Coolpad blasts Xiaomi for drawn out patent dispute amid IPO process

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Coolpad Group, the Shenzhen-based Chinese smartphone brand which is suing larger rival Xiaomi over alleged patent infringements, said the tech start-up was trying to drag out the case by raising objections over legal jurisdiction to buy time for its initial public offering in Hong Kong.

The Shenzhen Intermediate Court has already dismissed the jurisdiction objections from Beijing-based Xiaomi, which has now appealed to the higher court of Guangdong province, thus prolonging the process, said Coolpad global chief intellectual property officer Nancy Zhang, in an interview this week.

“We’ve been sending letters from our lawyers to Xiaomi since 2014 over its violation of our patent rights, but the company hasn’t responded,” said Zhang in a telephone interview. “Therefore, we have no alternative but to seek protection of our interests through the courts.”

The dispute comes at a delicate time for Xiaomi. It has filed for an IPO in Hong Kong that is expected to raise at least US$10 billion, valuing the eight-year-old company at up to US$100 billion, according to bankers familiar with the plan. The market debut could catapult Xiaomi, founded in 2010 by serial entrepreneur Lei Jun, past Baidu and JD.com to become the third-biggest Chinese technology company by value, after e-commerce giants Tencent Holdings and Alibaba Group Holding.

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A spokeswoman for Xiaomi said the firm had never received a legal letter from Coolpad pertaining to patent infringements in 2014. The company declined to comment on Coolpad’s assertion that it was trying to prolong the lawsuit.

Xiaomi said on May 11 that it had requested the Patent Re-examination Board, under China’s State Intellectual Property Office, to invalidate three patent rights that Coolpad unit Yulong Computer Telecommunication Scientific had claimed were infringed by the world’s fourth-largest smartphone supplier.

Hong Kong-listed Coolpad announced in a regulatory filing late on May 10 that its Yulong unit had initiated a patent infringement case against Xiaomi with the Jiangsu Province Nanjing Intermediate People’s Court, following an earlier case lodged against Xiaomi in the Shenzhen Intermediate People’s Court in January 2018. The complaints alleged that Xiaomi has used patents without any license from Yulong, relating to app icon management, notifications and the system user interface as well as dual SIM card-related designs on certain Xiaomi products that Coolpad said it had originally developed.

Xiaomi in smartphone patent dispute against rival Coolpad

Coolpad requested the court to order Xiaomi to stop the sale and production of three smartphone models covered by the patent dispute – the Mi Mix 2, Redmi Note 5 and Redmi 5 Plus. The court was also requested to order Xiaomi to pay “for the economic loss suffered” by Yulong and all litigation expenses.

Coolpad has owned some of the disputed patents since 2006 and remains the legitimate owner, said Zhang in the interview. Asked whether the timing of the lawsuit, as Xiaomi readies its IPO, was intentional, Zhang said: “It is the right of all patent holders to choose when to sue infringers.”

Once a major smartphone brand in China, Coolpad has lagged behind other domestic suppliers in terms of updated technical specifications and range of models available, according to research firm IDC. Coolpad was outside the top 10 smartphone suppliers in China in the first quarter of this year. The 10th-ranked vendor, Xiaolajia, sold just 1.3 million handsets during that quarter, according to Sino-Market Research.

Alibaba is the parent company of the South China Morning Post.

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