Delhi HC directs Xiaomi to stop import, sale of phones over patent case by Ericsson

NEW DELHI: The Delhi High Court has asked smartphone vendor Xiaomi and its local e-commerce partner Flipkart to stop importing and selling devices in India until February 5, when the court will again hear Swedish equipment maker Ericsson’s patent-infringement petition against the Chinese company.

The court has asked both Flipkart and Xiaomi to furnish details on the devices sold by them so far in India that are compliant with mobile technologies 3G, EDGE and AMR and the revenue generated. According to Ericsson, its technologies are essential to manufacture these devices.

This is a setback to the Chinese smartphone maker that has managed to gain massive traction in India after selling more than 800,000 smartphones including the popular Mi3 and low-cost Red Mi 1S in India since its launch here in July. It already has a more than 1% share of India’s growing smartphone market.

The development follows a recent Delhi High Court order asking homegrown handset maker Micromax to pay a royalty equal to 1% of the selling price of its devices to Ericsson for using its patents, called standard essential patents. That interim order holds until December 31, 2015, the deadline set by the court to conclude the trial.
The court has directed the Central Board of Excise and Customs to stop any imports of Xiaomi's mobiles, handsets, devices and tablets. According to the court ruling, a copy of which was reviewed by ET, Ericsson’s claim of Xiaomi infringing upon eight of its registered standard essential patents makes a prima facie case for an interim injunction.

Ericsson has alleged that despite its proposals to Xiaomi to obtain a licence to use the patents, not only did Xiaomi bypass it and enter the Indian market in July, it also set up an Indian subsidiary Xiaomi technology India Pvt Ltd. “Thus, the defendants have become liable to pay damages, rendition of accounts, delivery up and other reliefs,” the court has ruled.

Xiaomi's India head Manu Kumar Jain said the company has yet to receive the court order. “While we haven't received an official notice from the Delhi High Court, our legal team is currently evaluating the situation based on the information we have,” he told ET. “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.

According to Ericsson, it had been discussing the matter with Xiaomi for over three years and was forced to explore the legal route due to Xiaomi’s non-compliance. “It is unfair for Xiaomi to benefit from our substantial R&D investment without paying a reasonable licensee fee for our technology,” the company said in a statement.