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China’s Xiaomi to Buy 1,500 Patents From Microsoft

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Henry Lawrence

BEIJING—Xiaomi Corp. has agreed to purchase around 1,500 patents from Microsoft Corp. in an example of the rising costs facing the Chinese smartphone startup as it expands outside China.

One of its ultimate goals is to sell its phones in the U.S.

For Microsoft, the move is the latest in a yearslong push to collect royalties from electronics makers who use Google Inc. s Android operating system, which Microsoft says uses some of its technology.

Beijing-based Xiaomi shot to the top of China s smartphone market in 2014 with a lean online-sales strategy that helped it keep costs down, but it is gradually spending more on patent licensing, brick-and-mortar stores and advertising as it matures.

The mounting costs come at a time of slowing revenue growth, as Xiaomi faces a saturated domestic phone market and overseas regulatory hurdles.

Microsoft holds more than 60,000 patents, so the patents sold to Xiaomi represent just a small share, said Jennifer Crider, a spokeswoman in Microsoft s legal department.

We are taking the necessary steps for launching in the U.S., but for the time being, the focus remains in India, Mr. Barra said.

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