Microsoft and Samsung in royalties row

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Microsoft is suing Samsung for threatening to stop paying royalties to the software giant for patents behind the Android operating system. The two companies came to a deal in September 2011 to cross-license each other’s patent portfolios and Samsung wound up paying Microsoft royalties on a series of patents. Analyst Rick Sherlund of Nomura Securities has estimated royalties on its Android patents bring Microsoft nearly $2bn a year. Microsoft, based in Redmond, Washington, says more than 25 companies are licensing the patents, including Samsung, Acer and ZTE, covering about 80% of the Android-based smartphones sold in the US. In a blog post Microsoft’s deputy general counsel said Samsung Electronics decided to breach its contract after Microsoft announced in September that it was acquiring Nokia’s devices business. After initially refusing to pay royalties in the second year of the deal, Samsung made a late payment in November but did not add on interest, according to a redacted copy of the complaint filed in federal court in New York and provided by Microsoft. 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.”