Xiaomi open to another patent mega-deal if the right opportunity presents itself 05 Jun 17
It has been about a year since Xiaomi completed one of the larger single patent acquisitions made by an emerging Chinese tech company. The smartphone maker secured around 1,500 Microsoft patents as part of a licensing deal and a technology sharing pact that allowed the US tech giant to install its software on certain Xiaomi devices. I learned some more background to that agreement during a recent visit to the Chinese company’s Beijing headquarters, and was told that the smartphone upstart is not necessarily done hunting for megadeals.
Paul Lin says that the call to Microsoft was one of his first actions as Xiaomi’s new vice president of IP strategy. Lin formerly headed Beijing-based patent aggregator Zhigu, which was acquired by Xiaomi in February 2016, and the core of which now serves as the company's in-house IP strategy function. While Xiaomi and CEO Lei Jun had been early backers of Zhigu, the aggregation business had operated independently up to that point, with the Lei's smartphone insurgent as a major client.
As an external advisor, Zhigu had been able to help acquire patents on behalf of Xiaomi, advising on patent portfolio acquisitions it made from Intel and Broadcom. But the strict confidentiality around most licensing negotiations makes it all but impossible to rely on external advisors in that domain. It was a series of challenges in this area, starting with Ericsson’s December 2014 patent infringement suits against Xiaomi in India, that eventually convinced Xiaomi executives that they would be best served by bringing Zhigu into the fold. As full-fledged Xiaomi employees, Lin and his team are able to hammer out complex and multifaceted licensing and transaction deals like the one they completed with Microsoft.
Since the Microsoft deal, Xiaomi’s only publicly-known third party patent acquisition has been a transfer from Casio of 59 US patent assets related to camera, image capture and image processing technology. I asked the Xiaomi team whether, having closed a 1,000+ patent deal with Microsoft, they would shift their focus toward smaller deals or slow down acquisitions generally. The answer was no: the company is still very much willing to entertain large-scale offers. And you can be sure Xiaomi receives more than its fair share of approaches from brokers now that everyone in the patent world knows who they are – a marked change from when Lin and his team were getting established in 2012.
Licensing and standards remain a big immediate focus, and the company has become more vocal what it argues is the need for foreign innovators to take a flexible approach to the Chinese market. But don't be surprised if Lin and company pull off another major aquisition.
For much more on the transformation of Xiaomi’s IP function over the past year, be sure and read the profile just published in Issue 84 of IAM.
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