01 22:36 UTC
They are going to counter sue over the patents.
Counter sue for what?
Sorry, counter sue is probably the wrong term. I just mean they will file their own suit over one or more of MS’s patents…
Which could then result in a lot of Microsoft’s patents being invalidated and set a precedent for others to “violate” the agreements with Microsoft.
That depends entirely on the contents of the contract.
Mebbe …
http://finance.yahoo.com/news/microsoft-sues-samsung-royalty-disput…
[Bottom of article]
The complaint also alleged that Samsung has asked South Korean competition authorities to change the contract to reduce or eliminate its payments to Microsoft.
Samsung said in a statement, “We will review the complaint in detail and determine appropriate measures in response.”
Not necessarily. If Microsoft was claiming royalty rights to invalid patents or intellectual property then the contract may very well be invalidated (you can’t sell what is not yours).
This is a perfect example of how the patent system is easily manipulated when your at the top of the food chain.
Its all about the Benjamins – this is just patent negotiation playing out… Samsung makes enough money now that the cost of compliance to their agreement with Microsoft outweighs the cost of funding a defense in court:
(Legal Fees + Projected Worse Case Damages) < Ongoing Licensing Fees
Its not about MS being “evil” for pursuing Android licensing, its not about Samsung being “evil” for violating their agreement, its simply how the game is played.
This will quickly end in renegotiated terms more favorable to Samsung. This won’t go anywhere or change anything. Sadly…
Since Microsoft released the MDOS source for educational use, you can bet we will find prior art in FAT which they use to extort payments from anything Linux. Time to invalidate those abstracts
If you find the old PDF of the FAT/FAT32 spec from microsoft, you will find wording that disclaims any IP required to implement it (not so for exFAT).
Watching Samsung, Microsoft and Apple fight about patents is like watching total dickheads fighting. I really don’t shed a tear for any of them.
More like what happens when you don’t honor a written agreement.
Unlike you, Samsung has an army of Corporate lawyers. I think they have worked out a case for this (I am presuming invalidating some of the patents to show that Microsoft wasn’t supplying what was promised, or something along that lines.)
Yeah Microsoft should’ve thought twice about violating the smartphone non-competition clause of their written agreement with Samsung. And they never did acquire Nokia’s patents so they also showed gross negligence by assuming they had a functional cross-licensing agreement with Samsung. Looks like they owe Samsung some money.
In normal cases I’m sure the companies would be able to work something out. But victims of extortion like Samsung aren’t left with a lot of reasons to be accommodating.
Edited 2014-08-02 15:46 UTC
So yeah, just what I said. This is what happen when a party, rightly or otherwise, don’t honor a written agreement.
Yeah, I fail to understand the kneejerk reaction, hyper-opinionated editorial comments, and exaggerated indignation by OSAlert editors over every contract dispute that makes the news.
Samsung and Microsoft have a contract. Samsung says the contract is void because of Microsoft’s Nokia deal. Microsoft says the contract is still valid. So they’re asking a judge to settle the issue in court. That’s what judges do, and that’s what courts are for.
“Protection money,” “burly men with clubs,”… Seriously??? Grow up.
“Interesting, if true. This is what happens when you stop paying protection money – the burly men with clubs show up.”
Isn’t that what the whole income tax is all about?
In the US that’s when the armored cars with full body armor, full automatic weapons and artillery show up….oh wait a sec, they’re probably there to confiscate your neighbor’s SUV!
No, because you’ve already partook and benefited from publicly provided services and so your tax is payment for services rendered. The burly men with clubs part is when you don’t pay for those services, in effect stealing from the people who did pay for them.
kwan_e,
That’s fine in principal, and everyone should pay their taxes to pay for services provided. Unfortunately though taxes don’t always go to public services, but can also pay for unauthorized/unconstitutional/illegal operations too.
Considering huge sums of our national defense budget are officially unaccounted for, my guess is that the amount of public money that’s being misspent is not insignificant.
http://rense.com/general70/trill.htm
“according to some estimates we cannot track $2.3 trillion in transactions.”
“Total undocumented accounting adjustments for reported periods for the Department of Defense [and HUD for fiscal 1998-2000] amount to a whopping $3.3 trillion, or $11,700 for every American.”
Yes, and we should try to stop that. What I only argue against is the rhetorical argument that the principle is bad because the implementation is bad. It removes any chance of sensibly talking about what society considers important to support as a whole.
But regardless, some of my taxes do go towards legal public services, and so for someone else to use and/or benefit from those services without paying for it is stealing from me. That I end up paying (unwillingly) for illegal and/or unnecessary operations does not negate the fact that I also paid (willingly) for the legal ones.
The difference however of an income tax versus fair taxes like sales and consumption taxes is pretty significant though.
Edit: And perhaps she did not wish to partake in those services, but was forced to do so as there is no way of opting out.
The government is the initiator of force, wheter their goal for stealing your money is noble or not is not the question. Theft is theft, and force is force.
Edited 2014-08-03 21:42 UTC
A society’s stability depends on, for example, an educated populace. If you live in any country that provides public schooling, you are benefiting from that whether you like it or not. Or, businesses needs things like roads to make business more efficient. You automatically benefit from an improved economy due to roads whether you like it or not.
Asking you to pay for that when you’ve received that benefits is not stealing. You wanting to get all the benefits while having me* pay for all of it on your behalf is stealing from me.
Enforcing the rule that people pay for things does require force. Why not? If you steal from me, why shouldn’t I use force to get things back? Your stealing from me is theft and force. Or do you mean to say your libertarianism means it is your freedom to be able to rob me of my resources and I don’t have the liberty to get it back? Only your are allowed to use theft and force and no one else is allowed to?
* And by “me”, I mean anyone who sees the benefits and reasons for public pooling of resources.
In the end, it basically comes down to this: countries with high taxes but superb social security, healthcare, education, etc. etc. all rank consistently the highest in happiness, best places to live, life expectancy, and so on, and the lowest on things like crime, infant death, drug abuse, and so on.
I happily pay my 40-50% Dutch taxes because I know it maintains our excellent roads,, healthcare, and education, while also making sure that those less fortunate than I – say, a single mother with three kids, a disabled person, a retiree – can lead relatively healthy, comfortable lives with all the same opportunities that I, as upper middle-class, had.
Libertarianism is inherently egocentric and self-serving. “As long as I’m happy, everyone else can fuck off and die.”
The taxes also pays for the dutch soldiers in afghanistan that is killing people in your name.
The number of Dutch soldiers involved in killing innocent people abroad is infinitely smaller than the number of Dutch soldiers involved in defending our nation against the water, disaster relief and control (e.g. the terrorist attack by Poetin that killed almost 200 Dutch people), peace-keeping missions, foreign aid, combating piracy off the Somali coast, providing employment, etc. etc. etc.
It’s easy to look at a small thing you disapprove of and then go BUT MUH TAXES without actually taking a step back and looking at it rationally. If you’re American, I can understand your position a bit more because the US is fundamentally broken at virtually every government level, but that’s not a tax problem, but a problem of enough American citizens not giving a fuck.
Come visit Scandinavia, Germany or The Netherlands for a while. Virtually every American expat in The Netherlands tells the same story: surprised by the taxes at first, but they realise quickly just how much better life is in The Netherlands because of them.
We’re not talking opinion here – it’s a fact. The best places to live are, and have been for decades, the Nordic countries, The Netherlands, and Germany. There’s a reason for that.
The reason is economic and personal freedom. Not taxation.
A far larger percentage of Dutch citizens have economic and personal freedom than do American citizens – because of taxes.
Also as you pointed out, there is less violence perpetrated by the dutch state against its citizens than in the USA. Exampel the imprisonment for non-agressive drug crimes and violent enformenet of laws as seen here commonly.
For that statement to make any sort of sense, first, you have to define what you mean by “freedom.” And then you have to provide the actual percentages with verified sources.
So you are saying people would not be educated if there was no income tax. I have never heard anything that absurd.
No, I’m not saying that.
What I’m saying is THAT’S WHAT HAPPENED. That is the system we have NOW. A great number of people in the developed world are educated on AVERAGE better than people 100 years ago because of public funded schools.
Whether or not that is the sole means to achieve it on a WIDE SCALE (which you fail to qualify), it doesn’t change the fact that it’s HAPPENED THAT WAY.
If you want to change the system, fine. But first, pay us all back for all the benefits you’ve received thus far from that system. If you don’t, you’ll be stealing from us and thus gives us good reason to get it back from you by force if necessary.
Modern medicine have given you a several x better chance of survival. Now give it back… that is not how the world works little deary.
I DO give back. Have you not been paying attention? I pay for public hospitals and universities, who in turn redirect my money back towards the entities, public AND private, who did the research.
That is how the world works. Your attempt at a counter argument shows how little you understand about indirect flows. That is the curse of the libertarian ideal – anything that’s not directly in front of you you can’t imagine its existence.
This is how the world works – it is an entangled web.
Many countries and states have low or no income tax, revenue can be gained by the state without the income tax.
kwan_e,
We really should call it “tax evasion”, because that’s what it is. “Stealing” would be more appropriate when someone inside the government uses public funds without permission, or if someone literally stole the funds out of the treasury.
I feel one of the biggest problems with tax system in the US, the reason it’s so difficult to fix, is that it operates in debt. *We* are effectively paying for services rendered one or two decades ago. The fundamental problem is easy enough to see, the taxes collected were never saved for those who would be consuming the services, they were spent on other things in the past. Essentially they got more services than they paid for, and now we’re getting less.
The situation really sucks for this generation of taxpayers without passing the problem to future generations. However even that strategy is problematic. Take the example of social security, if you are a sufficiently young US taxpayer, you should have gotten an official statement from the government notifying you that, without increasing taxes on future taxpayers, you will receive something like 80 cents on every dollar you paid in.
http://americanvision.org/countyrights/?p=94
It’s really not that public services are bad, in fact I feel they are extremely important. It’s that they are so mismanaged that’s the problem. I have no idea what the answer is, how do we fix what’s been done…default on our debt? I suppose at some point the national debt will intersect and bypass the economic & social costs required to recover from declaring bankruptcy…but it would probably be the most financially destructive event we’ve ever faced. It’s just a crummy situation that continues to snowball into a bigger and bigger disaster waiting to happen. At some point our descendants will have to face the consequences, right?
Edited 2014-08-04 21:29 UTC
I’m just using the same absurd hyperbolic language used by the other side to highlight how ridiculous it is to continue to use the old libertarian tropes of tax being theft and violence. Using their logic, what they’re advocating IS stealing just the same.
Yes, that is the true debate, about how best to manage them. When people start making the issue to be about whether we should have them or not, it just deadlocks the whole debate. By actually figuring out, maybe through experimentation, how to improve management, we’d probably end up paying less in taxes and getting more out of our public services.
I see no problem in pooling your money, but using force or coercion to pool money makes it morally comparable to the mafia.
Our taxation – and the high-quality life they enable for a far larger percentage of citizens than in e.g. the US – are the result of a proper democratic process. There is no force or coercion.
Forcing 20% of your citizens to live below the poverty line, and letting them literally rot away with no access to healthcare or education, in crime-ridden areas – I call that coercion. It’s all a matter of perspective.
I agree that the US government is no better. Just saying that there is other ways for the government to have revenue other than taxation. Since if 50% income taxation is better than 10% then 100% should be the optimal, right?
No. This is a stupid extrapolation that no one is claiming. Do you know any maths more complicated than a linear equation?
It was an absurdum to proove a point. Wow.. im out.
No, it was an attempt at an absurdum, but because no one was making that argument, you’ve only created a strawman.
David Howard, Microsoft VP and Deputy Counsel, commented as follows:
“Curiously, Samsung did not ask the court to decide whether the Nokia acquisition invalidated its contract with Microsoft, likely because it knew its position was meritless.”
Courts aren’t supposed to get involved until AFTER a lawsuit is filed. Courts resolve disputes; they don’t offer legal advice, especially regarding contracts. Sounds like Howard is making a specious comment for the sole purpose of wanting to make Samsung look bad.
Maybe someone knows otherwise, but the MS/Samsung agreement was not negotiated to settle any prior litigation – right?
Uh, yes there is? Samsung could’ve asked for a declaratory judgement.
Instead they simply breached the contract.
Yes, Samsung could have filed for declaratory judgment. Doing so would constitute a LEGAL ACTION. However, that is not how Howard described Samsung’s options. Let’s go back to Howard’s statement.
Here is how he described Microsoft’s action:
“Microsoft filed LEGAL ACTION against Samsung …”
Here is how he described possible actions by Samsung:
“Samsung did not ASK the court to decide …”
What Howard should have said is, “Samsung did NOT file a LEGAL ACTION against Microsoft …”
– but he didn’t. Total marketing spin by Howard.
There could be a non-compete clause in the agreement or something else that is breached by Microsoft acquiring Nokia. Microsoft had a history of legal abuse, and Samsung had a history of being unclassy. The truth is probably halfway, and believing either of these companies word-for-word seems naive.
May be Samsung wants to use the latest Supreme Court decision which invalidates many junk patents which patent abstract ideas by adding “on the computer”? Probably a good amount of MS patents can be invalidated that way. Dealing a serious blow to this brazen racket that MS engages in would be very beneficial for the industry.
Samsung already attempted that tactic with Apple.
Edited 2014-08-03 02:35 UTC
It is also possible that they decided that being pushed into signing a licensing agreement that was being leveraged by an NDA was a mistake and may be, like some of the patents, void, ineligible or unenforceable.
MSFT gave Barnes and Noble a $610 million settlement in the suit they brought against B&N for not licensing MSFT’s eye pee.
Nokia was able/forced/clever to sell off D&S to avoid bankruptcy. The $250 million/qtr. partner payments had done nothing to keep the wolf away from their door.
The Chinese exposed the patents that were under NDA, cutting the legs out from under the use of that tactic.
If Samsung goes further and actually busts those patents instead of settling for some better deal, that would be great. But few are actually principled enough to fight to the end, like Newegg for example. B&N caved in and took the bait.
Edited 2014-08-03 19:47 UTC