Apple loses battle in China over use of iPhone trademark on leather goods

Apple has lost a trademark battle in China for the use of the iPhone name, clearing the way for a small company that sells leather goods to continue using the brand on its handbags and wallets.

Apple keeps the trademark for mobile devices, but it does not have full ownership of the iPhone name in China.

Setback

It’s the latest intellectual property setback for the world’s biggest technology company and highlights how difficult it can be to do business in the planet’s second-largest economy, despite rapid growth in recent years.

According to a report in the Legal Daily, which is effectively the official organ of the justice ministry, Beijing Municipal High People's Court has ruled that Xintong Tiandi can continue to use the phrase "iPhone" on its leather goods, which include wallets and, indeed, iPhone cases.

It uses the name in all-caps “IPHONE”.

Although its products are hugely popular here, the move is the latest blow to Apple in China, its second-biggest market.

In recent weeks, the Cupertino-based company has also had to cope with a new rule that requires all content shown in China to be stored on servers based on the Chinese mainland.

Since that law was passed, iBooks and iTunes have been shut down in China.

Apple applied for the “iPhone” trademark in 2002, but this was only approved in 2013. Meanwhile, Xintong Tiandi filed its application in 2007 and was given the trademark “IPHONE” for its leather products in China in 2010.

Negotiations

Apple became locked in protracted negotiations with mobile phone carriers in China, and the Apple iPhone didn’t finally go on sale in China until 2009.

This allowed the Beijing court to rule that Apple could not prove it was a well-known brand in China before Xintong Tiandi filed its trademark application in 2007.

In 2012, Apple paid $60 million (€52 million) to settle a legal dispute over the iPad trademark in China, which had slowed down the introduction of a new iPad in the country.

Apple shares have been suffering of late because of slowing economic growth in China. Revenues fell 13 per cent in the March quarter, with a 26 per cent drop in sales in China.

Intellectual property rights have long been a bone of contention between Western countries and China, where piracy is commonplace.