Apple iPhones Violated Chinese Firm’s Patents, Beijing Bureau Rules

Beijing's patent regulator has ordered Apple to stop selling its iPhone 6 and iPhone 6 Plus in the city because their design too closely resembles that of a Chinese phone.

Apple is appealing the ruling, which marks the latest challenge to the tech company in its second-largest market.

The two iPhone models violated design patents held by Chinese device maker Shenzhen Baili because of similarities in external design with the company's 100C phone, the Beijing Intellectual Property Office wrote in a statement on its website.

Apple said in a statement it will continue to sell those iPhone models in Beijing as it appeals the decision.

Because the ruling applies only to the sales within the city of Beijing, analysts doubt the ruling will affect Apple's bottom line.

"We do not think the case will have any negative impact on Apple's revenue and margin in China," Amit Daryanani and Shawn Yuan, of RBC Capital Markets, wrote in a research report.

Analyst Gene Munster of Piper Jaffray said the spat illustrates the ongoing "friction between Apple and the Chinese government."

"Even if they do get banned, they'll come out with new phones and they'll be selling those phones, Munster said. "It's a little bit of a carnival going on between Apple and China."

Apple shares are down 1.6 points, or 1.65%, to $95.91 as of 10:29 a.m. Pacific time. Angelo Zino, equity analyst at S&P Global Market Intelligence, said the market's reaction shows investors aren't greatly concerned about the patent issue itself.

"Does it impact anything on the fundamentals today? No. Could it alarm investors of other issues that could potentially happen in the future?" he asked. "I think that's why maybe you see the stock trading where it is."

Apple had to shut down its iBooks and iTunes Movies services in China in April because of violations of foreign publishing regulations.


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