Jack Ellis

For a while now, the IP market has watched and waited to see what steps Xiaomi would take to try to begin solving its patent deficit problem. While the company has been keen to stress its patent filing efforts of late, the consensus has been that it would need to acquire third-party portfolios to properly equip itself for further growth. And it would appear that, in the run up to the new year, Xiaomi made its first move in this direction.

In an assignment dated 23rd October 2015 and recorded with the USPTO on 7th December, US semiconductor company Broadcom transferred 19 US patent assets to an entity named Xiaomi H.K. Ltd, which is based a couple of blocks away from IAM’s Asia-Pacific desk in Hong Kong. The 15 issued patents and four applications in the portfolio relate broadly to wireless telecommunications technology; they had previously belonged to Renesas Mobile, a unit of Japanese semiconductor player Renesas Electronics that was acquired by Broadcom in 2013. Broadcom agreed to a $37 billion merger with Singapore-based Avago Technologies in May last year.

As this blog has previously suggested, and as was underlined again in a Marketwatch piece this weekend, any global ambitions on Xiaomi’s part have been hampered by the threat of patent disputes and a lack of portfolio coverage that might serve to deter such assertions. The situation is becoming increasingly urgent for this darling of the Chinese start-up scene, as the past few months saw it fall behind longer-established domestic rival Huawei in terms of Chinese smartphone shipments. Salvation, at least in part, would seem to lie in foreign markets. But Xiaomi’s push into India was met with an infringement lawsuit and an injunction; while even the slightest hint that it may be shaping up for its maiden US product launch was apparently enough to attract the attentions of one NPE.

As far as I can tell (and assuming that the Hong Kong entity is indeed a vehicle of the Chinese smartphone start-up), the transfer from Broadcom is the first recorded instance of Xiaomi acquiring US patent assets from a third party. That is not to say that it has not made any unrecorded acquisitions, or that it has been inactive with regards to non-US assets. We also know that Xiaomi is one of the lead investors in Beijing-based patent aggregator Zhigu, which has obtained US assets from the likes of Taiwan’s Lite-On, Foxconn Group and Inventec, among others, and has a management team convinced that there is untapped value to be mined from Chinese-issued patents. Taken together, these efforts, along with an increasing focus on organic portfolio growth, are all intended to strengthen Xiaomi’s hand as it enters the next phase of its development. Nevertheless, the transfer of a US patent portfolio from a major player like Broadcom is a watershed for the Chinese company.