China’s Xiaomi slapped with patent-infringement suit by Blue Spike in US over upcoming Mi 5, Mi 5 Plus smartphones

PUBLISHED : Wednesday, 09 December, 2015, 6:53pm
UPDATED : Wednesday, 09 December, 2015, 7:05pm

Chinese smartphone giant Xiaomi’s expansion plans to the United States may be negatively affected after the company was slapped with a lawsuit by Blue Spike LLC, which claims that Xiaomi has infringed on its patents with devices such as the upcoming Mi 5 and Mi 5 Plus.

Blue Spike filed the lawsuit last month in Texas, the state in which it is based. While Blue Spike claims to own over 98 patents in content management and applied security, the company is sometimes referred to as a “patent troll” due to its habit of snapping up patents and then using them later to sue large technology companies such as Google and Yahoo! for alleged patent infringement.

In the latest lawsuit, Blue Spike claims that Xiaomi’s smartphones, such as its Mi 4, Mi 4 LTE, Redmi 2, Redmi 2A and even the yet-to-be released Mi 5 and Mi 5 Plus have infringed on its “Data Protection Method and Device” patent.

READ MORE: Lawsuit alleges Beijing colluded with Chinese telecoms giant ZTE to protect it from US competitor

The lawsuit was filed in the US, a smartphone market Xiaomi has not yet officially entered. Hugo Barra, vice president of Xiaomi’s international operations, told Bloomberg in July that the company plans to sell its smartphones in the US, although that could still be a year off.

Xiaomi only sells accessories such as earphones in the US market. The upcoming Mi 5 and Mi 5 Plus are therefore expected to be its first smartphones for release there. Both have received FCC certification, a prerequisite for foreign companies selling smartphones in the US.

The signs that point towards Xiaomi’s entry may be what prompted Blue Spike to file its suit, possibly in hope of a hefty settlement to prevent any product delays.

When contacted by the South China Morning Post, Xiaomi declined to comment on the issue.

“Patent infringement issues are something that any company trying to get into the US will have to think carefully about,” said Melissa Chau, a senior research manager at research firm IDC.

Chau said Xiaomi’s aggressive plans hinge on global expansion, especially as most of its smartphone sales have centred on the Chinese market, for which IDC forecasts slow growth.

“The lawsuit in the US would be a barrier that keeps Xiaomi focused on emerging markets, where low-cost devices have already powered the bulk of its sales in China,” said Chau.

Targeting India, Brazil and other emerging markets would allow Xiaomi to sell a larger volume of entry-level smartphones than a market like the US, which traditionally values higher-end devices, Chau added.

This is not the first time Xiaomi has faced legal trouble overseas.

Last December, Ericsson sued Xiaomi at the Delhi High Court in India on the grounds that the Chinese company infringed on Ericsson’s wireless technology and did not apply for licences to use its technology.

READ MORE: Xiaomi starts making phones in India through partnership with Apple supplier Foxconn

The Indian court temporarily banned sales of Xiaomi’s phones nationwide until another hearing in February, leaving Xiaomi scrambling to try and re-enter its largest overseas market.

The following month, Xiaomi announced plans to open 100 stores in India.

Xiaomi also reached a patent-licensing deal with chipmaker Qualcomm last week. It will pay the US company royalties on devices that use its 3G and 4G cellular technology.