China's smartphone firms warned of patent disputes

Beijing, April 15 (IANS) China's smartphone companies are at risk of becoming embroiled in disputes over intellectual property rights since many important patents are held by international companies like Google and Microsoft, experts have said.

In 2005, international mobile phone-makers occupied over half the Chinese market. But in 2011, China shipped 455 million mobile phones, among which domestic brands made up 72 percent.

Telecommunications experts have warned Chinese companies that they may be hit with charges of violating intellectual property rights, the China Daily reported.

The Mobile Terminal White Paper, issued by the China Academy of Telecommunication Research, a branch under the ministry of industry and information technology, said China shipped more than 110 million smartphones in 2011.

"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," said Xu Zhiyuan, an engineer at the China Academy of Telecommunication Research.

"Chinese companies should watch out," the daily quoted him as saying.

China is the world's largest producer of mobile devices. In 2011, it produced 1.13 billion mobile devices, including mobile phones and tablet computers.

The report said domestic brands like ZTE Corp, Huawei Technologies Co Ltd and Lenovo Group Ltd have made significant progress in producing mobile phones.

ZTE's mobile device business earned around 27 billion yuan (over $4 billion) in 2011.

Domestic phone-makers have gradually squeezed the market share of their overseas counterparts, the report said.

Experts said most smartphone patents held by domestic makers have to do with designs or physical forms, and few are related to the central technologies.

Xu Zhiyuan said international mobile companies often invest heavily in acquiring patents in the hopes of curbing competition through the use of patent lawsuits.

"In the mobile device industry, there are patent lawsuits everywhere. The disputes surrounding Google's Android mobile operating system are one of the current topics of discussion," he said.

Although Chinese companies such as Baidu Inc and Alibaba Group have developed their own mobile operating systems, their combined market share lags far behind the share enjoyed by international operating systems like Apple's iOS, Google's Android and Microsoft's Windows phone.