Delhi High Court orders Xiaomi to suspend smartphone sales

By Aman Shah

MUMBAI (Reuters) - The Delhi High Court has ordered Xiaomi Technology Co Ltd to temporarily stop selling its smartphones in India in a case related to patent infringements that telecom equipment maker Ericsson had filed against the Chinese company.

Xiaomi, whose low-priced but feature-rich smartphones have made it the biggest smartphone vendor in China, sells its phones exclusively through online retailer Flipkart.com in India, the world's third largest smartphone market.

Both Xiaomi and Flipkart.com have been ordered by the Delhi High Court in an order on Wednesday to stop selling the devices until Feb 5, when it is due to hear the case, according to the court documents seen by Reuters.

Xiaomi entered India in July this year and has been a huge hit among customers in a market that has at least 80 different phone makers including Samsung Electronics Co Ltd and a bunch of home-grown companies.

India is an attractive market for cheap smartphones, as more people are now able to afford a smartphone, often for the first time. Just 10 percent of the India's population currently owns a smartphone, brokerage Nomura said in a recent research note, and that figure is likely to double over the next four years.

Xiaomi in October became the world's third-largest maker of smartphones, just three years after first hitting the market, trailing only Samsung and Apple Inc .

The Delhi High Court also asked both Xiaomi and Flipkart.com to provide details of the devices sold so far in India that are compliant with the 3G, EDGE and AMR technologies and the revenue earned from the sale of the devices.

Ericsson, in a statement, said on Thursday it had to take legal action against Xiaomi in India for using its technology in its smartphone devices without paying it a licensing fee.

"To continue investing in research and enabling the development of new ideas, new standards and new platforms to the industry, we must obtain a fair return on our R&D investments," the Swedish company said.

The chief of Xiaomi's India operations told Reuters the company had yet to receive an official notice from the Delhi High Court and that it was willing to work with Ericsson to resolve the issue "amicably".

"Our legal team is currently evaluating the situation based on the information we have," said Xiaomi's Manu Jain. He did not give details about the case.

Flipkart also said it was yet to receive an official notice and would work with Xiaomi and the authorities.

(Aditional reporting by Suchitra Mohanty in NEW DELHI and Jeremy Wagstaff in SINGAPORE; Writing by Sumeet Chatterjee; Editing by Miral Fahmy and Mark Potter)