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Xiaomi Does A Patent Power Play

Source: Grill IP patents news

china-ip-xiaomi-patent-leaderWho is the biggest patent buyer in the world? It might well be the Chinese company Xiaomi, at least in terms of the number of patents acquired in a single transaction – buying 1,500 patents from software giant Microsoft (albeit for an undisclosed sum). Xiaomi is often called “China’s Apple”, not because of its position as the smartphone market leader in China, but because its phones are pretty good copies of Apple’s iPhone design. Xiaomi’s developers have had little qualm about copying many successful smartphone models from around the world, hurting the likes of Apple and Samsung.

What works in China – a country notorious for lax patent enforcement – does not work around the world. And as Xiaomi is outgrowing its domestic market, and tries to expand abroad, it has run into one patent troubles after another. The company suffered its first patent defeat in India, where the Delhi High Court temporarily banned all trading activities for Xiaomi and Flipkart, its official distributor, because it violated a number of patents held by Swedish technology giant Ericsson. In the United States, Xiaomi lost a court case brought by Blue Spike, which accused the Chinese of violating its patent for a “Data Protection Method and Device”. Since then, lawsuits have piled up and given the company with headquarters in Beijing plenty to think about.

Xiaomi has seen the writing on the wall and – since 2010 – tried to build up a patent portfolio of its own. Between 2003 to 2010, Xiaomi purchased or was granted 41 patents. In 2011 alone, they added 49. In 2012 – 272, in 2013 – 685, in 2014 – 1412! This year, however, it seems like the sky is the limit. In just a few months the company either received or bought more than a thousand patents. Which is dwarfed by Xiaomi’s latest deal, the purchase of 1,500 patents from Microsoft. Xiaomi is rapidly building up some serious patent muscle.

If the company wants to grow, it needs to go global, and that inevitably forced Xiaomi to fundamentally change its business model and take a strategic approach to intellectual property. For starters, Xiaomi aims at the entire Asian market. Russia is set to be next, as a potential test case and gateway for entering European markets. Xiaomi already registered a range of patents in Asia and some European countries such as Moldova and Russia.

As Xiaomi spreads its wings abroad, it is also setting itself up for a confrontation with a domestic rival, government-backed Huawei – a company that has started to sue foreign rivals like Samsung in an attempt to secure patent cross-licensing agreements.

Microsoft, meanwhile, will hope that its readiness to help out Xiaomi will improve its standing with the Chinese government, which in recent months has given Western technology companies an increasingly hard time.

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Author: grill-ip

Grill IP is a non-profit project for educational and entertaining purposes only. Our aim is to provide quick and easy access to aggregated and original patent news, IP analysis, interesting business cases in IP, basic legal updates and a list of patent transactions.

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