Microsoft Hits Samsung With Android Royalty Demand

Microsoft has demanded that Samsung pays royalties for each Android smartphone it sells.

According to Reuters, Microsoft is demanding $15 (£9.36) for each Samsung-produced Android smartphone. That information apparently came from unnamed industry officials speaking to the Seoul-based Maeil Business Newspaper.

Considering that Samsung sells millions of Android-based smartphones every year, a per-unit fee of that size could result in substantial payments to Microsoft.

Royalty Hunt

Microsoft claims the Android platform infringes on a number of its patents. In light of that, the company has pursued a stark strategy with regard to manufacturers of Android devices such as smartphones and tablets: pay royalties, or face a patent-infringement lawsuit. Some companies have chosen to embrace the royalty agreement option.

In April 2010, HTC announced that it had agreed to pay Microsoft in exchange for the use of “patented technology” in its Android-powered smartphones. In the wake of that, rumours circulated that Microsoft was actively seeking similar arrangements with other unnamed companies.

Over the past 10 days, Microsoft has entered into a series of patent-licensing agreements with four small Android device manufacturers, including Wistron, Onkyo, Velocity Micro and General Dynamics Itronix. Under the terms of those agreements, the companies will pay undisclosed royalties to Microsoft.

That being said, some larger Android manufacturers have been willing to put up a fight. Motorola retaliated to a Microsoft patent-infringement suit with an intellectual-property complaint of its own. And Barnes & Noble, whose Nook e-reader uses Android, filed a counter-suit against Microsoft after the latter sued it for patent infringement.

Patent Misuse?

The bookseller’s counterclaim, filed 25 April with the US District Court for the Western District of Washington at Seattle, described Microsoft as repeatedly arguing that its patent portfolio would “entirely preclude the use of Android Operating System by the Nook,” and mentions that both HTC and Amazon have entered into patent-licensing deals with Redmond.

“Microsoft is misusing these patents as part of a scheme to try to eliminate or marginalise the competition to its own Windows Phone 7 mobile device operating system posed by the open source Android operating system and other open source operating systems,” the counterclaim notes. “Microsoft’s conduct directly harms both competition for and consumers of eReaders, smartphones, tablet computers and other mobile electronic devices, and renders Microsoft’s patents unenforceable.”

In the meantime, Microsoft’s Windows Phone continues to scramble for smartphone marketshare against the likes of not only Android but also Apple’s iOS and Research In Motion’s BlackBerry.