About patent infringement! Dong Mingzhu and Xiaomi, who is lying?

The patent dispute between Gree and Xiaomi, the reappearance of "Rashomon", is behind the confrontation between new and old forces in the air conditioning industry. On December 16, Dong Mingzhu, chairman and president of Gree Electric Appliances, said in a dialogue program that Xiaomi recently compensated Gree 500,000 yuan for patent infringement. Subsequently, Wang Hua, general manager of the public relations department of Xiaomi Group, then responded on Weibo that there was no patent infringement of Xiaomi air conditioner, let alone compensation for patent infringement. As for Dong Mingzhu's accusation that Xiaomi's infringement specifically involves Gree's patent and whether it involves the field of air conditioning, as of press time, Gree Electric has not responded to the first financial reporter's inquiry. An industry veteran told the first financial reporter that it is impossible to define whether Xiaomi air conditioners are infringing for the time being, but now many of the R&D personnel of Xiaomi air conditioners are former Gree employees. In this regard, Wang Hua further responded to the first financial reporter that the home appliance industry is very traditional, there is no non-compete agreement, there is no non-compete compensation, and there is generally only a confidentiality agreement.

Who is lying

According to the currently circulating online video, when asked "What do you think of Xiaomi air conditioner", Dong Mingzhu said that Gree is the best air conditioner, with more than 100,000 patents, and Xiaomi recently paid Gree 500,000 yuan for patent infringement, so let him say it himself. In this regard, Wang Hua responded that after re-verification, the information was untrue, the first is that there is no patent infringement of Xiaomi air conditioner, and the second is that Xiaomi air conditioner has not been compensated for patent infringement. Lu Weibing, president of Xiaomi Group, also posted on Weibo: "This morning (16th) just held a regular business meeting for major appliances, focusing on the sales volume and share of the air conditioning business. According to third-party statistics, Xiaomi air conditioner sales increased by 53% year-on-year from January to November. Wang Hua reposted the content and said that Xiaomi's major appliance factory has started construction, and it can develop and produce its own Xiaomi air conditioner next year. Regarding Xiaomi's denial, Gree Electric did not make a further explanation. The first financial reporter noticed that in the above video, Dong Mingzhu did not specifically say that Xiaomi recently paid Gree 500,000 yuan for patent infringement, whether it involves the field of air conditioning. This is not the first patent dispute between Gree and Xiaomi. In July this year, Gree Electric Appliances announced that it had sued Xiaomi Mi Home Appliance Fan for infringing its patent rights and won the lawsuit, and the relevant manufacturer "Dream Maker (Zhejiang) Technology Co., Ltd." has paid 1.85 million yuan to Gree Electric Appliances. But at that time, Xiaomi's relevant people also told the first financial reporter that the manufacturing, supply, and production of the electric fans involved in the lawsuit are all ecological chain companies, and Xiaomi and Mijia are only investing in empowerment and helping them sell and promote, and are not responsible for their daily management and operation. Under the premise that the specific subject of the penalty is unclear and Dong Mingzhu's so-called fine of 500,000 yuan is certain, Zhao Zhanzhan, a lawyer at Beijing Yunjia Law Firm, told the first financial reporter that it is common for the industry to award compensation of hundreds of thousands of yuan. You Yunting, a senior partner of Shanghai Dabang Law Firm, told reporters that if the settlement compensation is 500,000 yuan, the amount is not particularly serious in the industry, because the main demand of patent litigation is that the other party stops using the patented technology, and the amount of compensation depends more on the amount and nature of the infringement. Liu Buchen, a senior analyst in the home appliance industry, told reporters that under the premise that the facts are temporarily unclear, if Gree points out that Xiaomi infringes its patents and compensates, it should cite evidence; At the same time, Xiaomi can't say "untrue", otherwise it will not be able to dispel the doubts of the outside world about whether it is infringing. On the whole, it can be seen from Dong Mingzhu's mention of Xiaomi air conditioners from time to time during this period that the rapid growth of Xiaomi air conditioners has indeed made Gree feel the pressure.

Xiaomi air conditioner absorbs the original Gree employees

According to Xiaomi Group's financial report for the third quarter of 2024, Xiaomi's air conditioner shipments reached 1.7 million units in the third quarter of this year, an increase of more than 55% year-on-year. In the earnings call, Lu Weibing said that personal devices with mobile phones, tablets and wearables as the core are Xiaomi's first growth curve. Although it has entered the mature period of the industry, there is still a lot of room for growth. Home equipment with air conditioners, refrigerators, and washing machines as the core is the second growth curve, and although the industry is traditional, there is still huge room for innovation. Lu Weibing also said that the profit margin of Xiaomi air conditioner is only about 10%, far lower than the 30% to 40% profit margin that is common in the traditional home appliance industry; Some traditional home appliance brands take advantage of high profit drivers to bring high-priced products to the market, harming the interests of consumers. Unlike the electric fan business, Xiaomi is increasing its control over the supply chain in the air conditioning sector. On July 24 this year, the first financial reporter learned from relevant people in the supply chain that Xiaomi air conditioner is strengthening its control over the supply chain with the expansion of sales scale, and its foundry model has changed from the previous contract labor and material to material processing. On November 26 this year, Xiaomi's smart home appliance factory laid the foundation stone in Wuhan, and the first phase of the project focused on air conditioning, covering the assembly and production of household and central air conditioners. An industry veteran told the first financial reporter on December 16 that it is impossible to define whether Xiaomi air conditioners are infringing for the time being, but now many of the R&D personnel of Xiaomi air conditioners are former Gree employees, and some people have changed their names in order to avoid non-compete agreements. According to rough estimates, from the end of last year to the first half of this year, Xiaomi's air conditioning business absorbed more than a dozen original Gree technicians. In this regard, Wang Hua further responded to reporters, saying that the employment of any enterprise will only be recruited by branch and school, and it is normal for social recruitment to come from any company in the same industry; In addition, the home appliance industry is very traditional, there is no non-compete agreement, there is no non-compete compensation, and there is generally only a confidentiality agreement. In the field of air conditioning, there is still a significant gap between the number of patents of Xiaomi and the number of patents of Gree Electric Appliances. The first financial reporter learned from the wisdom bud patent database that as of December 16, Xiaomi has 2144 patents in the field of air conditioning, and 172 patents are being accepted. In recent years, the number of patent applications and authorizations for Xiaomi air conditioners has reached a peak in 2022, with 517 applications and 302 authorizations. More than ninety percent of Xiaomi's air conditioner patents are filed in China, mainly related to ventilation, control safety, air conditioning, air treatment, etc. As of December 16, Gree has 51,009 patents in the field of air conditioning, and 172 patents are being accepted. In recent years, Gree Air Conditioner has continued to strengthen its patent layout, reaching a peak in 2018, with 6,304 applications and 4,115 authorizations. These patents are all filed in China, mainly related to air conditioning, air humidification, ventilation, control or safety, fluid circulation devices, gas purification, etc.

Old and new forces clash with each other

Since the beginning of this year, Dong Mingzhu and Lei Jun, the founder of Xiaomi, have staged a war of words. Dong Mingzhu asked at the shareholders' meeting of Gree Electric Appliances on June 28 this year, Xiaomi said that it (air conditioner) is the first, and it all depends on other manufacturers to make products, what is your technology? After that, Lei Jun responded in the live broadcast, "Sister Dong criticized us and said that we pretended to be the first, but we really didn't pretend, we really ranked fourth." After Sister Dong criticized us, to tell the truth, (Mijia air conditioner) became more popular." The reporter saw from the AVC data compass that as of December 8, 2024, in the domestic online air conditioning market, Xiaomi jumped to third place, with a market share of 11.81%, an increase of 4.32 percentage points year-on-year, and Gree was in second place, with a market share of 24.72%, a year-on-year decrease of 2.68 percentage points. In the same period, in the domestic offline air conditioning market, Xiaomi ranked 20th, and Gree ranked second. He Jinming, vice president of Aowei Cloud Network, analyzed to reporters that Xiaomi air conditioners have grown rapidly in recent years, and data from Aowei Cloud Network shows that Xiaomi air conditioner shipments will exceed 6 million units in 2024. In recent years, in order to increase the self-research capacity of air conditioning, Xiaomi has gradually increased investment in research and development, and recently the foundation of Xiaomi air conditioning Wuhan base has been laid and is about to enter the construction stage, self-development and self-production is the core strategy of the long-term and healthy development of Xiaomi air conditioning. "Patent disputes in the air conditioning industry occur from time to time with the flow of R&D talents in the industry, which reflects that enterprises are trying to build technical competition barriers through patented technology." He Jinming said that Gree and Xiaomi, as important players in the industry, attach great importance to the technical patents of home appliances such as air conditioners. For Gree, it is recommended that in terms of patent rights protection, it is necessary to ensure that there is conclusive evidence of patent infringement to avoid unnecessary disputes; At the same time, we will continue to strengthen our own R&D investment, continuously improve product quality and technical content, and use technological advantages to consolidate our market position. He Jinming also suggested that Xiaomi take this opportunity to comprehensively sort out the intellectual property rights of its products to prevent potential infringement risks; At the same time, it is necessary to increase cooperation with universities and scientific research institutions, and speed up the research and development of its own technology and patent layout. "For the entire air-conditioning industry, enterprises should attach great importance to intellectual property protection and patent work to prevent infringement or infringement of their own rights against other enterprises." He Jinming said. The above-mentioned industry veterans told reporters that in the current brand competition in China's household air conditioning market, from the overall perspective of online and offline sales channels, Xiaomi air conditioners have ranked among the top four, located behind Gree, Midea and Haier; However, in the brand competition in the global household air conditioning market, the annual shipments of Midea, Gree, Haier, Hisense, TCL, and Oaks have exceeded 10 million units, while Xiaomi's annual shipments have not yet exceeded 10 million. Xiaomi air conditioners can reach 5 million ~ 6 million units a year through cost performance, but if you want to continue to expand the scale of your business, you need deeper technical precipitation. At the same time, this person hopes that Xiaomi should maintain reasonable profits in the industries it has entered to promote the healthy development of the industry. Peng Yu, COO of Beijing Rosewood Insight Data Co., Ltd., believes that Xiaomi, as a representative of emerging enterprises in China's real economy manufacturing industry, does need to learn more from the traditional leading enterprises in the home appliance industry in terms of consolidating the foundation of manufacturing. In the process of healthy development of the household appliance industry, the traditional leading enterprises can absorb the flexibility and innovation of the new power enterprises, and the new power enterprises also need to further consolidate their product technical characteristics and manufacturing skills, so that China's home appliance industry can develop more vigorously.

Duty Editor: Natsuki