Apple is currently facing a messy IP battle with Chinese company BYD, and could be devastated if Chinese courts rule against it. In two separate suits filed in May, BYD claims that the antenna on the iPhone 6 and some other Apple products infringes on their IP. The patents in the case relate to super-energy beam induced deposition (SBID) technology. According to a Market Watch article from 2013, SBID is a “revolutionary process for the manufacturing of special plastic products” and BYD earned international recognition for developing that IP.
In the suit, five other companies are listed as co-defendants along with Apple, four Chinese suppliers and one Chinese distributor. BYD has asked the court to order all six defendants to cease the infringing activity and destroy all infringing products. If the court sides with BYD, Apple will experience serious problems with its supply chain. Most of the final assembly facilities for Apple products are located in China, including six of its seven facilities for assembling iPhones.
The lawsuit may seem surprising to some, because of BYD’s business relationship with Apple, whom BYD has been a supplier for since at least 2012. It’s suspected the relationship goes back even further, but was not publicly disclosed until then due to non-disclosure agreements. Apple is using this relationship to try to bring the dispute to more friendly grounds than the Chinese court system. In October, Apple filed a complaint with a judge in California, arguing that BYD cannot sue Apple or its suppliers over patents because they have a “Master Development and Supply Agreement” which contains an IP non-assert clause. Apple asks the court to compel arbitration and to order BYD to cease its lawsuit in China.
Apple’s complaint makes very clear the danger BYD’s lawsuit poses to its business, “If BYD is not prevented immediately, and pending a final determination in the arbitration, from continuing the Chinese Patent Litigation Apple and Apple’s supply chain may suffer serious disruption. Such disruption will irreparably harm Apple, Apple’s reputation and goodwill, and the millions of consumers and businesses who demand Apple’s high-end innovative products.” BYD does have operations in the United States, and continuing a lawsuit in China in defiance of an injunction by an American judge could have negative consequences for the company, but it seems like Apple has more to lose in this situation than BYD.
Will Apple be able to survive losing a lawsuit to BYD? Leave your comments below.