A regulator in Beijing ruled against Apple last week in a lawsuit that has been ongoing since 2014. Baili had claimed that the iPhone 6 and later the 6s too closely resembled patents it held on its 100C smartphone. The court ruled in its favour, technically banning Apple’s devices from sale. Apple has filed an appeal and is currently allowed to continue selling the iPhone.
However, all is not quite what it seems. In a report published yesterday, The Wall Street Journal (WSJ) revealed that Digione, the parent company of Shenzhen Baili, has virtually disappeared. Its three registered addresses are empty, its website has been abandoned and phone calls to the listed office landlines were not answered. To all intents and purposes, the business seems to have ceased operations.
The company’s lawyer, Andy Yang, claimed otherwise in court. He said “Shenzhen Baili is still operational in its necessary functions,” without elaborating or stating where it is actually operating from. “The issue here is not whether Digione makes phones anymore, but whether the iPhone 6 infringes on this patent,” said Yang.
Digione is said to have collapsed due to a combination of poor management, sub-par products and the intense competition in the local Chinese smartphone market. Former employees and investors told the Wall Street Journal that “buggy” devices were part of the reason for the decline.
It’s a different story to when Baili initiated the lawsuit against Apple. In 2014, it was an emerging manufacturer equipped with a strong team of executives. It became a big investor in Chinese internet firm Baidu. Baidu has since accused it of squandering its investment fund.
Digione and Baili are now both financially insolvent. They are still clinging onto the patent case against Apple though, claiming the iPhone 6 resembles the Baili 100C closely enough to infringe on a patent Baili was awarded in March 2014.
The patent covers a smartphone design featuring curved edges and a rear camera positioned in the top-left corner of the handset. The iPhone 6 has a similar basic chassis design. Around the time the patent was awarded, leaked images of the iPhone 6 began to circulate online.
Since the case began, speculators have suggested that Digione copied Apple with the intention of profiting from the eventual patent infringement. The company has always disputed this, reposting an employee’s social media post that stated “I am not Newton. I don’t need Apple to give me inspiration.”
However, by the time Digione started legal proceedings against Apple, it was already declining in the market. Former employees told the Wall Street Journal that it developed a reputation for low-quality devices, cutting production costs where possible and launching phones with serious flaws. Devices would overheat and customers were disappointed.
According to Emen Zheng, a consultant hired by Digione to set up its e-commerce portal, the court case against Apple was designed as a marketing effort rather than a serious patent action. “In truth, there are other smartphones that look more like the iPhone 6,” Zheng commented to the WSJ, alluding to the scores of other Chinese brands that sell knock-off versions of Apple products.
With the appeals process likely to drag proceedings on for several more months, Digione will continue to exist in some capacity as it fights its case against Apple. In the meantime, the iPhone 6 remains on sale in Beijing, disputed by a company that initially appeared to be promising. It soon became an example of the volatility of China’s smartphone industry, currently headed towards a bust after a few years of demand-driven boom.
