Apple Faces $1.4 Billion Lawsuit by Chinese AI Firm in Siri Patent Fight



(WSJ) A Shanghai company that was recently awarded a Chinese patent for a voice assistant similar to Apple Inc.’s Siri has filed a patent-infringement lawsuit against Apple that, if successful, could prevent the American tech giant from selling many of its products in its most important market outside the U.S.


Shanghai Zhizhen Network Technology Co. said Monday that it is suing Apple for an estimated 10 billion yuan ($1.43 billion) in damages in a Shanghai court, alleging the iPhone and iPad maker’s products violated a patent the Chinese artificial-intelligence company owns for a virtual assistant whose technical architecture is similar to Siri’s.


Siri, a voice-activated function in Apple’s smartphones and laptops, enables users to dictate text messages or set alarms on their devices.


As part of the suit, Shanghai Zhizhen, also known as Xiao-i, asked Apple to stop sales, production and the use of products flouting the patent—a category that includes virtually all the U.S. company’s devices.


China’s Supreme Court ruled in late June that Shanghai Zhizhen owns the patent for the virtual assistant in China. The decision ended an eight-year-long legal battle between the two companies in Chinese courts.


If Shanghai Zhizhen applies for a preliminary injunction, the court could decide to ban Apple from selling products loaded with Siri in China for the duration of the trial, said Fang Jianwei, a former Chinese judge who is now a litigation partner at Zhong Lun Law Firm in Shanghai.


However, Mr. Fang said such injunctions have to meet strict conditions and are rarely granted by Chinese courts. And the patent-infringement suit isn’t a surefire win for Shanghai Zhizhen, he added. While the Supreme Court ruled that the Chinese company’s patent is valid, the current court could still find that the underlying technology behind Siri and Shanghai Zhizhen’s patent is different enough to rule in favor of Apple.


China is Apple’s most important foreign sales market, second only to its home market in terms of sales. The American brand boasts considerable cachet in China but has recently faced more competition from domestic device makers including Huawei Technologies Co., which surpassed Apple to become the world’s top seller of smartphones in the second quarter of the year.


Apple said last week that its China sales rose slightly to $9.33 billion, accounting for roughly 16% of its overall revenue for the three months ended June 27, thanks to discounts on its iPhone 11 models and China’s earlier recovery from the new coronavirus compared with the rest of the world.


Conflicts over intellectual property, technology and trade are driving bilateral relations between the U.S. and China to their lowest point in decades. Last Friday, President Trump threatened to ban Chinese short-video app TikTok on national-security grounds. U.S. officials have been involved in talks over a potential sale of TikTok’s American business to Microsoft Corp.


Apple has faced three lawsuits over intellectual property in China since 2012, when it agreed to pay $60 million to settle a trademark dispute with the mainland Chinese unit of another company, Proview International Holdings Ltd., which claimed ownership of the “iPad” name in China.


Apple lost another trademark battle four years later when a Beijing court ruled in favor of a Chinese company, Beijing Xintong Tiandi Technology Co., that made handbags, smartphone cases and a other leather goods under the label “IPHONE.”


Source: Wall Street Journal by Liza Lin

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