Huawei Sues Transsion For Intellectual Property Infringement

Transsion, a Chinese smartphone company best known for its dominance in the African market, has been hit with a lawsuit from Huawei on the eve of its public filing on Shanghai’s STAR board. Someone familiar with the case said that the infringement is not exceptionally egregious, and the amount of the claim is not large, but is more a symbolic slap in the face from Huawei during a sensitive time for Transsion.

On September 27, the Shanghai Stock Exchange announced that Transsion shares will begin public trading on Monday, September 30 under the stock code “688036”. According to the company’s IPO prospectus, Transsion has obtained 630 patents from the State Intellectual Property Office in China, including 97 invention patents, 385 utility model patents and 148 design patents. In terms of copyright, Transsion holds 286 computer software copyrights and 69 core software copyrights related to production and operation.

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Transsion’s number of patents and copyrights pale in comparison to other Chinese smartphone companies, as Huawei has 100,000 patents, OPPO has over 38,000 patents, and Vivo has over 10,000 patents. Patents are largely considered to be central to smartphone internationalization, even potentially more crucial than the products themselves. Transsion has been able to dominate the African market due to the outdated nature of much of the technology on the continent. Large swathes of Africa still use 2G technology, the patents for which have already expired. However, as Africa continues to modernize its technology, the use of 3G, 4G, and even 5G will become more prevalent, forcing Transsion to adjust if it is to retain its title as “The King of Africa”.

Transsion has cited these patent related risks in their IPO prospectus. Li Junhui, a special researcher at the China University of Political Science and Law’s Intellectual Property Research Center, told Tencent Tech News that the lawsuit will likely be negotiated and settle out of court.

As the global smartphone market reaches higher rates of saturation in mature markets like North America, Europe and China, more smartphone players will be looking to penetrate emerging markets. For example, Huawei recently launched the online platform “Huawei Mall” in South Africa and other places to further increase promotional exposure in these markets. Xiaomi established the African Region in January 2019 and cooperated with the African e-commerce platform Jumia to sell online products. In addition, the Indian market is becoming increasingly competitive, with manufacturers like Xiaomi and Samsung increasing their R&D presence there.

As the battle for supremacy in these emerging markets intensifies, investment in R&D and patent development will be the weapons with which smartphone companies will compete for consumers. According to Transsion’s IPO prospectus, the company’s R&D expenditure has increase every year, and totaled 2 billion yuan over the reporting period.