Chinese Company Sues Apple for Intellectual Property Theft

Several Chinese iPhone users have claimed that their handsets caught fire or exploded, according to a Shanghai consumer watchdog
AFP/File Johannes Eisele

A Chinese computer company called Shanghai Zhizhen Intelligent Network Technology Co. Ltd., or “Xiao-i” for short, filed a billion-dollar lawsuit in Shanghai court against Apple, Inc. on Monday.

Xiao-i claims Apple appropriated some of its patented artificial intelligence software to create Siri, the voice-activated digital assistant on Apple smartphones and computers. The suit could effectively block Apple from selling its products in China, its largest foreign market.

Xiao-i has a long history of suing Apple over its voice recognition technology, which the Chinese company uses to power a digital assistant known as the “Xiao-i Robot.” The Chinese company filed its first patent infringement lawsuit against Apple in 2012, claiming that its patent has been in force under Chinese law since 2009.

The Chinese Supreme Court ruled in June that Xiao-i holds the patent for a voice-activated virtual assistant in China. The Wall Street Journal noted this was “the third time in less than a decade that Apple has faced trademark and patent challenges in China.” 

One of the previous losses was to a Chinese company that made handbags and similar accessories under the name “iPhone,” the name Apple uses for its flagship product. Another was to a Chinese company that claimed to own the name “iPad.”

“We are disappointed Xiao-i Robot has filed another lawsuit. We look forward to presenting the facts to the court and we will continue to focus on delivering the best products and services in the world to our customers,” Apple said in response to the new suit.

“This case has been going on for eight years,” an Apple representative told C/Net. “Siri does not contain features included in their patent, which relates to games and instant messaging, and we are disappointed Xiao i Robot has filed another lawsuit. Independent appraisers certified by the Supreme People’s Court have also concluded that Apple does not infringe Xiao I Robot’s technology.”

In addition to seeking $1.43 billion in damages, Xiao-i asked the court to block Apple from “manufacturing, using, promising to sell, selling, and importing” products that infringe upon its patent, which would include much of what Apple sells in China. Apple reported $9.33 billion in revenue from third-quarter sales in the Chinese market, a 1.9% increase from last year despite, or perhaps because of, the coronavirus pandemic.

“iPad was helped in the June quarter there (China) by the work from home and distance learning as it was in other geographies. And the Mac also grew strong, double-digit during the quarter. And services set a new June quarter record there,” Apple CEO Tim Cook said in the company’s quarterly earnings call last week.

“We also continue to see extremely high new customer rates on Mac and iPad there. To give you a perspective, about three out of four customers that are buying the Mac are new in China and about two out of three that are buying the iPad are new. And so these are numbers that we’re super proud of,” Cook added.

Many observers speculated the Xiao-i lawsuit is part of China’s retaliation against the U.S. for trade actions and the deteriorating diplomatic relationship between the two countries, although as noted above, the dispute between Apple and Xiao-i has a long history. China also bristles at frequent allegations of intellectual property theft, and could relish an opportunity to turn the tables by lobbing that accusation at a prominent American company.

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