Fast-growing Chinese smartphone maker Xiaomi has reportedly been hit by an injunction in India that bans the sale of some of its smartphones for infringing on essential patents.
Ericsson filed a complaint with the Delhi High Courts after Xiaomi failed to respond to six requests for royalties, CNET reported.
According to Richard Windsor’s Radio Free Mobile blog, most patent holders don’t bother to claim for royalties in China, since the cost of pursing a claim would likely not make it worth the effort. He noted that if unsuccessful, “a patent claim can be very expensive for the plaintiff as the amount of research and the cost of legal services are very high”.
But the situation is very different outside the world’s largest mobile market, he said, and Xiaomi will likely have to start paying standard essential patents on all products it exports out of China, which would raise its costs by 5-7 per cent.
Dr Windsor says the company has started talks with Ericsson and he estimates it will need to pay about 1 per cent of the wholesale price of its devices to the Swedish firm.
He suggested that the claim is likely to be the first of many infringement claims against Xiaomi, and other major patent holders such as Nokia and Google will jump on the bandwagon.
The major exception will be Qualcomm, which was an earlier investor in the Chinese firm and is probably already receiving some type of royalties, he said.
Xiaomi has high expectations for India, its second largest market, and Lin Bin, co-founder and president, said the last four months have been very encouraging in the country, where it has quickly sold out of the 200,000 units it is shipping there each week.
Xiaomi said in late November it has slowed its international rollout plans, as it struggles to keep pace with growth in the new markets it has already entered this year.