Samsung says teaming up with mobe-maker Microsoft could violate antitrust law

...and that's why it doesn't have to cough up that $6.9m

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Samsung has taken a new tack in its ongoing patent royalty spat with Microsoft, claiming that its former partnership with Redmond should be considered null and void as it could violate US antitrust law.

Microsoft is suing Samsung for $6.9m in interest on royalties that it says it's owed under the terms of a 2011 business agreement in which Samsung licensed Microsoft's Android-related patents.

But in court documents [PDF] filed on Thursday, Samsung revealed that Android wasn't the whole story. Microsoft also agreed at the time to help Samsung build Windows Phone devices – and now that Microsoft sells Windows Phone kit of its own, Samsung says, a continued partnership between the two companies could run afoul of the law.

Specifically, Samsung says that once Microsoft bought Nokia's devices and services business, Samsung's old business agreements with the software giant became "incompatible with prudent business conduct under the Sherman Act" – a reference to one of the foremost US laws barring anticompetitive business conduct.

Samsung's filing goes on to note that Microsoft is in the process of fully assimilating the former Nokia smartphone division and is even abandoning the Nokia brand, which to Samsung's thinking means Redmond is no longer a partner but a competitor.

According to Samsung, that change in the relationship between the two companies triggered Samsung's right to unilaterally dissolve their earlier agreements, meaning it doesn't owe Microsoft any royalties, let alone interest payments.

What's more, Samsung says, even absent any antitrust issues, Microsoft becoming a smartphone vendor made the earlier business relationship between the two companies untenable, because Microsoft will naturally be more interested in its own hardware ambitions than those of its partners.

"Microsoft therefore has a disincentive to promote Samsung's devices, because that promotion would come at the expense of Microsoft's own hardware offerings," the court filing states.

Samsung also says its partnership agreement with Microsoft required it to disclose sensitive business information to Redmond, such as phone specs, shipping schedules, and road maps – information that the chaebol would be loath to share with a direct competitor.

In its counter-claim, Samsung has asked the court not only to toss out Microsoft's claims but also to award Samsung damages for "Microsoft's breach of the covenant of good faith and fair dealing" when it bought out Nokia's phone business.

Microsoft could not immediately be reached for comment on the matter. But in October, David Howard, the software giant's deputy general counsel, said, "Microsoft values and respects our long partnership with Samsung, is committed to it, and expects it to continue." ®




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