Chinese Regulators Order Apple to Halt Sales of Two iPhone Models

By Todd R. Weiss  |  Posted 2016-06-17 Print this article Print
Apple, iPhone 6, iPhone 6 Plus, smartphones, China, Tim Cook, patent infringement

The officials say that Apple's iPhone 6 and iPhone 6 Plus models are too similar to patented Chinese device designs.

Chinese officials have ordered Apple to stop selling its iPhone 6 and iPhone 6 Plus smartphones (pictured) in Beijing after determining the handsets infringe on Chinese-held patents related to smartphone designs.

The order from Beijing's intellectual property regulator was reported in a June 17 story by The Wall Street Journal. No other iPhone models were mentioned in the order.

"It wasn't immediately clear what impact the order would have," the article reported, because some retailers there previously stopped selling the two models months ago after the company released its newer iPhone 6s and 6s Plus models. The two older models will drop from production in the future, a source told The Journal.

Apple, however, told eWEEK in an email reply to an inquiry that the phones have not been pulled from store shelves in China.

"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," the company said in a statement.  "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 [Intellectual Property] Court."

The patents that Apple allegedly is infringing upon are held by Chinese device maker Shenzhen Baili and relate to the exterior design of the company's 100C smartphone, according to The Journal story. The details are from a statement on the Website of the Beijing Intellectual Property Bureau.

Apple has had a rocky road doing business in China in recent months.

In March, Apple lost the exclusive use of the word "iPhone" in China when the Beijing Municipal High People's Court ruled against the company in a trademark dispute, granting authority to the Beijing Xintong Tiandi Technology Co. to use the iPhone name on its wallets, smartphone cases and other leather goods. Xintong seems to have applied for and received its trademark in 2007.

In late April, government regulators in China without warning shut down Apple's online iBooks Store and iTunes Movies service, which had opened six months before, leaving the company working with the Communist government to try to restart the services. The shuttering of the Apple services occurred despite permission that Apple previously received from the Chinese government when the services began there last year, according to an earlier eWEEK story. Apple is still working to return the services to users there.

Things were so tough that Apple CEO Tim Cook traveled to China in late May for talks with government leaders after the company experienced a series of stumbles.

Just before Cook's trip to China, Apple unveiled a $1 billion investment in China's DiDi Chuxing ride-sharing service, a competitor to Uber. Apple made the investment as part of a larger plan to seek new revenue streams and business as sales of its flagship products wane around the globe.

In late April, Apple reported a quarterly decline in revenue for the first time since 2003. Apple's second-quarter revenue of $50.6 billion fell 13 percent from $58 billion a year earlier. Net income in that interval dropped to $10.5 billion from $13.6 billion, as sales of the company's iPhones leveled off, ending Apple's 13-year record of uninterrupted sales growth.

Apple reported second-quarter sales of 51.2 million iPhones, down 18 percent from 61.2 million in the same quarter one year ago. The iPhone sales were down sharply—by 32 percent—from the 74.78 million sold in the first quarter of 2016. iPhone sales dropped to $32.9 billion in the second quarter, down 18 percent from $40.3 billion one year ago.

For the company, China has long been seen as a place where it could increase revenue due to a large pool of customers and economic growth in recent years. Apple has been garnering more and more of its revenue from China in the last several years.

In January, Apple reported $18.37 billion in fiscal first-quarter revenue from China, which accounted for about 24.2 percent of the company's $75.87 billion in revenue for the period. In the fourth quarter of 2015, Apple reported $12.52 billion in revenue from China, out of a total of $51.5 billion.

China is Apple's second-largest global market behind the United States. The company began selling iPhones in China in October 2014, after gaining government device security approvals.



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