“The order has been stayed pending review by the Beijing IP (intellectual property) court”, Apple said. The iPhone model allegedly violated design patents held by Shenzhen Baili as it is too similar to the company’s 100C mobile phone.
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The news comes with China an increasingly important market for Apple as it deals with a slowdown in global smartphone sales. The ruling orders Apple to stop its sales of both these models in the city.
However, the importance of the Chinese market to Apple can’t be underestimated.
In April, China’s government blocked Apple’s books and movies services in the country after finding they violated the rules covering foreign publishers.
Baili is among many smartphone makers trying to compete against established brands such as Apple and Samsung. Last month, a Chinese court decided that a company was allowed to use the iPhone trademark on their bags, wallets and other leather products.
In note on Friday, UBS analyst Steve Milunovich said the concern about the ban is “likely overblown”, but it underscores the existential threat facing Apple in the long term that “the government could decide to favor local suppliers”. “It’s a little bit of a carnival going on between Apple and China”.
While other American technology companies have failed to gain a foothold in China, Apple is the rare exception. According to the State Intellectual Property Office, in a decision issued in December and published in January, Shenzhen Baili applied for a patent for exterior design of its 100C smartphone in January 2014 and was awarded it in July that year.
Shares of tech and growth stocks are being penalized by investors who prefer dividends as yields on U.S. treasuries languish, said Jack Ablin, chief investment officer at BMO Private Bank.
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According to Apple Insider, these shipping delays have not only impacted the US Apple Store, but also several overseas markets. “So, this case falls into the patent rights protection category”, said the ruling by the Beijing Intellectual Property Office. Further, the iPhone SE was recently released as Apple’s budget iPhone, which may make the iPhone 6 and 6 Plus superfluous once the new iPhones for the 2016 model year get unveiled. In response, Apple said that they would again appeal to the court. The company said it hoped to resume service soon.
