Delhi HC allows Xiaomi to sell in India subject to conditions

Xiaomi can only sell devices that use chipsets imported from Qualcomm Incorporated, a licensee of Ericsson

Xiaomi was also told to deposit Rs100 for every device it has sold in India or sells till 5 January. Photo: Reuters
Xiaomi was also told to deposit Rs100 for every device it has sold in India or sells till 5 January. Photo: Reuters

New Delhi: The Delhi high court on Tuesday allowed Xiaomi Technology India Pvt. Ltd to import and sell communication devices such as mobile phones and tablets in India, subject to some conditions.

Xiaomi can only sell devices that use chipsets that have been imported from Qualcomm Inc., a licensee of Ericsson. Xiaomi was also told to deposit Rs.100 for every device it has sold in India or sells till 3 February.

The ruling came in an appeal filed by the Chinese handset maker against an order restraining Xiaomi from “manufacturing, assembling, importing, selling, offering for sale or advertising including through their and third-party websites, products (telephone instruments, mobile handsets, tablets, hand-held devices, dongles,. etc)” and “any future or other devices or models that include the AMR (adaptive multi rate), 3G and EDGE technology/devices/apparatus” that infringed any of Swedish telecommunication giant Telefonaktiebolaget LM Ericsson’s eight patents.

The 8 December order was passed in a patent infringement suit filed by Ericsson claiming infringement of its 2G and 3G technologies. The court’s order had also extended to e-commerce website that had an exclusive arrangement with Xiaomi for flash sales of its handsets in India.

Claiming that the 8 December order brought Xiaomi’s business in India to a grinding halt, senior lawyers Kapil Sibal and Mahesh Agarwal appearing for the company argued that Ericsson had suppressed important information before the single judge that Xiaomi had been sourcing the chipsets from Qualcomm, which was authorized to sell them to Xiaomi according to terms of an agreement it has with Ericsson.

Citing the closure of Xiaomi’s business due to the “sweeping order” passed by the single judge as the reason for the temporary relief being granted to Xiaomi, the court clarified that it was not expressing any opinion on the merits of the case.

“This is a temporary decision until the court in the first instance can look into the matter more closely. Ericsson is confident that all allegations will be rejected in the next hearing on 8 January. Xiaomi needs a licence from Ericsson for all of their phones imported to India, which will be clarified in the upcoming hearing. 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 (research and development) investments. Our ambition has always been to reach a mutually fair and reasonable conclusion with Xiaomi, just as we do with all of our licensees. Since this is an ongoing legal process, we do not have any more comments on this matter at the moment,” Ericsson said in a statement.

The court, in its earlier order, had also directed the Central Board of Excise and Customs not to allow “the import of mobiles, handsets, devices, tablets” of the allegedly infringing devices and to intimate Ericsson about any consignments imported by Xiaomi.

It had directed Xiaomi to file an affidavit disclosing the quantum of AMR, EDGE and 3G devices sold by it in India and the revenue earned from their sale.

Ericsson claimed that despite specific requests to Xiaomi to obtain a licence with respect to Ericsson’s standard essential patents (SEPs), it had “launched its infringing devices in India in July 2014”, without taking any such licence.

An SEP is a patent that protects technology that is essential to a standard, without which it would be impossible to manufacture that particular technology while complying with the set industry standard. Since any product that meets the standard will necessarily have to use the patented technology, globally these patents are licensed by the patent holder to prospective users on fair, reasonable and non-discriminatory terms.

This order was passed ex-parte, that is, without giving Xiaomi an opportunity to appear before the court and defend its stand.

Xiaomi did not respond to emailed queries.

Following the earlier order, the company’s vice-president, international, Hugo Barra, in a statement made on social networking website Facebook, said that the company had been “forced to suspend sales in India” and was assessing its legal options.

“The good news is that Redmi 1S is coming back next week and we’ll be having our next sale on Tuesday, December 23. We will also be resuming sales of Redmi Note shortly, with the 4G model this time, Barra said in a Facebook update.