Xiaomi has faced another hurdle in its India journey as Delhi High Court banned its sales for now after mobile R&D major Ericsson moved Delhi High Court and got a stay or injunction to the effect over patents row. The next hearing is on February 5, 2015.
Ericsson, a Stockholm-based IT services company that holds 33,000 granted patents, and No. 1 holder of GSM/GPRS/EDGE, WCDMA/HSPA, and LTE essential patents, has sued Xiaomi over patent violations in the Delhi High Court and got an ex-parte interim injunction or stay to stop Xiaomi’s Tuesday sales on Flipkart.
It may be noted that the Swedish firm Ericsson was given an interim relief in October this year in Micromax case until final disposition of the case in 26 patents violation. “Micromax has asked for agreements/offers by Ericsson with other Indian parties,” observed the court.
By referring to “other Indian parties”, Micromax was able to drag Xiaomi too into the patents’ violation case and it remains to be seen how Xiaomi, which sells these phones in many Asian countries too, will face the case. As of now, pending trial in Micromax case, the Delhi High court has asked it to pay royalty until November 2015.
Similarly, the case in Delhi High Court by Ericsson against Xiaomi Technology and Others in case no. CS(OS) 3775/2014, seeks patents’ protection and royalty payments by Xiaomi for the use of its patents in its Redmi phones.
Until and unless Xiaomi, the Chinese smartphone maker, gets a higher court to dismiss the injunction order immediately, it is unlikely to sell its Redmi Note phones or the planned online sale of Mi4 smartphones from the next week as the court order purportedly directs custom officials to stop imports and restrain Xiaomi from selling, manufacturing, and advertising its devices in India.
Since the next hearing is on February 5, 2015, there is enough room for Xiaomi and Ericsson to negotiate and decide the future course of action but for a flash sale giant like Xiaomi, the loss for one day may mean a loss of Rs.50 to 90 crore via its Tuesday sales on Flipkart.
The case bearing OS9CS) 3775 includes others, which means Flipkart and other sellers like Airtel, which is also set to sell Redmi Note 4G LTE devices via its 100 stores across the country. However, the information is still sketchy and it will be known clearly once the order is made known to all the parties concerened.
Meanwhile, Xiaomi India Head Manu Jain told media that they have not received any official notice from the Delhi High Court but expressed Xiaomi’s willingness to settle the matter amicably. “Our legal team is currently evaluating the situation based on the information we have,” he said.
In a statement provided to TechCrunch, Ericsson described Xiaomi’s use of its Standard, Essential Patents (SEPs) as “unfair.” It said its action is “a last resort” after Xiaomi ignored more than three years of communication requests:
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.
After more than 3 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.
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.
Xiaomi — which began selling devices in India in July — claimed it had not received correspondence from the high court, but it did state its willingness to discuss the issue with Ericsson:
We haven’t received an official note from the Delhi High Court. However, our legal team is currently evaluating the situation based on the information we have.
India is a very important market for Xiaomi and we will respond promptly as needed and in full compliance with India laws. Moreover, we are open to working with Ericsson to resolve this matter amicably.
Ericsson is said to be negotiating compensation for patents with a number of Indian smartphone makers, and it could be that its dispute with Xiaomi goes the same way