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Chinese phone maker Xiaomi has been slapped with an injunction from a high court in India, which bans the sale of Xiaomi phones in the country.
Ericsson, one of the world’s biggest telecommunications equipment providers and holder of many vital patents that allow smartphones to connect to mobile networks, is behind the injunction. The Swedish mobile heavyweight alleges Xiaomi infringed on its patents.
Ericsson told TechCrunch that it has spent three years attempting to engage Xiaomi, but to no avail. After Xiaomi allegedly refused to respond, Ericsson filed for the injunction, forcing Xiaomi into negotiations. Ericsson demands Xiaomi pay royalties for the relevant patents on products that connect to 2G (GSM), EDGE, and 3G networks.
Indian authorities have reportedly been dispatched to Xiaomi’s offices in India to assure the rules of the injunction are not broken, namely selling or importing more phones. The injunction did not specify which models are affected.
A Xiaomi representative sent the following statement to Tech in Asia, saying it has not yet heard from the court:
We haven’t received an official notice from the Delhi High Court. However, our legal team is currently evaluating the situation based on the information we have.
India is a very important market for Xiaomi and we will respond promptly as needed and in full compliance with Indian laws. Moreover, we are open to working with Ericsson to resolve this matter amicably.
Ericsson has mounted similar litigation against other phone makers, including Micromax, Gionee, and Intex, according to SpicyIP, which originally broke the news. But the court seems to have expedited the case against Xiaomi due to the company’s alleged refusal to respond to Ericsson’s complaints.
However, SpicyIP notes that the law under which the injunction was granted is questionable. The international TRIPS Rules from 2007 only applies to copyrights and trademarks, not patents. That means the law might be overstepping its mandate.
Secondly, according to Indian law, SpicyIP says a lower district court must decide the case, and a high court can only get involved if there is a counterclaim. Therefore, the high court is not in conformance with the law by granting the initial injunction.
See: No, Huawei and ZTE did not accuse Xiaomi of patent infringement
In India, Ericsson has the high ground
Ericsson’s claim that it has been trying to engage Xiaomi for the past three years means this conflict began long before Xiaomi ever entered India, or any country outside of China for that matter. Xiaomi’s first-ever phone was launched just over three years ago, in August 2011.
Chinese smartphones typically operate on one of two types of networks: the local standard used by the country’s biggest carrier, China Mobile (TD-SCDMA and TD-LTE) or the international standards used by China Unicom and China Telecom (WCDMA, CDMA2000, and FDD-LTE). Ericsson’s beef is with Xiaomi phones’ use of the latter, which most Indian carriers also use.
But China has been notoriously protective of its domestic tech companies, which have gotten away with failure to pay royalties in the form of licensing fees in the past. Notably, chipset maker Qualcomm suffered a serious hit to its earnings after several phone makers using its chips refused to shell out. Chinese authorities then accused Qualcomm of price gouging, and the firm is now under investigation for breaking anti-monopoly and antitrust regulations.
So China doesn’t seem to be an ideal battleground for companies like Qualcomm and Ericsson to take on domestic phone manufacturers. However, now that Xiaomi is moving beyond China’s borders into countries like India, it’s much more vulnerable. Every country Xiaomi enters presents a new opportunity for Ericsson to sue, and India is a huge market that Xiaomi badly wants a piece of.
As we’ve noted before, Xiaomi has a relatively minuscule amount of intellectual property in its patent portfolio compared to other phone makers of its size. These disputes are often settled through cross-licensing agreements – wherein Xiaomi would allow Ericsson access to its patents – but if Xiaomi doesn’t have enough IP that Ericsson wants, it would have to pay out of pocket or go to court.
Earlier this month, Xiaomi, Kingsoft, and a handful of other Chinese tech companies set up a US$35 million investment fund to develop new IP.
Last month, a company controlled by Xiaomi struck a deal with Chinese chipset maker Leadcore, but it isn’t clear if Xiaomi received any patents in the transaction. Leadcore makes the 3G and 4G chipsets using the Chinese TD standard, which is growing more popular around the world.
Xiaomi aims to sell 60 million smartphones across seven countries in Asia this year, and it has big plans to expand to many more countries – including Latin America – next year.
(Source: SpicyIP)
