Apple Crushes Xiaomi in the Chinese Patent War- Part 2

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November 4, 2014 by ...

Part 1 of this piece explained how Xiaomi is being lauded as a leader in global innovation. Differences in the interpretation of this term lead to mud slinging and tears. In an attempt at reconciling the Mi-Fans and Apple loyal, your humble author has assumed the role of mediator. His weapon of choice is the venerable patent. (For more information on Chinese patents and their descriptions go here or here).

Apple-Xiaomi patent divide…

As one can see from the charts below, Xiaomi does not measure up to Apple as far as Chinese patents are concerned. The biggest discrepancy is in ‘Invention Patents Granted’, where Apple has a 53 to 1 advantage. Across the board this holds true. Xiaomi lags behind Apple in all quantifiable measures, the only variable is by how much.

Chart 1

Wait a minute, lets talk about patents awarded…

I don’t mean to kick Xiaomi when they are down, but the previous chart actually is more optimistic than it should be. The reason is that it includes ‘patents filed’, which is not the same thign as ‘patents granted’. Of course these patents may one day be granted, but as of the writing of this article they are not.

Revsing the numbers we see that Xiaomi even looks less innovative.

Chart 2

 

The data shows how Apple now has 10.7 patents for every 1 that Xiaomi has. Aside from that, we are still faced with that ugly 53:1 invention patent disparity.

Hey, is that really fair?

In the event that neither Mssers Barra and Lei do not speak in their own defense, I shall do so. Xiaomi could argue that it takes more time for invention patents to be awarded than the others. Thus, their published patents will/may one day be granted. They could argue that Xiaomi is relatively new to the game and had to imagine, create and then apply for patents within the past few years. Apple, on the other hand, merely had to refile in China.

Of course this is true, but then again one could ask what took Xiaomi so long. Stating that they are newer than Apple does not absolve them of the ‘innovation-less’ guilt. They have been selling phones for years now. Surely Xiaomi didn’t become paragons of innovation all of the sudden. If this is true, then why so few innovation patents up until now?

Based on the data, Xiaomi averaged a paltry two new and patentable ideas per year since its inception. Wow, this surely does not sound like the work of a global innovator.

Rich man, poor man

Another way to analyze this would be to use the ‘poor small company vs the giant’ argument. It would go something like this. ‘Xiaomi is new and should not be held to the same standards as Apple. In addition, it has much less cash. It is unreasonable for anyone to compare them to Apple at this stage in the game.’

This claim falls short, as I will now explain. Xiaomi is plenty cashed up, at this point so that is a non-issue. In addition, obtaining patents in China should have been a cinch. All of these patents are filed in the Chinese mainland so the language is no barrier. In all honesty, being Chinese favors Xiaomi in this respect. As I mentioned, Beijing’s push for indigenous innovation included writing patents and funding them as well. This included the full cost and a cash bonus once awarded, for many firms. All of this means that Xiaomi has no reason to lag behind.

A counterpoint would be that it’s hard to run to any patent office and say, ‘Hey, our flagship Mi 4 kinda’ looks like the Iphone. How about giving us an innovation or design patent for that?’

Perhaps this has happened, but I have my doubts. Knowing Apple, they were probably first to file in China and not even SIPO would allow such blatant piracy, or would they?

Based on the data, they probably did not. Xiaomi was awarded a palsied 64 design patents to Apple’s 357, but then again, I’ve searched Xiaomi’s designs and fail to see little to anything original. This being the case, even 64 design patents seems liberal.

Perhaps I am being hasty. The Xiaomi Red Army Soldier bunny/mascot, for example, could have been awarded myriad of design patents. They most definitely could have squeezed one-dozen from this doll alone.

 

So where does this leave us?

As you can tell from the sarcastic tone of this post, things do not look good for Xiaomi. Free speech being what it is, they can claim what they want. Calling themselves the next Apple and innovators is their prerogative, but they have not proved this as of yet. Using a quantifiable and objective measure of patents, we see that Xioami is not nipping at the heels of Jobs’ legacy. From the looks of it, Xiaomi is not even a fast follower yet.

Sure its true that Xiaomi is setting the cellphone world on its head. They are disrupting the market with a novel approach. This however, has little to nothing to do with innovation.

Xiaomi’s business model comes in two flavors. Lei Jun leverages nationalism in his target market lesser educated males living in second-tier cities. This ‘support the hometown hero’ motto resonates not only with this niche, but greater China as well. The second method to his madness is by creating a mashup of best business practices spanning several industries, as I explain here.

Xiaomi definitely deserves props for disrupting the industry. But not in ways that most people think. In a rush to find the next global innovator, many take extreme liberty with that term. Every crucial component of Xiaomi’s business model can be found elsewhere, with the exception of the ‘nationalism’ motif.

As a consequence Xiaomi needs to be studied for what it does best, execution of multiple strategies. Design innovation, however, is not one of them.

 

Related information on Chinese patents from this site:

China has three types of patents, the invention patent, utility model patent, and design patent. Although the name is similar, the utility patent in the United States is similar to the Chinese invention patent. The Chinese utility model patent is similar to the European and Japanese utility model patents. The United States has no utility model style patent.

A utility model patent may not be acquired for all types of inventions. Utility model patents may only be obtained on physical products. Therefore, methods or chemical compounds may not receive utility model protection since they do not have a shape or structure. However, in some cases, it may be possible to revise the application such that an invention may receive utility model protection. For example, it may be possible to revise a method application to claim a product that uses the method rather than the method itself.  However, the product must have an element of shape or structure and may not be described entirely as to its function. Electronic circuits, since they have a structure, may receive utility model protection if described as a product rather than a pure circuit.

Utility model patents are granted faster

A principal disadvantage of the utility model patent is its ten-year term from the filing date, rather than the twenty-year term enjoyed by the invention patent. However, a utility model patent will issue much faster than an invention patent (sic). This is because a utility model receives preliminary (sic) examination but does not receive substantial examination.