Recently, Beijing’s First Intermediate court ruled against Apple Inc (AAPL), refusing to invalidate the patents held by Shanghai-based technology company, Zhizhen Network Technology.
The beginning of the legal battle between the two tech companies dates back to 2004 when Shanghai Incesoft, which is currently known as Zhizhen Network, filed before the State Intellectual Property Office (SIPO) a patent for the voice-recognition system, Xiao I Robot. The patent was eventually granted in 2006.
Later in 2012, Apple’s voice-recognition personal assistant application, SIRI was introduced on the Chinese mainland on iPhone 4S. Soon after its release, in June 2012, Zhizhen sued Apple, alleging the company of having infringed the patents of Xiao in man-machine interaction technologies.
Apple retaliated to this by filing a request for invalidation of Zhizhen’s patent before the Patent Re-examination Board (PRB) of the SIPO. The PRB refused to invalidate the patent and on the contrary decided to uphold it.
In Feb, 2014 dissatisfied with SIPO’s decision, Apple filed a lawsuit in a Beijing court regarding the same. Beijing’s First Intermediate Court also decided to uphold the validity of Zhizhin’s patent, thus declining Apple’s request in the process.
Per sources, soon after the verdict was announced, Apple has declared its intention of appealing to the Beijing Higher People’s court for the same. However, as per court’s ruling Zhizhen is allowed to continue with its case against Apple in which the former had accused the latter of infringing its patents.
It is believed that Apple’s plea was an endeavor on part of the company to avoid paying hefty compensation to the Shanghai-based firm for patent-infringement, provided it is found guilty.
Usually, this kind of lawsuits takes too long to conclude and they end up in out-of-court settlements. This is not the first time that Apple is facing such patent-related headwind in China. Earlier in 2012, Apple had to pay $60.0 million to Shenzhen-based Proview Technology inorder to settle its iPad trademark lawsuit in China.
We believe that Apple’s foray into new industry spaces such as automobiles, home and healthcare is a major positive catalyst and will drive growth going forward. Moreover, the increased scope of operation will also help it to combat continuously increasing competition from the likes of Google (GOOGL), Hewlett-Packard (HPQ) and Microsoft (MSFT).
Currently, Apple has a Zacks Rank #3 (Hold).
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