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The Recent Patent Infringement Case against Apple's iPhone 6 in Beijing Brought by Insolvent Entities

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Last Friday we posted a report titled "Beijing Court Rules that Apple's iPhone 6 Models Violate Chinese Design Patent and may be Banned," wherein we noted that "the politics of this simply reeks." That was an understatement. A new report surfacing today shows us the extent of this scam and wonder how the court could have ever taken this seriously. While Apple has been successful in staying the order temporarily, the fact is that this case should be laughed out of court, not just thrown out of court.


According to a new Wall Street Journal report titled 'Chinese Company in Patent Dispute with Apple Barely Exists,' they noted the Beijing regulator who recently ruled against Apple in a patent dispute, "it handed a victory to a Chinese company that barely exists."


The report further noted that "Phone calls to the company, Shenzhen Baili Marketing Services Co., ring unanswered. Its websites have been deleted. Visits to its three registered addresses found no company offices.


Baili and its parent, Digione are part of a rapid boom and bust in China's new wave of smartphone makers. When Baili took on Apple in December 2014, telling Chinese regulators that the Cupertino, Calif., company's new models infringed on its smartphone design patents, it had bold aspirations, a big-name investor in Chinese internet giant Baidu Inc. and a team of experienced executives.


By the time regulators reached a decision this year, Digione had collapsed, brought down by buggy products, mismanagement and fierce competition, according to former employees and investors. Digione has been absent from China's mobile-phone market for at least a year and Baidu has accused it of squandering its investment.


Baili, its unit that registered the phone patents, will continue to battle Apple in court, said Digione lawyer Andy Yang, of Beijing Wis & Weals. 'Shenzhen Baili is still operational in its necessary functions,' he said. Mr. Yang declined to comment on queries on Digione's relationship with Baidu.


Digione, whose formal name is Shenzhen City 100/100 Digital Technology Co., and Baili are both insolvent, their debt exceeding their total assets, according to the companies' annual financial reports.


The case comes as Chinese companies become more adept at taking advantage of a maturing patent system and represents a further complication for Apple.


Baili may consider expanding its suit to the iPhone 6S and iPhone 6S Plus, said Mr. Yang.


'The issue here is not whether Digione makes phones anymore, but whether the iPhone 6 infringes on this patent," he said.


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The report further noted that "In March 2014, Baili was granted a patent from Chinese regulators for a smartphone design that had curved edges and a rear camera in the left-hand corner. Leaked images of Apple's upcoming iPhone 6 floating online at the time showed a similar design -- curved edges instead of the straight ones of previous iPhone models."


It's an interesting point proving that "leaked photos" of upcoming Apple products from Apple rumor sites could be causing Apple legal a major headache. Perhaps it's time for Apple to clamp down and sue those who leak these photos for the sake of thrills.


The WSJ lastly noted that a Digione associate and "other former employees said the lawsuit with Apple was always more a marketing ploy than a serious court case, and that given the inherent limitations of smartphone design, many devices now share similar physical features." For more details about this report, read the full WSJ report here.


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