Apple’s latest China patent imbroglio could turn for the worse

Apple’s latest legal dispute in China could be serving as a cultural and business proxy war for market share in the Middle Kingdom.

Apple has found itself in the crosshairs of the Chinese legal system once again.

Last year Apple was sued by a Chinese firm called ProView over use of the name “iPad”. Though ProView’s “iPad” was in no way similar to Apple’s device (and ironically arguably infringing on Apple’s iMac design patents), Apple ended the case by paying ProView a $60 million settlement.

Now, a Chinese firm has filed a lawsuit against Apple in China, claiming the company has infringed on its intellectual property with its Siri personal assistant application.

Zhizhen Network Technology, the developer of a voice control software called Xiao i Robot, is claiming that Apple’s Siri infringes on a patent that covers a “type of instant messaging chat robot system”. Zhizhen says it filed a patent in 2004 for Xiao i Robot’s functionality, and is demanding that Apple stop selling products in China that infringe on this patent — namely the  latest iPhone and iPad.

Apple has strongly denied these claims.

Speaking to AFP, Apple’s counsel said:  ”One can achieve the same results through various means. Apple has its own technology for Siri, which is totally different from the plaintiff’s.”

These claims were denied by the lawyer representing Zhizhen.

“We noticed iPhone 4S’ digital assistant Siri copied Xiao i Robot’s artificial intelligence technology when it came out in 2011. Our main goal at the current stage is to let the court validate our claim regarding the infringement,” he said.

Last year’s case against Zizhen ended with a $60 million settlement — a modest amount that could be written off as the cost of doing business in China considering the growth Apple has experienced in the Middle Kingdom. After all, China is Apple’s biggest market outside the US accounting for $22.8 billion in sales in 2012.

But since last year, the political climate regarding foreign firms has changed in China.

In China, foreign firms compete against China’s state owned enterprises, or companies that have close ties to the government. In many cases there is a price disparity between a Chinese brand and its foreign counterpart, but there’s also a disparity in quality too. China’s new leadership regime has gone to great lengths to reform China’s state owned enterprises, as they are notorious for glut and inefficiency but sometimes the government finds that even they are going up against a brick wall.

This spring, at the behest of the Chinese government, China’s state media turned an investigative eye to foreign brands operating in the country. Some of their investigations were legitimate, and showed unsafe food handling practices in fast food chains operating in the country. Others, however, were simply aimed at harming the reputation of foreign brands to give domestic counterparts a leg up in the market like foreign automobile companies.

China’s car companies are decades away from developing a car that can compete with the likes of General Motors or Volkswagen. While they have made great strides during the last ten years they simply lack the mechanical finesse to build globally competitive cars. Thus, Chinese drivers seem to prefer foreign cars over domestic counterparts.

In response, China’s state media ran a series of stories about trumped up safety concerns about foreign made cars. Cancer causing chemicals found in the interior, poor accident safety, etc.

Apple wasn’t spared the wrath of China’s state media. Over allegations that Apple treated Chinese citizens like second-class citizens, Communist party mouthpiece the People’s Daily accused the gadget maker of “unparalleled arrogance.” A known spokesperson for one of Apple’s rivals posted a message on Weibo, China’s Twitter clone, criticizing Apple (but inadvertently copy-and-pasted instructions on when to post the message).

In the end Apple’s Tim Cook was forced to apologize to Chinese consumers — a kowtow to show uncharacteristic humility — in order to make the issue go away. In the end it worked, as the Global Times — which was once the company’s harshest critic in China — published an editorial praising the company.

“The company’s apology letter has eased the situation, softening the tense relationship between Apple and the Chinese market … Its reaction is worth respect compared with other American companies,” the Global Times wrote.

With this Siri patent lawsuit, Apple could find itself in a situation like it did this spring where the issue at hand is simply a microcosm of a bigger play by China’s government. China’s government could see Apple’s iTunes, and its vehicle the iPhone, as a trojan horse for foreign content that could slowly undermine the cultural monopoly the government works hard to impose in China. The Chinese cultural establishment likely imagines a  Brave New World in China, where a population still pays only the slightest respects to its culture and history but prefers the culture and content of the now brought by foreign brands. The Chinese man of the future in the nightmare of the powers that be still eats jiaozi, but prefers to watch a western TV show on his iPhone instead of joining his family at the Qingming festival.

With this in mind, Apple’s current lawsuit may blow up and become a theatre in court. It won’t rise to Apple v. Samsung levels, but it could cost the company sales and market share helping its Chinese competitors regain some market share.