Jack Ellis

It increasingly looks like we are on the cusp of entering a second round of smartphone patent wars, driven by the expansion of China’s fast-moving, lower-end mobile device manufacturers outside of their home markets. Earlier this month, Brazil’s competition regulator – the Conselho Administrativo de Defesa Economica (CADE) – handed down a decision that underlines just how important South America’s largest and most populous country could prove to be if this new conflagration comes to pass.

The Comparative Patent Remedies blog reports that CADE rejected TCL’s appeal against its earlier ruling (here, in Portuguese) that Ericsson had not violated competition law in its attempts to license 3G-related standards-essential patents (SEPs) to the Chinese manufacturer. TCL subsidiary TCT – which also markets mobile devices under the Alcatel OneTouch and Palm brands – had originally filed the antitrust complaint against Ericsson after the Swedish company had sued it for patent infringement in the Brazilian courts and requested injunctive relief. This is not the first Brazilian FRAND dispute involving a Chinese company of late; NPE Vringo has also been successful in obtaining an injunction against ZTE, preventing the latter from selling its telecoms infrastructure technology in the country.

Ericsson is no stranger to enforcing its IP rights in emerging economy jurisdictions, having already launched litigation concerning alleged infringement of its SEPs in India against Chinese starlet Xiaomi, among others. Vringo has also engaged in a truly global assertion campaign against ZTE, with suits field in such countries as Australia, India, Malaysia and Romania. All in all, this goes to show how jurisdictions outside of the obvious can play an important part in litigation strategy.

China itself, however, has not seen any significant enforcement by foreign SEP holders, despite the fact that it is the home turf of industry upstarts such as Xiaomi, Coolpad, Meizu et al and is more likely than not the location where the lion’s share of the world’s mobile devices and their components are manufactured. This is because, in spite of the Chinese authorities’ concerted efforts to improve the country’s judicial and administrative systems – and clear signs that progress is already being made – there remains a significant number of drawbacks for those seeking to enforce their IP rights there compared to other jurisdictions.

With available damages still low overall in China, and while its courts remain highly unpredictable and subject to varying degrees of influence from the country’s rulers, India’s common law heritage, independent, English-speaking courts and rule of law make it attractive to IP owners used to litigating in the United States. The Brazilian system’s roots in European civil law similarly provide a certain familiarity to rights holders with globally focused businesses; and its courts are likewise considered to be largely independent from government interference. Most eye-catching of all is the availability of injunctive relief in a market of such size and significance; Brazil’s population of over 200 million people – more and more of whom have a growing level of disposable income – and its significant manufacturing base mean that injunctions can be a very powerful tool indeed.

With that in mind, it wouldn’t be a big surprise to see more patent disputes flaring up involving Chinese mobile companies in Brazil, which is likely to be one of their key target markets for those same reasons listed above. Xiaomi, which is already embroiled in FRAND disputes with Ericsson elsewhere in the world, started selling its products in Brazil at the end of last month; it is well worth keeping a watchful eye on developments in the country in the coming months.