Xiaomi’s India smartphone ban exposes wider patent risk

Tuesday, 16 December 2014 01:01 - - {{hitsCtrl.values.hits}}

Reuters) - The court order that banned Chinese mobile maker Xiaomi from selling its phones in India has halted its breakneck expansion into the world’s fastest growing major smartphone market and could be just the start of a string of patent challenges. Xiaomi Technology only started selling in India in July and quickly became the country’s fastest growing smartphone brand; with minimal marketing, it is already outselling even low-cost smartphones running Google’s (GOOGL.O) Android One. Hugo Barra, the former Google executive now leading Xiaomi’s international operations, told Reuters in November how rapidly the country had taken to his brand. All it took was a single Facebook post to draw dozens of superfans to a California Pizza Kitchen in Mumbai to meet him, he said.“It was far more

than we expected. The community has really, really embraced us,” he said.And then came Wednesday’s court order to stop selling, after a patent infringement case was filed by telecom equipment maker Ericsson (ERICb.ST). The ban will last until at least Feb. 5, when the Delhi court hears the case again. But that is unlikely to be the end of the young company’s battle over intellectual property (IP) rights.Sources close to Xiaomi say its leadership has privately acknowledged for years its vulnerability to patent entanglements. The higher risks of IP litigation in Western markets even played a role in shaping Xiaomi’s strategy of expanding in India and Southeast Asia, the sources said. Xiaomi said in a statement that “it isn’t easy” to build up a patent portfolio as a start-up company, but it aims to have filed 8,000 applications by 2016.On its home turf, Xiaomi has already been dogged by IP controversies with other Chinese firms, mostly over content rights for its streaming TV service. As its smartphone business, already number one in China, continues to grow, however, industry analysts expect greater pressure at home, particularly since two of its fiercest handset rivals, Huawei and ZTE Corp, are among the top telecom patent holders in China.