When the gavel fell in early July at the Beijing First Intermediate People’s Court, ruling against Apple in an intellectual property dispute, it came down in the middle of a rough patch for the US tech giant in China. Earlier in the summer Chinese authorities had promised to crack down on the iPhone’s proprietary instant messaging client, iMessage. A few days after the ruling, state broadcaster CCTV took another one of its periodic swings at Apple, implying the iPhone’s location-tracking features might be a threat to national security, a keenly sensitive issue for consumers and officials.
But of the many challenges facing Apple in China, stacked courts aren’t necessarily one of them. Indeed, the case in question has been extraordinarily open and even-handed, some legal experts suggest. That’s good news for Apple, which was embroiled in a disruptive IP infringement case with another Chinese tech firm over the iPad trademark in 2012 that it paid US$60 million to settle.
In no small measure this is because it involves a giant firm such as Apple, but the case also touches on a number of areas central to China’s development of IP rights protection.
It has received an atypical level of care from Chinese courts eager to show they can operate on the level when it comes to safeguarding IP rights. In the February hearing preceding this latest decision, five judges participated in the concerned tribunal rather than the standard three. That hearing saw a full day in court, rather than the typical clock time of under an hour for such suits and, most unusually, all three parties concerned were called into the court for the decision’s specially televised announcement. Typically this information is mailed out in an envelope.
Apple is in the dock because Shanghai Zhizhen Network Technology, a little known company, claims the US firm infringed on its patent for a ‘little I robot’ chat technology system with the Siri voice recognition software, introduced to China in the iPhone4S in early 2012. Zhizhen hauled Apple into the Shanghai First Intermediate People’s Court for three hearings in the summer of 2012 before proceedings were suspended that November when Apple asked a Patent Review Board to invalidate Zhizhen’s patent. When the board ruled to uphold the patent’s validity nearly a year later, Apple sued the board, taking both parties – along with Zhizhen – to Beijing’s First Intermediate People’s Court for a brand-new administrative lawsuit. Apple just lost that case, and will probably appeal.
Tough as it is for Apple, it’s not a unique situation or one designed specially to hurt a foreign company. The latest ruling simply followed a well-worn judicial habit: The capital’s intermediate court often decides in favor of review board decisions. However, the next court up the ladder, the Beijing High Court, often overturns those rulings. Apple could win this administrative suit yet.
Even if the high court ultimately rules in favor of the review board’s ruling upholding Zhizhen’s patent, it doesn’t mean that it is actually enforceable. Once the administrative case is settled, proceedings would then revert back to the Shanghai First Intermediate People’s Court, where the case would resume as a civil lawsuit. In that suit, flash-frozen since 2012, the onus would be on Zhizhen to prove that its patent covers the same scope as that for Apple’s Siri. That might be difficult.
Steve Song, a senior patent attorney for Beijing-based IP firm Li and Lee – Leaven who has authored two articles analyzing the Siri case but is not directly involved in the legal wrangle, told China Economic Review that the courts had been mindful to handle Apple’s case by the book and with extraordinary care. He suggested this approach would serve Apple well if the case did get sent back to Shanghai: There, the court’s decision would depend on the strength of Zhizhen’s patent. Song said he believed that the language used in the drafting of the patent could be plied to Apple’s advantage thanks to an important 2008 Supreme People’s Court interpretation issued for China’s patent law.
The Supreme People’s Court stated that an infringing solution should cover each and every element of each claim in the patent concerned. Song believes that when it comes to Zhizhen’s patent, “the drafting of the claim has a lot of drawbacks and flaws.” Chief among them is listing a user as one of the patent’s technical features. While a common mistake in Chinese patents, it would be difficult for the court in Shanghai to ignore the flaw and the clear departure in scope it makes from Apple’s Siri patent.
The way this case has been conducted hints that Beijing is taking domestic IP seriously enough to more strictly enforce local firms’ patents, which could even signal a gradual sea change toward a truly fair system for all. Apple’s woes may be mounting in China – a slowing economy and fierce competition from Samsung and lower-cost domestic rivals have hurt sales – but legal injustice isn’t among them.
Although most IP cases here can’t expect such a high level of scrutiny and care, it seems the company has been well-served thus far by Chinese IP courts, and stands a fair chance of coming out ahead – though that might take a while. After accepting a case, the Beijing High Court can take anywhere from six months to a year before handing down a verdict. ♦
Author: Hudson Lockett (@KangHexin)