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Wednesday, 10 December 2014

Xiaomi’s Indian expansion could be derailed by a patent tussle with Ericsson...........

Xiaomi, the upstart Chinese smartphone manufacturer with ambitious plans to find new growth in India, may have just hit a roadblock.

Swedish telecom equipment manufacturer Ericsson has secured an injuction from the Delhi High Court for Xiaomi to immediately stop selling, importing, manufacturing and advertising its handsets in India, claiming that they infringe on the Stockholm-headquartered firm’s patents.

Ericsson has accused Xiaomi of violating eight mobile phone patents relating to the technology standards AMR, EDGE and 3G.

“I am satisfied that plaintiff (Ericsson) has made out a prima facie case for grant of ad interim injunction in its favour. The balance of convenience also lies in favour of plaintiff and in the absence of an injunction order, plaintiff will suffer irreparable loss and injury,” the court said.

Under the injunction, the Indian e-commerce firm Flipkart—Xiaomi’s sole distribution partner in India—has also been told to stop selling the company’s smartphones. But as of Thursday morning, Flipkart is still selling the phones. “We are yet to receive any official communication,” a spokesperson for Flipkart told Quartz.

The high court has also directed Xiaomi and Flipkart to disclose how many devices have been sold, and for what price.

Xiaomi’s response

“We haven’t received an official notice from the Delhi High Court yet. However, our legal team is currently evaluating the situation based on the information we have,” Hugo Barra, Xiaomi’s vice president of international operations, told Quartz.

Xiaomi had an impressive start in India, selling entire stocks of its handsets in seconds. The company says it sold about half a million handsets in India, and also launched its Redmi Note phablet in November. It also has plans to start its e-commerce operations in India, which is its largest market outside China.

The company’s Indian campaign hasn’t been without problems, though: Even before Xiaomi started selling its phones in India, the Indian Air Force advised its personnel not to use the company’s handsets, due to fears that the Chinese government might be able to gain access to sensitive communications.

While IAF’s suspicions about Xiaomi didn’t do much damage, patent wars can be prolonged affairs—and a legal dispute in India is a headache that the Chinese company can do without as it seeks to expand its presence in the subcontiment.

India has shown a voracious appetite for smartphones lately, and is set to become the second-largest smartphone market in the world by 2019.

“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,” Barra said.