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Samsung seeks Hong Kong arbitration after Microsoft lawsuit

Wednesday, October 8, 2014 - 06:44
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Samsung Electronics Co Ltd initiated an arbitration proceeding in Hong Kong against Microsoft Corp on Tuesday, amid ongoing US litigation over smartphone patent royalties - PHOTO: AFP

[NEW YORK] Samsung Electronics Co Ltd initiated an arbitration proceeding in Hong Kong against Microsoft Corp on Tuesday, amid ongoing US litigation over smartphone patent royalties.

The arbitration was disclosed in a court filing as part of a federal lawsuit Microsoft filed in August in New York accusing Samsung of refusing to make royalty payments to Microsoft after the software company announced its intention to acquire Nokia's handset business.

Samsung said it filed the request for arbitration with the Hong Kong office of the International Court of Arbitration of the International Chamber of Commerce. The filing did not indicate why the arbitration is taking place in Hong Kong.

The new case marked a counter-offensive by Samsung against Microsoft's claims in New York and could complicate the New York lawsuit.

The arbitration was commenced under the terms of a business collaboration agreement "to resolve a dispute concerning the calculation of success credits under that agreement," Samsung said.

Jennifer Crider, a spokeswoman for Microsoft, said the companies' contract provided that the "appropriate venue to interpret the business collaboration agreement is New York." "We still believe that to be true," she added.

A representative for Samsung did not respond to a request for comment.

The arbitration came just days after Microsoft filed an amended complaint in its New York lawsuit asking the court to rule that it did not breach a business collaboration agreement with Samsung.

Microsoft in the complaint also sought an order requiring Samsung to pay US$6.9 million interest on more than US$1 billion in royalty payments which it delayed in protest of the Nokia deal.

Samsung made royalty payments on time to Microsoft during the first fiscal year after they signed their 2011 agreement, the lawsuit said.

But after Microsoft announced the Nokia deal in September 2013, Samsung initially refused to make another payment, arguing the purchase breached its licensing agreement with Microsoft. Samsung eventually paid late without adding interest, Microsoft said.

Microsoft has successfully argued that Google Inc's Android mobile system uses some of its technology, and as a result most hardware makers, including Samsung, have agreed to pay patent royalties on Android handsets.

Motorola is one of the main holdouts, and that company has been in litigation against Microsoft since 2010. - Reuters