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Microsoft sues Samsung over dispute regarding royalty payments for Android phones

LOS ANGELES, Calif. - Microsoft said Friday it is suing Samsung for threatening to stop paying Microsoft royalties for patents behind the Android operating system.

The two companies came to a deal in September 2011 to cross-license each other's patent portfolios. Samsung wound up paying Microsoft royalties on a series of patents.

Analyst Rick Sherlund of Nomura Securities has estimated royalties on its Android patents bring Microsoft nearly $2 billion a year.

Microsoft, based in Redmond, Washington, says more than 25 companies are licensing the patents, including Samsung, Acer and ZTE, covering roughly 80 per cent of the Android-based smartphones sold in the U.S.

In a blog post Friday, Microsoft Corp.'s deputy general counsel said Samsung Electronics Co. Ltd. decided to breach its contract after Microsoft announced in September it was acquiring Nokia's devices business.

After initially refusing to pay royalties in the second year of the deal, Samsung made a late payment in November but did not add on interest, according to a redacted copy of the complaint filed in federal court in New York and provided by Microsoft.

The complaint also alleged that Samsung has asked South Korean competition authorities to change the contract to reduce or eliminate its payments to Microsoft.

Samsung said in a statement, "We will review the complaint in detail and determine appropriate measures in response."

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