Samsung paid Microsoft over $1 billion as annual fee last year for using its technology in its Android smartphones and tablets.
Microsoft is raking in enormous profits from several tech companies that use Android as base platform for their smartphones and tablets. In a recent court filing via PC World, Samsung paid a whopping $1 billion a year to Microsoft last year for using the software giant's technology in its smartphones and tablets. The court document dated Friday, reveals the confidential information after Microsoft filed a lawsuit against Samsung in August for not paying the annual patent licensing royalties, which were a part of an agreement made in late 2011.
In addition to the annual fee, Microsoft is demanding nearly $7 million in interest for delaying the payment. Samsung, however, argues that Microsoft breached the seven-year agreement with its purchase of Nokia's handset business and refused to make any future payments. This will result in a massive loss in revenue for Microsoft.
Microsoft and Samsung entered into a consent decree in 2011, agreeing to pay $1 billion in royalty payments to Microsoft for 7 years. The $1 billion annual fee is based on the number of Android handsets sold by Samsung and the price charged for each one of them. In the first fiscal year, Samsung made the payment on time but the second installation of the payment, which spanned from July 2012 to June 2013, the Korean tech giant failed to meet the deadline. Samsung paid the second year fee on November 29, 2013 and the third year fee is not due till next year, according to a report by ZDNet.
Besides Samsung, Microsoft also received patent-licensing royalties from over 20 companies such as HTC, Acer and Barnes & Noble. The agreement between Samsung and Microsoft is a cross-licensing and business-collaboration deal, which means Samsung also agrees to license technologies to Microsoft.
Microsoft is defending its Nokia deal from being the reason for Samsung to terminate the agreement. The software giant says the Nokia acquisition "does not give Samsung the right to terminate or modify the License Agreements and thus avoid billions of dollars in contractually-negotiated future royalty payments to Microsoft for Samsung's Android-based products that would otherwise infringe Microsoft's patents."
