From China with Love: The Xiaomi Story

This post was first published on December 19, 2014.

Just a few months ago, this particular cellular company took the market by storm and made its stand in the 3rd rank of the world’s cellular companies. It not only pleased consumers, but also gave tough competition to leading brands in the market. As a matter fact, the phones sold like hot cakes within minutes of its release on one of the biggest online shopping destinations, Flipkart. More recently, the company got into a patent spat, the first of them, with another biggie, Ericsson. Even more recently, the ban was partially lifted.

Xiaomi is the name that jumps to mind immediately. This phone gained all the stardom due to its amazing specifications. It did not provide any specification out of the box when compared to its competitive brands but what it did provide was all the highly featured specifications which the leading brands sell for very high cost. Xiaomi sold the same specifications for half the cost. This low cost phone with high end specifications was then known to be a “Chinese iPhone”. Xiaomi, having moved out of China, has made its stand in seven countries in Asia and is on track to sell 60 million smartphones this coming year.

In recent news, Xiaomi, was sued by another leading company, Ericsson. The Delhi High Court has reportedly granted an ex parte injunction order against Xiaomi for allegedly infringing on Ericsson’s Standard Essential Patents (SEPs). The case revolves around the eight patents viz IN203034, IN203036, IN234157, IN203686, IN213723 (AMR Patents), IN229632, IN240471 (3G Patents) and IN241747 (Edge Patent). Officials have been ordered to visit Xiaomi India’s office to ensure it does not sell, advertise, manufacture or import devices that infringe the patents in question and will be taken offline from Flipkart.

This ban is likely to benefit Asustek, Taiwan-based electronics manufacturer, in the first quarter of 2015, with the market predicting that smartphone shipments for the firm will increase to 500,000-600,000 units in a single quarter. It entered the Indian market two weeks earlier, where it enjoyed booming sales as well. Earlier Asustek was to ship out 700,000-800,000 units. Now, it is expected to increase handset shipment to 2.5 million units in India after major rival Chinese handset maker Xiaomi was banned due to patent infringement, reports paper the Commercial Times.

Ericson states that it had previously invited Xiaomi to use its patents and urged them to obtain a license. However, Xiaomi without obtaining the license launched its infringing products in Indian markets without obtaining license from Ericsson. Honorable Justice G P Mittal of the Delhi High Court found prima facie merits in the case of Ericsson and ordered that till the date of the next hearing:

  1. Xiaomi or their agents and distributor are restrained from manufacturing, assembling, importing, selling, offering for sale or advertising any products that violates the said patents;
  2. The Central Board of Excise and Customs is directed to restrain import of mobiles, handsets, devices, tablet etc of Xiaomi that are infringing the said patents;
  3. In the event of any importation of products by Xiaomi, the Custom Authorities shall intimate the same to Ericson; and
  4. Xiaomi shall file an Affidavit stating the quantum of devices sold and revenue earned from such sale.

Ericsson on the other hand, thinks it is unfair that Xiaomi is to benefit from their substantial R&D investment without paying a reasonable licensee fee for our technology. Ericsson also stated “After more than 3 years of attempts to engage in a licensing conversation in good faith, for products compliant with the GSM, EDGE, and UMTS/WCDMA standards Xiaomi continues to refuse to respond in any way regarding a fair license to Ericsson’s intellectual property on fair, reasonable and non-discriminatory (FRAND) terms. Ericsson, as a last resort, had to take legal action.

It appears now that, Qualcomm had obtained a license on Ericsson’s patented technology, and hence Xiaomi phones using Qualcomm processors are not actually infringing upon Ericsson’s patents. Xiaomi, having had quite a tough time recently, was granted slight respite by the Delhi High Court which permitted them to sell and import Qualcomm chipset based handsets till January 8, 2015, thereby lifting the ban on the phones partially.

Contributions of NS Kanmani, Nithin V Kumar and Aashima Sobti

Source: here, here and here

Image Source/Attribution: here (This is governed by CC BY-SA 4.0 )