How Xiaomi’s patent portfolio stacks up against competitors, in two charts

When an Indian high court slapped an injunction on Xiaomi, halting sales and import of all its phones, many people including us started to question whether the Chinese smartphone maker had enough intellectual property to do business outside of its home country. Ericsson, the telecommunications giant behind the injunction, alleged that Xiaomi infringed on its patents in India.

Xiaomi models that use MediaTek processors, namely the Redmi 1s, are still not for sale in India, but Xiaomi has repeatedly argued that intellectual property will not be a concern moving forward. The four-and-a-half-year-old company now sells its devices in seven Asian countries and plans aggressive expansion into many more, including some in Latin America, this year.

So should Xiaomi be worried? For each market it enters, it opens itself to more legal vulnerabilities. If it doesn’t have a patent portfolio to protect itself, it could run into further trouble like it did in India.

Patents are important for two big reasons. First, they cut licensing fees that companies like Xiaomi have to pay to companies like Ericsson for the technology used in their phones. Secondly, when tech companies get sued for patent infringement (it happens a lot in the mobile sector), handing over patents is a common way to settle the suit out of court. This use of patents as a bargaining chip is called a cross-licensing agreement, in which Xiaomi would allow the company that sued it to use some of its patents.

To give some context to Xiaomi’s situation, we dug up some data from China’s State Intellectual Property Office (SIPO) and the World Intellectual Property Organization (WIPO), both of which have public databases of patent applications. We compared Xiaomi to several other Chinese phone makers, including Oppo, Coolpad, Meizu, ZTE, and Huawei, as well as foreign competitors Apple and Samsung — best sellers in China.

The data

For each of these companies, we found the number of applications filed under the Patent Cooperation Treaty (PCT), which are internationally-recognized patents for some or all member countries, and those filed with China’s SIPO, including invention patents, design patents, and "announced" patents, which are still pending approval. SIPO patents are only recognized in China.

As you can see, Samsung, ZTE, and Huawei dwarf Xiaomi and the rest. But it isn’t exactly fair to make that comparison because their products are not limited to smartphones. Samsung has a huge catalog ranging from smartphones to laptops to speakers to kitchen appliances. ZTE and Huawei are both major telecommunications equipment manufacturers, which build the infrastructure necessary for nationwide 4G networks to work, among other things. They are two of the biggest patenters in China across all sectors. These three companies are also much older and thus have had more time to accumulate a large patent portfolio, so a direct comparison isn’t really applicable. Let’s take out those last three.

That’s more like it. In this chart, we also made a change to Apple’s data. Only patents filed under Apple Inc are included. Apple changed its official name from Apple Computer Inc to Apple Inc in 2007 – the same year the first iPhone launched. That makes for a more relevant comparison to Xiaomi and other young smartphone makers.

A threat to Xiaomi?

What can we infer from the data about the legal threat for Xiaomi beyond China? If Xiaomi were to stop applying for patents today and continue expanding into more countries, then it might indeed be at risk. It has just a tiny fraction of what Apple has on the international and domestic fronts. And with just 28 patents granted in China, it’s behind smaller local companies like Oppo and Coolpad, too.

But Xiaomi isn’t resting on its laurels when it comes to intellectual property. Of Xiaomi’s 130 or so applications to the PCT, about 100 were submitted in the past year, and 19 in the last two months. That shows Xiaomi is more gung-ho than ever about building its IP portfolio.

Oppo sets an important standard to which we can compare Xiaomi because it operates in many of the same international markets and has a relatively similar line of products. Oppo has more patents in its China portfolio, both pending and granted, but it’s lagging behind Xiaomi on the international front.