There is a lot more to the law so let’s get a few technicalities ironed out.
Apple first filed a trademark bid for the name for electronic goods in 2002, but it was not approved until 2013. In 2012, it had to pay US$60 million to Proview Technology for the legal rights to use its previously registered iPad trademark in China.
Xintong Tiandi sells handbags, mobile phone cases and other leather goods branded with the name "IPHONE", close to Apple's iPhone mark, and the registered trademark symbol.
Apple first brought the case against it to the Chinese trademark authority in 2012, then when that failed, filed a lawsuit in a lower Beijing court.
But both ruled against Apple, so it appealed to the higher court. It ruled that Apple – its phones started selling in China in 2009 - could not prove it was a well-known brand in China before Xintong Tiandi filed its trademark application in 2007.
The Beijing Municipal High People's Court ruled in favour of Xintong Tiandi Technology that trademarked "IPHONE" for its leather products in China in 2010. The company said that the "huge victory brings esteem to Xintong Tiandi's promise to protect the iPhone trademark."
Now to the opinion – the author does not hold any personal views here – as reported from many sources. It may be worth reading the BBC article first here.
The issue was first reported in the state-run Legal Daily that is widely understood to be the official mouthpiece of the Chinese Central Political and Legal Affairs Commission.
It is understood that Apple has had other issues with the Commission that resulted in Apple's iBooks, and iTunes services being shut down in China on 22 April. The Commission has strict rules on what can and cannot be published on the Internet. It also stated that all content shown to Chinese people must be stored on servers based on the Chinese mainland. Apple hopes access to the services would be restored soon.
It also comes at a time when the Chinese legal system is embracing both Western and Eastern cultures. One analyst close to the case said that in any case the use of the term iPhone had become so generic that it could not be copyrighted – yes the symbol/typeface could be trademarked, and this case does not infringe Apple’s rights.
It also comes at a time when the gloss has apparently come off Apple in that market. The global smartphone market was gobsmacked by a 16.3% drop in Apple sales and reports of 44% drop in Q1 volumes worldwide. According to Asian researchers Trendforce, Apple has cut back on iPhone production in Q2 by 30% and expects a further 30% cut in Q3.
Last week billionaire investor Carl Icahn sold all his shares in Apple over concerns about the technology firm's prospects in China. He blamed China's economic slowdown and worries over government interference. Apple’s share price slipped below the all-important US$100 psychological barrier to $92.68 – a far cry from $132.54 one year ago.