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Court stops Xiaomi from importing & selling handsets in India after Ericsson complaint

Chinese smartphone maker Xiaomi will no longer be able to import or sell handsets to India. An ex-parte interim injunction by the Delhi High Court has directed custom officials to stop the imports and restrain Xiaomi from selling, advertising, manufacturing or importing devices that infringe on Ericsson’s standard essential patents (SEP), reports SpicyIP.

Xiaomi handset

It says local commissioners have also been appointed to visit Xiaomi offices to ensure the implementation of these orders. Medianama sources had indicated this couple of days earlier, however we weren’t able to locate the relevant order on the Delhi High Court site. From what we understand, e-commerce major Flipkart, who is Xiaomi’s exclusive sales partner in India, has also been made a party to the case. The report also notes that court granted this injunction after Xiaomi didn’t respond to Ericsson’s repeated communications over this issue.

In an emailed response to Medianama, Xiaomi’s India head Manu Jain said that:

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.

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.

A Flipkart spokesperson also said that they haven’t received any notice on this, while we are currently awaiting a response from Ericsson.

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Impact on Xiaomi

This order could have a significant impact on Xiaomi’s Indian operations, which is the second largest market for the handset maker after China and also the fastest market, as pointed out by Xiaomi’s vice president of international operations Hugo Barra last month.

The company currently sells its devices on a weekly flash sales model through Flipkart and was planning to setup its own e-commerce site early next year, as indicated by Mint. However, it has always struggled to match consumer demand, with devices selling out in within seconds during its weekly flash sales. Barra had told Bloomberg last month that they had to hire charter flights four times in two months to just fulfill scheduled deliveries, since their shipments had shot up to 200,000 devices per week from 50,000 devices earlier.

Xiaomi also seemed to have adopted a single device strategy in the country to address consumer demand, wherein it focuses on one device at a time and discontinues the sales of previous handsets. It stopped selling Mi3 when RedMi 1S was launched and is stopping RedMi 1S sales to focus on the recently launched RedMi Note that started selling earlier this month. Xiaomi claimed to have sold around 75,000 units of RedMi Note in the flash sale yesterday and around 50,ooo units in a similar sale last week. It was also expected to launch the 4G variant of RedMi Note later in the month.

Ericsson’s previous lawsuits

Note that Ericsson had earlier filed similar patent infringement lawsuits against Micromax last year and Intex earlier this year. Interestingly, following Micromax’s complaint, the Competition Commission of India (CCI) had ordered an antitrust probe against Ericsson for allegedly charging a higher royalty for its GSM technology patents, in December last year.

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Last month, the Delhi High Court had directed Micromax to pay a royalty equivalent to 1% of the selling price of its devices to Ericsson, in an interim order until December 31, 2015, as indicated by an Economic Times report.

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