After Apple Inc. (NASDAQ:AAPL)’s ongoing high-profile legal action against Samsung, now Microsoft Corporation (NASDAQ:MSFT) has just brought a patent dispute lawsuit against the South Korean corporation, according to a report by Ina Fried of Re/code. The outcome of the patent dispute could have implications for both revenue stream Microsoft Corporation (NASDAQ:MSFT) is now receiving for royalties not just from Samsung but also from the other Android manufacturers, as well as for the positioning of the Windows Phone as the more economical alternative to Android.
When Microsoft Corporation (NASDAQ:MSFT) signed patent license agreement with ten Android device manufacturers, including Samsung, in October 2011, they ensured themselves a steady revenue stream. The lucrative deal meant that Microsoft Corporation (NASDAQ:MSFT) was making more income from Android than from its own Windows Phones. Moreover, the deal has given it a steady stream of revenue from one of its most important competitors in the mobile world – Samsung.
Now, however, Samsung claims that Microsoft Corporation (NASDAQ:MSFT)’s purchase of Nokia invalidates the deal from 2011, under which it agreed to pay the patent royalty, without denying Microsoft Corporation (NASDAQ:MSFT)’s patent claims, according to the report. The tech giants spent months in negotiations, and after no agreement was reached, Microsoft Corporation (NASDAQ:MSFT) has filed a suit, wanting its contract with Samsung to be declared both valid and enforceable by the court.
If Microsoft Corporation (NASDAQ:MSFT) wins the case, it will keep collecting royalties from Samsung and other Android-based smartphone makers, plus the interest on last year’s bill Samsung owes it. However, should its lawsuit fail, Samsung and possibly all other Android manufacturers will be able to stop paying these royalties. Moreover, it would affect Windows Phone’s price advantage: Windows Phone’s long-term attractiveness as compared to Android therefore also depends on the outcome of this lawsuit.
Fried also noted that, so far, Samsung has declined to comment on the matter, saying it is reviewing the complaint in detail. Microsoft Corporation (NASDAQ:MSFT)’s public side of the story is also heavily redacted, which makes the judgement of the merits of the dispute tough.