Popgun patents

Samsung-Microsoft row could defuse patent arsenals

A legal spat between Samsung and Microsoft could end up defusing patent arsenals. The South Korean smartphone giant says it's withholding interest on a more than $1 billion licence fee because its US rival breached their deal. More likely, Samsung is angling for a discount. That's a savvy move. Court rulings and costly lawsuits have weakened patents' value as competitive weapons.

The disputed licences cover the parts of Google's Android smartphone operating system that Microsoft patented. Even though Android is free, the Redmond-based firm has managed to extract billions of dollars in royalties from the dozens of device makers that use it.

Samsung may shell out more than anyone. Its $1-billion fee covers only 12 months, according to court documents. The exact amount can vary in each of the seven years of their 2011 licensing agreement.

But the Korean firm says Microsoft violated the deal by purchasing rival Nokia's handset business. The argument is essentially that the acquisition breached a side agreement calling for Samsung to develop a Windows-based smartphone. Since that obligation and the licence pact are related, Samsung claims it's off the hook.

That seems a stretch. But the company probably has reason to believe it can negotiate better terms. Google's Motorola Mobility, now owned by Lenovo, successfully challenged many Microsoft patents before US and German courts and the International Trade Commission.

More generally, American judges have invalidated patents in dozens of cases since the top court questioned abstract intellectual property in June. Targets of weak infringement suits recently gained leeway to recoup legal fees. And the US patent office is flexing new powers to nullify dodgy intellectual property (IP) rights.

The upshot is that patents, probably including Microsoft's, are less valuable and more vulnerable. That's not necessarily a bad thing.

The likes of Apple, Google and others until recently fought vicious IP wars essentially to a stalemate. Now they are not only calling truces, they're beginning to share, too. Electric carmaker Tesla even opened its technology to other users in June.

Samsung and Microsoft's battle could be a watershed moment, though. When what may be the biggest smartphone licensing deal ever is under siege, arms control starts to make a lot of economic sense.