Blue Spike sues Xiaomi, but for now US litigation floodgates for China's premier unicorn remain shut 11 Dec 15
Over the past few days, a number of sources have reported on the US district court lawsuit that has been filed against Xiaomi by a company headquartered in Tyler, Texas by the name of Blue Spike LLC. Inevitably, they have been quick to posit this as the start of an inundation of patent infringement litigation that many pundits – including us at IAM – have slated for the Beijing-based unicorn as it expands into new markets. Furthermore, they have taken it as a signal that Xiaomi’s maiden US product launch is imminent, along with the US Federal Communications Commission’s (FCC) reported accreditation of several of the Chinese company’s product lines. However, a closer look at the details of this story provides pause for thought.
According to its website, Blue Spike owns “over 98 patents” in the field of digital content management and security. Last month, Blue Spike filed suit against Xiaomi and Shenzhen-based Tomtop in its home district of Eastern Texas, alleging infringement of one of its patents relating to address space layout randomisation (ASLR) software. In its filing with the court, Blue Spike claims that Xiaomi “makes, uses, offers for sale and/or imports into the United States products, systems and/or services including, but not limited to, its Mi 4, Mi 4 LTE, Mi 4c, Mi 4i, Mi 5, Mi 5 Plus, Mi Note Plus, Mi Note Pro, Redmi 1S, Redmi 2, Redmi 2 Prime, Redmi 2 Pro, Redmi 2A and Redmi Note 2 devices… which infringe one or more claims of the patent-in-suit”. Co-defendant Tomtop appears to be a Shenzhen-based wholesaler and e-commerce platform that may sell some Xiaomi products (though not mobile devices) through its US website.
It has been possible to purchase Xiaomi smartphones and tablet computers online in the US for some time, while MIUI – its own version of the Android operating system – is also available there. However, the company is yet to officially launch any of its mobile device product lines directly in the country.
It would seem that some developments over the past few weeks have contributed to the Xiaomi rumour mill, and may even have encouraged Blue Spike to launch its litigation against the Chinese company. Back in August, China Daily reported that Xiaomi was planning on launching a US online store in the near future. More recently, a couple of its product lines have apparently received accreditation from the FCC, certifying them as safe for sale in the US market.
Many commentators have taken this as a sign that Xiaomi is preparing a product launch in the country. However, gaining the accreditation alone does not necessarily make that so; and based on online discussion in the comment sections of websites reporting the story, it would seem that FCC certification is seen as useful for launching in other jurisdictions too – including Brazil and Colombia, which have been focal points of the company’s expansion outside of Asia.
More to the point are the substantial logistical and regulatory hurdles that it needs to overcome. In an interview with CNBC back in June, Xiaomi’s vice president for global operations Hugo Barra said: "Launching a smartphone in the US requires a huge amount of effort. We've got to set up after sales support centres across the country – not to mention marketing... With engineering, you have to customise the antenna design, with a huge amount of testing. This process is quite time consuming." He also acknowledged that Xiaomi’s dearth of patent coverage was another issue that would need to be addressed before it could enter the US market in earnest – though it is clear that the company has been taking some significant strides in this regard (not that it would be much help against a plaintiff such as Blue Spike).
It is also worth pointing out that this is not the first time that Xiaomi has been sued by Blue Spike. According to the Lex Machina database, in October 2013, the latter filed suit in Eastern Texas alleging infringement of a different patent – also relevant to ASLR technology – by the Chinese company. In February the following year this case was dismissed after being consolidated with other related complaints launched by Blue Spike against fellow Chinese device makers Huawei, Oppo and others. In a 2012 report from RPX, Blue Spike came in ninth in the top 10 NPEs by US cases filed, with 55 suits in total and 52 remaining active at the end of that year. It also came in fifth place in terms of defendants added during the year, with 83 (79 of those in cases remaining active at year’s end).
On that evidence, Blue Spike is an entity that doesn’t shy away from filing lawsuits, to say the least. That Xiaomi has been a target of its apparent ‘shoot first’ strategy does not necessarily herald the tidal wave of patent litigation that many expect to come Xiaomi’s way if, and when, it does finally launch in the United States. We would need to see a host of other lawsuits – from NPEs and operating companies alike – on federal district dockets before we can say that for sure. We’ll be keeping our eyes peeled.
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