Xiaomi Smartphone Sales In India Threatened By Patent Dispute With Ericsson

Update as of 11:12 a.m. EST: In a Facebook post, Hugo Barra, Xiaomi’s vice president for international operations, said that the company has "been forced to suspend sales in India until further notice due to an order passed by the Delhi High Court.”

In the last two days, Xiaomi had received about 150,000 pre-bookings for its Redmi Note phablet on Flipkart, according to Barra’s Facebook post. Flipkart, the Indian online shopping company that has an exclusive agreement to sell the handsets, is also named in the lawsuit, the court order showed.

Sales of Xiaomi Inc.’s smartphones have been temporarily barred in India by a court order in connection with a patent dispute with Swedish networking gear maker Telefonaktiebolaget Lm Erisson. The interim order was reported by SpicyIP.com, a blog on India’s intellectual property law.

“Regarding the court injunction: we haven’t received an official notice from the Delhi High Court. However, our legal team is currently evaluating the situation based on the information we have,” Manu Jain, head of Xiaomi’s India operations, said in an emailed statement to International Business Times. “India is a very important market for Xiaomi and we will respond promptly as needed and in full compliance with Indian laws. Moreover, we are open to working with Ericsson to resolve this matter amicably,” he added.

India’s fast-growing smartphone market has attracted Chinese players such as Xiaomi as well as global brands like Motorola Mobility Holdings, which is now part of Lenovo Group Ltd. Competition is fierce and local handset sellers, including Micromax Informatics Ltd., have won market share using Chinese imports, challenging market leader Samsung Electronics Co. Ltd.

Xiaomi, China’s largest smartphone seller by shipments, says it has sold over half a million handsets in India through October since it entered the market some five months ago, but didn’t give details of which of its handsets were affected by the court order.

However, the court order, a copy of which SpicyIP posted on its website on Dec. 11, shows that sale of all of the Xiaomi devices on the Indian market will likely be stopped, especially as one of the patents involves 2G or second-generation technology, currently the most prevalent mobile phone communication method in India.

Xiaomi has thus far sold its Redmi 1S entry level and Mi3 mid-range handsets in India and it had just started selling its Redmi Note handsets that support 4G wireless technology, which enables much higher Internet speeds than on the current 2G and 3G data networks that most Indian cities have. The company’s current Chinese flagship smartphone Mi4 was expected to be launched early next year in India.

“Ericsson’s commitment to the global support of technology and innovation is undisputed. It is unfair for Xiaomi to benefit from our substantial R&D investment without paying a reasonable licensee fee for our technology,” Ericsson said in an emailed statement to IBTimes.

“After more than three 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,” the company added. “To continue investing in research and enabling the development of new ideas, new standards and new platforms to the industry, we must obtain a fair return on our R&D investments. We look forward to working with Xiaomi to reach a mutually fair and reasonable conclusion, just as we do with all of our licensees.”

In a similar lawsuit, Micromax agreed to pay a royalty fee to Ericsson, under an interim order, The Economic Times reported last month. The Xiaomi case is CS(OS) 3775/2014: Telefonaktiebolaget Lm Ericsson Versus Xiaomi Technology and Others.