The Lawsuit That Could Force Apple To Exit China Market

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It seems like China is now turning up the heat and is ready to take some really hostile measures after being worn out of the trade war with the United States. A Chinese firm is all set to try and bar one of the biggest smartphone manufacturers from selling their products in China. What went wrong? Let’s find out.

A Chinese firm named Shanghai Zhizhen has filed a patent-infringement lawsuit against the popular iPhone manufacturer Apple Inc on the grounds that their recently awarded local patent for a voice assistant which is similar to Siri has been violated. Now, if the outcome of the lawsuit rules out a decision in favour of the Chinese firm, it can very well end up preventing Apple from ever selling their smartphones or other products in China.

China is Apple Inc’s second-biggest market outside the U.S. Even though they have faced severe competition from China’s homegrown brands such as Huwaei, it has steadily surpassed them to become one the leading seller of smartphones in the country. In FY 2019, the tech giant minted $43.67 billion in revenue from the Greater China region. Besides, China is the second-largest market outside the US for Apple’s top-selling product iPhone. Therefore, losing their footing in this country will make a huge dent in Apple’s financial statements.

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Shanghai Zhizhen has been reported to be suing Apple for close to 10 billion yuan in damages which is equal to $1.4 billion along with asking them to stop the sales, production and use of all products which happen to violate their patent. Therefore, Apple, which happens to integrate Siri in almost every single device they manufacture, will need to halt the sales of everything from Macs, iPhones, iPads to Apple TVs and the Homepod.

According to the Wall Street Journal, a local Chinese court can decide to ban Apple from selling all their products which feature Siri if a preliminary injunction is filed. This, of course, will apply only for the duration of the entire trail after which the final decision of the court will need adhering to.

This is not the first time when Apple comes to getting tangled with a patent rights suit in China. The iPhone maker had already lost an intellectual property suit of a similar kind in 2016 when a Beijing court ruled in favour of a Chinese company that was manufacturing handbags and smartphone cases under the label – iPhone.

In another instance prior to that, in 2012, Apple agreed to settle a trademark dispute with the Chinese unit of another company which claimed the ownership of the name “iPad” in China. The iPhone manufacturer ended up paying a whopping $60 million.

The Cupertino-based company’s dominant presence in China is all due to the fact that they agreed to comply with their extremely stringent and restrictive internet laws, something which other American-origin tech giants such as Google, Amazon and Facebook couldn’t play nice with.

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This is also the reason why Apple has been subjected to a lot of criticism back home in the U.S. In the last month itself, U.S Attorney General William Barr, without citing any evidence whatsoever, made a blatant statement alleging Apple for selling smartphones in China with security backdoors that can be accessed by local authorities.

All said and done, this particular patent infringement lawsuit by the Chinese firm is definitely somewhat fueled by the escalating trade tensions between China and the U.S. Therefore, it now remains to be seen what will be the future of Apple’s presence in China. We will keep you updated on all future developments. Until then stay tuned.

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