Apple lost its fight to keep the "iPhone" name exclusive to its products, with a Beijing court deciding a little-known accessories maker can use the label for a range of wallets and purses.
The ruling affirmed that Xintong Tiandi Technology (Beijing) Ltd. has the right to use the name on a swath of luxury leathergoods, state publication Legal Daily reported. While Apple retains the trademark for mobile devices, it defeats the company's efforts to gain full ownership of the name in the world's largest mobile market. It's also the second time it has lost exclusive use in China of a brand name it coined.
Xintong holds a trademark running the gamut of leather and imitation leather goods, from smartphone cases to products that Apple has never launched, like wallets and clutches, Legal Daily said. The court decision upholds a 2013 ruling that centered on the fact that, when the Chinese company sought its trademark in September 2007, the iPhone had only been linked to products outside of China. Apple didn't start selling its iconic iPhones in the country until 2009, it said.
"Apple is disappointed the Beijing Higher People's Court chose to allow Xintong to use the IPHONE mark for leather goods when we have prevailed in several other cases against Xintong," Apple said in a statement Wednesday. "We intend to request a retrial with the Supreme People's Court and will continue to vigorously protect our trademark rights."
Xintong Tiandi, which uses the all-capital IPHONE label on its products, confirmed the court ruling on its website and said the decision represented a victory for free consumer markets.
The decision is unlikely to hurt the U.S. company, which faced a similar issue over the iPad trademark. In 2012, Apple paid $60 million to Proview International Holdings to settle a dispute over the right to the iPad name in China.
The ruling is the latest in a series of setbacks for the world's largest technology company in China, where its book and movie services were blocked in April for violating foreign publishing regulations.
While Chinese courts are getting better at understanding intellectual property issues, they are struggling to handle the deluge of applications from all over the world, said Ted Chwu, a partner and lawyer specializing in intellectual property at Bird & Bird in Hong Kong.
"Just keeping up with the pace of growth with the Chinese economy and the filing of trademarks as companies in China get more IP savvy is a great challenge," he added.
Greater China, a region that includes Taiwan and Hong Kong, is Apple's largest overseas market, accounting for about 25% of revenue. It's of increasingly critical importance to a company that's facing its second quarterly decline in sales in over a decade.