Apple Wins Patent Lawsuit After Ample Difficulties in China

Apple has successfully beaten back a copycat claim in China, notching an important legal victory in the world’s largest smartphone market.

A Beijing court ruled in favor of Apple in a patent infringement dispute on Friday, dismissing a previous ruling that found that the American tech giant had violated design patents of Chinese phone manufacturer Shenzhen Baili. The court also overturned a ban on selling iPhone 6 and iPhone 6 Plus models in China, according to Xinhua news agency.

The ruling recognizes that Apple “has not infringed the design patent filed by the company Shenzhen Baili”, according to The South China Morning Post.

Last year, Shenzhen Baili Marketing Services lodged an initial complaint against the Cupertino-based company, claiming that sales of the iPhone 6 and iPhone 6 Plus were violating patents for exterior smartphone design covering Baili’s 100C phone. The Beijing Intellectual Property Office granted the Shenzhen-based manufacturer an injunction in May, ordering that Apple’s Chinese subsidiary and local retailer Zoomflight halt sales of the disputed iPhones.

iPhone 6s juxtaposed with Baili 100C

“Apple’s iPhone 6 and iPhone 6 Plus have minor differences from Baili’s 100C. The differences are so tiny that the average customer could not notice. So, this case falls into the patent rights protection category,” the Beijing patent regulator said in the ruling.

The ruling could have prevented Apple and Zoomflight from selling the iPhone 6 and iPhone 6 Plus in all of China, though the damage would have limited by the fact that Apple was already gearing up to release the iPhone 7 at the time. However, the two immediately appealed the order and took the fight to the Beijing Intellectual Property Court, clearing the way for sales of the devices to continue. Apple also retaliated by request that the court strip Baili of its design patents for the 100c.

Apple’s Rare Chinese Legal Win

Now, the court has revoked the ban, finding that Baili’s claims were baseless and that the 100C is clearly distinct from the Apple’s models. It also stated that the iPhone 6 had features that “completely change the effect of the entire product” and that “both phones are easily distinguishable in the eyes of consumers.”

The IP court also ruled that the Beijing patent regulator had not followed proper procedures in issuing the sales ban without sufficient proof that Apple had infringed on the Chinese smartphone maker’s intellectual property rights. It also rejected Apple’s request against Baili in a related ruling. As of now, it’s unclear whether Apple will appeal that ruling.

Strangely enough, Shenzhen Baili Marketing Services, which is backed by Chinese search giant Baidu, is virtually non-existent and a company in name only. A Wall Street Journal report released at the time of last year’s sales ban stated that Baili is defunct and “barely exists”, maintaining only a skeleton operation. Reporters from the Journal found that phone calls to the company went unanswered, its websites had been deleted, and that company offices were not at its three registered addresses.

The phone at the center of the dispute– the 100C — is also largely unknown and very hard to find. With its curved edge and rounded corners, it does bear a passing resemblance to the iPhone 6– which in itself is unsurprising given the popularity of Apple’s pioneering smartphone designs.

Surprisingly enough, despite the fact that it barely exists and has tenuous patent claim, Baili’s legal team has announced that it plans to appeal and continue the fight, Techcrunch reports.

Apple’s Uneven Track Record in China

In any case, this ruling hands a major win to Apple in its second-largest market, signaling that Chinese courts will not always rule in favor of local manufacturers. It offers a glimmer of hope for the US tech giant, which had a rough go of it in domestic courts last year and has struggled against local competitors in China, where it was the No. 4 smartphone seller last year.

Last spring, for instance, Apple lost the exclusive right to the “iPhone” trademark. A Beijing court ruled that leather goods maker Xintong Tiandi could sell products bearing the “iPhone” name because it had registered to use it in 2007, whereas Apple did not start selling iPhones in the country until 2009.

The Chinese government also shuttered its iTunes, iBooks and Movies services last year for unclear reasons, leaving Apple’s Chinese customers without access to a majority of its digital content.

To top it off, Apple has been steadily ceding market share in China to domestic competitors like Xiaomi, Oppo, and Vivo, thanks in part to the lower price points they offer. Apple’s sales throughout the Greater China region fell 12 percent in the last quarter of 2016.

Despite these struggles, Apple still accounts for the lion’s share of smartphone industry profits worldwide, according to The Motley Fool. In 2016, for example, it “captured an incredible 79% of global smartphone industry profits with just 14.5% market share”.

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