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China warns domestic mobile phone makers of IP dangers

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China’s IT ministry has warned domestic handset makers to beware of getting sucked into the escalating number of intellectual property disputes currently disrupting the smartphone industry.

A white paper (Chinese) issued by the Ministry of Industry and Information Technology’s China Academy of Telecommunication Research argued that as home grown brands begin to dominate on the world stage the risk of them being hit with an IP suit by a foreign company has surged.

China now produces the majority of the world’s supply of mobile devices, churning out over one billion devices in 2011, and domestic players which have a market share of around three quarters in the People’s Republic have largely edged out international rivals, according to a China Daily report on the research.

However, it is international companies like Google and Microsoft who have the patents that matter for key underlying technologies, the report continued.

Xu Zhiyuan, senior engineer at the academy, told the paper that “there are patent lawsuits everywhere”, and highlighted Android in particular as a platform heavily mired in litigation at present.

Google is fighting Oracle over use of Java in the OS as well as Microsoft, which has managed to force most major Android OEM partners to sign cross-licensing deals.

"As more Chinese mobile phones pour into the global market, it is much more likely that international rivals will use intellectual property rights as a weapon in competition," Xu said.

"Chinese companies should watch out."

It’s difficult to know whether the research is the opening salvo in a new government campaign to encourage local manufacturers to move away from foreign platforms and especially Android – which now has market share of around 70 per cent in China.

If it is, then at present there is no realistic domestic alternative for Chinese handset makers, IDC analyst Melissa Chau told The Reg.

“We’ll see how well they can develop their own alternatives but it is a stretch as it is,” she said. “There is not really a home grown alternative.”

The report mentions that some Chinese mobile operators as well as some web firms such as Baidu and Alibaba have developed their own operating systems, but Chau pointed out even these are based on Android, and are far from successful.

On the other hand, the ministry’s report could possibly be viewed as some timely advice to the country’s notorious white box manufacturers, who operate very much at the fringes of what could be deemed legitimate.

“These smaller groups infringe on software and hardware [patents] … putting things on Android without Google’s knowledge. They’re probably more of the kind of handset makers the piece refers to,” added Chau. “Huawei and ZTE usually do things legitimately.” ®

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