Sun, Oct 05, 2014 - Page 13 News List

Microsoft seeking interest on US$1bn royalties Samsung paid for technology

Bloomberg

Microsoft Corp said, in a patent lawsuit against Samsung Electronics Co, that the South Korean smartphone maker paid it as much as US$1 billion in royalties last year under a now-disputed 2011 licensing agreement.

The payment was disclosed for the first time in a court filing in Microsoft’s complaint alleging Samsung breached an agreement to share patents.

The seven-year accord requires Samsung to pay Microsoft royalties for phones and tablets that use the software maker’s patented technology, according to the filing made on Friday in Manhattan federal court.

Samsung has refused to pay US$6.9 million in interest owed under the agreement, the filing read.

“Samsung has suggested that Microsoft has breached the business collaboration agreement,” Microsoft’s deputy general counsel David Howard said on Friday in a blog post.

“We disagree and that’s why we asked the court to rule that Microsoft is not in breach,” he said.

The US giant claims Samsung is using Microsoft’s acquisition of Nokia Oyj’s phone business as an excuse to stop complying with the contract. The license agreement contains explicit provisions that grant a patent license to both companies’ subsidiaries, including Nokia, Microsoft said in the complaint.

The acquisition does not breach a provision of the agreement that the two companies collaborate, the company said in the filing.

Most Samsung mobile devices run Google Inc’s Android operating system.

Microsoft pays Samsung an annual, pre-set royalty to use Samsung’s patents, which is credited against royalties the South Korean firm owes Microsoft each year, according to the filing.

Microsoft is seeking payment of the US$6.9 million and a declaration by the court that its addition of the Nokia phone business does not affect the 2011 agreement with Samsung.

Separately, Romanian President Traian Basescu on Friday authorized public prosecutors to launch an inquiry into five former ministers suspected of receiving millions of dollars of bribes and kickbacks from resellers of Microsoft software.

“I’ve examined key documents from the public prosecutor’s office and believe an investigation should be launched soon and carried out thoroughly,” Basescu told a press conference in Bucharest.

A total of nine former ministers are accused of money laundering, abuse of power and bribery.

Parliament is due to vote to remove the immunity for three others, while one other former minister is a sitting member of the European Parliament.

The inquiry centers on state contracts to lease software from Microsoft that the Romanian government agreed with distributor Fujitsu Siemens Computers in 2004.

Witnesses quoted in a report sent to parliament by the prosecutors’ office describe how tens of millions of US dollars of commissions were paid to members of successive governments and businessmen between 2001 and 2012.

According to the prosecutors, “of the US$54 million paid by the government [for the contracts], US$20 million were commissions claimed by those involved, both within ministries and private companies.”

Additional reporting by AFP

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