Lawsuits are so common among the tech world, we really don't give them a second thought, after all, do they really affect us? If Microsoft loses this suit, it could have a huge impact on the Android-Windows Phone balance of power…or at the very least, the balance of cash – and lots of it. Microsoft has enjoyed a sweet deal up until now, collecting a royalty for check for every phone sold that uses the Android operating system – rumor has it about seven dollars per phone. The strange thing about this arrangement is that nobody really knows exactly which patents are involved – it is a long and complicated mess, but surprisingly nobody has really challenged Microsoft…up until now.
Samsung has said enough is enough and is threatening to stop paying the royalty altogether. Samsung did not argue with the courts about the original patent claims, but they are asserting that when Microsoft purchased Nokia, the deal it made in 2011 that started these royalties with Microsoft, are null and void. Samsung has stopped paying Microsoft their royalty fee and instead have entered into talks that seem to be going nowhere. Microsoft has now gone back to court and filed suit against Samsung to have the courts enforce their former agreement.
If Microsoft wins this suit, then Samsung will own them a big paycheck from past amounts not paid. If the courts find in favor of Samsung, then Android makers everywhere will owe a big debt to Samsung and Microsoft will lose a huge source of income. Microsoft has long used this tactic to encourage manufacturers to make Windows Phones, to which they have no fee to pay, rather than competing Android devices. That may have been Microsoft's initial plan, but one may ask them now, "How has that been working for you, lately?"
Nobody really knows the details of the arrangement – all we really know is Microsoft's side, and Samsung is not really saying anything other than they "will review the complaint in detail and determine appropriate measures in response." Not because I love Samsung, but because I dislike Microsoft and believe in free enterprise – if Microsoft really has a case, I hope Samsung's assertion that the royalty clause was broken with the purchase of Nokia is true. Please hook up with us on our Google+ Page and let us know what you think will happen if the seven dollar cycle is really broken…as always, we would love to hear from you.