Apple (NASDAQ:AAPL) is facing another problem in China after an intellectual property regulator in Beijing ruled that the tech giant violated the design patents of a local device manufacturer.
The Beijing Intellectual Property Office (BJIPO) ordered Apple to stop selling the iPhone 6 and iPhone 6 Plus in the capital of China following its findings that the devices have similarities with the 100C phone of Shenzhen Baili. According to the regulator, the iPhone maker infringed the patent rights of the Chinese device maker.
According to Bloomberg, the decision of the BJIPO could set a precedent for future patent lawsuits against Apple even if it only covers Beijing. The ruling could also influence decisions in other litigations against the iPhone maker in other provinces in China.
Apple considers China as a significant growth market. However, the tech giant is confronting challenges in the country, which prompted investors such as Carl Icahn to exit their investments company.
In April activist investor explained that he sold his entire stake in the iPhone makers because he was concerned about its relationship with China. He also believed that the country is no longer a growth driver for the company, and the smartphone market is already saturated. Apple’s sales in the country declined 11% in its recent quarter.
China banned Apple’s mobile entertainment services—iBooks and iTunes Movies stores in April for violating foreign publishing regulations. Last month, the tech giant lost a legal battle in Beijing after a court ruled that it does not have the exclusive right to use the “iPhone” label. The court ruled that Xintong Tiandi Technology can use the name “iPhone” on a variety of luxury leather goods such as wallets and purses.
Despite the setbacks in China, Apple is making efforts to improve its relationship with the Chinese government. In May, its CEO Tim Cook visited China and announced the company’s $1billion investment in Didi Chuxing, the leading car-sharing service in the country.
Apple continues to sell iPhone 6 and iPhone 6 Plus in China
Apple is still selling the iPhone 6 and iPhone 6 Plus in China despite the order of the BJIPO. The company appealed the ruling of the regulator.
In a statement, Apple spokesperson Kristin Huguet said, “IPhone 6 and iPhone 6 Plus as well as iPhone 6s, iPhone 6s Plus, and iPhone SE models are all available for sale today in China. We appealed an administrative order from a regional patent tribunal in Beijing last month and as a result, the order has been stayed pending review by the Beijing IP Court.”
BJIPO ruling has no impact on Apple in China
In an interview with CNBC, Dan Harris, a lawyer at Harris Moure and author of the China Law Blog, commented, “Apple can flip around and shut this whole thing down. I’m predicting this, in the end, is going to have zero impact on Apple in China other than the fact that this is a messed up situation in the short term.”
Atty. Harris noted that the exterior design of the iPhone had been “pretty similar for years.” According to him, Apple will just crush the Chinese company, which probably “wanted money or publicity, maybe it’s legitimate.’ He added, “But if everybody were super confident that the Chinese company had a strong design patent the order probably would not have been stayed.”
On the other hand, BMO Capital Markets analyst Tim Long also believed that the BJIPO ruling doesn’t have a significant impact on Apple.
He explained, “We believe there have been several prior cases against US companies ruled in favor of local companies by lower courts that were later overturned by higher courts. We have seen dozens of court decisions banning different smartphone products over the years in many different countries. We are not aware of one ever that has resulted in an actual injunction.”