China smartphones risk IP disputes

Booming Chinese smartphone industry potentially risks intellectual property tussle, as important patents regarding mobile technology belong to foreign companies, not homegrown ones, report notes.

As market for Chinese smartphones grows bigger at home and abroad, local companies risk getting into legal disputes over intellectual property (IP) violation, because several important patents are held by international companies, a government report said.

The White Paper on Mobile Terminal, issued Friday by the China Academy of Telecommunication Research (CATR), said the country is the biggest producer of mobile devices--including phones and tablets--worldwide, and shipped more than 1.1 billion smartphones in 2011.

In 2005, foreign handset makers made up half of the Chinese mobile phone market, it said. But by 2011, with Chinese manufacturers shipping some 4.55 billion handsets, domestic brands have squeezed the market share from overseas rivals to occupy nearly 72 percent, it added. It also pointed out that companies including ZTE and Huawei Technologies, have made significant progress in producing mobile phones.

The report however noted that Chinese smartphone companies are potentially at risk of violating intellectual property rights, as most of the important smartphone patents are held by foreign companies, including Google and Microsoft, whereas the patents held by domestic companies are to do with physical designs rather than technologies.

Furthermore, the market share of mobile operating systems (OSes) remains dominated by international brands such as Apple's iOS, Google's Android and Microsoft's Windows Phone 7 (WP7), despite homegrown mobile OSes such as Baidu Yi and Aliyun, it said.

Noting that the mobile device industry sees "patent lawsuits everywhere", Xu Zhiyuan, a senior CATR engineer, told newspaper China Daily in a news report Saturday that: "As more Chinese mobile phones pour into the global market, it is more likely that international rivals will use intellectual property (IP) rights as a weapon in competition." He hence cautioned Chinese mobile companies to "watch out", according to the daily.

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