Xiaomi’s intellectual property infringement may keep it from reaching $100 billion on its initial public offering (IPO) and becoming the number one smart phone brand in Vietnam.

Xiaomi was asked to halt the production of the Mi Mix 2s due to copyright infringement. Photo: Phonearena

According to Phonearena, Yulong Computer Telecommunication Scientific (Shenzhen) Co., Ltd., a division of Chinese smartphone manufacturer Coolpad, has filed a patent infringement suit against three units of Xiaomi.

The suit alleges that Xiaomi Telecom Technology Co., Ltd., Xiaomi Technology Co., Ltd., and Xiaomi Factory Co., Ltd. used Yulong's intellectual property without authorisation. In the suit, which was filed at a court in Jiangsu province, Coolpad asked Xiaomi to halt the production of several Xiaomi models, including the Mi Mix 2s.

The lawsuit alleges that Xiaomi illegally used Coolpad's patented multi SIM card design and a certain technology related to the UI on some Xiaomi handsets. While no figure was given, Coolpad is seeking compensation for losses incurred due to the patent infringement. In January, Coolpad filed a similar lawsuit against Xiaomi in a Shenzhen court, however, the lawsuit has yet to be finished.

Yulong’s move comes nearly two weeks after Xiaomi filed to stage the largest IPO in the last four years. In early May, Xiaomi filed the IPO paperwork in Hong Kong. The company did not disclose how much it plans to raise, but it could go public at a value of as much as $100 billion, which would make it the largest in the world since Alibaba’s $25-billion debut in 2014 and the biggest in Hong Kong since AIA’s $16.6-billion IPO in 2010.

In addition, the lawsuit may hinder the dream of becoming the number one smart phone brand in Vietnam.

Earlier this year, Doan Hong Viet, general director of Digiworld, the distributor of Xiaomi in Vietnam, issued the plan to popularise Xiaomi’s products in 15 cities and provinces this year and to build 1,000 Xiaomi stores across the nation by 2020.

Despite Xiaomi’s disadvantages in the war for market share in Vietnam, the world’s fourth largest smart phone maker is confident that building a secure retail distribution system across the country, which is considered a core factor in the success of a smart phone brand, will bring success for Xiaomi.

VIR