China’s Huawei and ZTE are reportedly preparing legal action against device vendors Xiaomi, Oppo and Bubugao for patent infringement.
The two companies, better known for their telecoms network gear, had sent the companies a warning letter requesting royalty payments, Business Korea reported. Since the three so-called second-generation handset makers failed to respond, Huawei and ZTE said they would file lawsuits.
The news comes just a week after fast-growing Xiaomi was hit by an injunction in India that banned the sale of its smartphones for infringing on essential patents. Ericsson filed a complaint after the Chinese firm failed to respond to repeated requests for royalties.
Xiaomi earlier this week was allowed to resume sales of some devices. Its devices powered by Qualcomm chipsets reportedly are clear to go back on sale since the US firm has a deal in place with Ericsson.
The report is not the first to suggest the Shenzhen-based firms ae taking legal action against their low-cost rivals. A month ago China’s 21CBH.com said the two had sent letters to Xiaomi, Oppo and Vivo claiming the three had violated their patents. The report was not confirmed.
As predicted by Richard Windsor in his Radio Free Mobile blog last week, other major patent holders are starting to jump on the bandwagon and file claims against the new wave of low-cost smartphone manufacturers. Being required to pay royalties on standard essential patents outside of China, which Windsor said could raise costs by 5-7 per cent for Xiaomi, would cut into the companies’ already extremely thin profit margins.
Huawei and ZTE both have strong patent portfolios. Huawei has almost 30,000 mobile phone patents (it registered for 7,000 this year alone), while ZTE has more than 13,000 patents and for two consecutive years (2011 and 2012) submitted the largest number of patent applications globally.
The two firms, however, face patent infringement issues of their own and also have filed suits against each other. ZTE in October lost a case against InterDigital for infringing on three mobile-phone patents. ZTE had previously won two cases against InterDigital, which is appealing both decisions. ZTE also filed an antitrust case in Europe in June against New York-based Vringo, a holder of a portfolio of essential patents, for impeding fair competition by not licensing its IP on reasonable terms.
Huawei filed a similar motion in the EU against InterDigital, but the two sides settled out of court in February.
Meanwhile, Xiaomi’s co-founder Lei Jun said he received the best birthday gift on 16 December when India’s high court lifted the injunction on sales of the firm’s smartphones.
He said the “patent wars” are a sign that the company is becoming an adult, C114.net said. Lei told reporters that the company wouldn’t pursue short-term profits in the next few years. He expects the firm to apply for 1,300 patents next year, with 300 international applications.