Samsung Signs Patent Cross Licensing Deal with Microsoft

Samsung this week became the seventh maker of Android devices to sign a patent cross licensing deal with Microsoft in just the past three months. The company will pay an undisclosed royalty to Microsoft for each Android-based smartphone and tablet device it sells.

Interestingly, Samsung is also a close Microsoft partner. The company sells the best-selling Windows Phone handset, the Focus, in the US. But this isn't particularly unique: HTC, another top seller of Android smart phones, also sells Windows Phone handsets and it too signed a patent licensing deal with Microsoft earlier this year.

And these patent licensing deals are turning into a decent business for Microsoft. According to a note from Goldman Sachs this week, the software giant could earn about $444 million from Android-based patent licensing in fiscal year 2012, which ends June 30, 2012.

Google describes Microsoft's patent moves as "extortion." But then Google has been freely using others' patented technologies for years and has driven its free Android OS to a dominant position in the market, leading to an antitrust investigation. And let's give Microsoft some credit for getting to the heart of the matter: In a tweet, Microsoft corporate communications chief Frank Shaw responded to Google's "extortion" claim with the following: "let me boil down the Google statement ... from 48 words to 1: Waaaah."

If comedy isn't your forte, then perhaps you'll find solace in a more straightforward explanation of why this and other patent cross licensing deals actually help drive innovation. This was provided by Microsoft general counsel Brad Smith and deputy general counsel Horacio Gutierrez in a blog post.

"These agreements prove that licensing works," the two wrote. "They show what can be achieved when companies sit down and address intellectual property issues in a responsible manner. The rapid growth of the technology industry, and its continued fast pace of innovation are founded on mutual respect for IP. Intellectual property continues to provide the engine that incentivizes research and development, leading to inventions that put new products and services in the hands of millions of consumers and businesses."

While Microsoft has been very successful getting Android device makers to license its patents, the company still faces a few holdouts, including Barnes & Noble and Motorola Mobility, the latter of which is in the midst of being purchased by Android maker Google. And there are questions around whether retailing giant Amazon, which recently announced an Android-based Kindle Fire tablet, will sign a similar agreement with Microsoft.

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