Summary
Xiaomi faced a temporary sales ban in India following a Delhi High Court order due to a patent infringement lawsuit filed by Ericsson. The court later permitted Xiaomi to resume selling Qualcomm-powered devices until the next hearing. Despite the legal dispute, Xiaomi has assured consumers that device pricing in India will remain unaffected. The company continues to launch new products and emphasises the need for enhanced risk mitigation strategies. Xiaomi’s engagement in cross-licensing arrangements and patent filings underlines its approach to managing intellectual property risks in India.
Background
Chinese smartphone manufacturer Xiaomi faced a significant disruption to its India operations towards the end of 2014 when the Delhi High Court temporarily prohibited the sale of its smartphones. The ban followed a patent infringement suit brought by Swedish technology company Ericsson, which alleged that Xiaomi had infringed eight of its patents. The Court subsequently modified its order to permit Xiaomi to continue selling models powered by Qualcomm chips until February 5, 2015, when the next hearing in the patent case was scheduled.
Xiaomi’s Position on Pricing
In patent infringement cases, the infringing party is ordinarily required to pay patent royalties, with the resulting cost increase typically passed on to consumers. Xiaomi, however, stated publicly that the ongoing patent battle would have no effect on the pricing of its devices in India and that the company would continue to offer smartphones of low price-performance ratio. Xiaomi confirmed its intention to continue launching new and competitively priced products in the Indian market, including the flagship Mi 4 and other devices such as the Mi TV.
Qualcomm Cross-Licensing and Patent Portfolio
The Delhi High Court’s partial lifting of the sales ban permitted Xiaomi to sell Qualcomm-powered handsets, specifically the Redmi 1S and the Redmi Note 4G. Qualcomm has entered into cross-licensing agreements with a number of Chinese smartphone manufacturers that use its chips, permitting them to use each other’s patents without legal impediment. This arrangement benefits companies such as Xiaomi, which have a relatively modest contribution to the overall patent pool. At the time of the dispute, Xiaomi held over 1,600 patent applications, the majority of which had been filed within the preceding two years, and had received 124 patent grants, of which 13 were for inventions and the remainder for design and utility model patents.
Risk Mitigation Plans
Manu Jain, Head of India Operations at Xiaomi, stated:
We will probably need to be a little more cautious. We will need to be more proactive in putting together a risk management or mitigation plan, to ensure that we can try and foresee any potential risk that might be coming well in advance, not only a court case.
Disclaimer
This article is for general information and does not constitute legal advice. Readers should consult a qualified attorney before acting on any matter discussed here.