Samsung paid $1 billion to Microsoft for patent licensing royalties

Though it was widely known that Microsoft's Android-patent-licensing business was big, it had turned out to be even bigger than many had estimated, ZD Net reported.

According to a filing unsealed yesterday in the Microsoft v/s Samsung US District Court patent-royalty case filed in early August 2014, it was now known that Samsung paid Microsoft $1 billion in 2013 for a single year's worth of patent-licensing royalties.

Samsung agreed in 2011 to pay Microsoft an undisclosed amount for licensing patents which were allegedly infringed. The agreement was  structured as a cross-licensing and business-collaboration agreement.

The unsealed filing states Microsoft was contending that "(U)nder the License Agreement, Samsung agreed to make patent royalty payment to Microsoft for a period of seven fiscal years, in exchange for the right to use patented Microsoft technology in Samsung smartphones and tablets that use the Android operating system."

The filing added that Samsung failed to make its year-two royalty payment on time and to pay interest for not doing so. According to Samsung, it should not have to make good on the contract because Microsoft bought Nokia's devices and services business.

According to Microsoft, Samsung owed interest in excess of $6.9 million for its late Android-patent fee, which it still had not paid as of the date of the filing.

In a glimpse of the financial stakes in the smartphone-patent wars, Microsoft Corp. said Friday that Samsung Electronics Ltd. paid the software giant more than $1 billion for an annual fee to use Microsoft technology in Samsung phones.

Though Samsung's smartphones and tablets used Google Inc Android software, Microsoft said some of its patents were included in Android technologies, such as methods for displaying multiple windows in a Web browser, The Wall Street Journal reported. Samsung and other smartphpone makers needed to pay royalty fees to Microsoft for each Android device they sold.