Transfer Pricing Associates

China’s version of the iPhone 5: Goophone i5

post Thursday September 27, 2012


China has become infamous for its unique ability to copy global trends, technology and products. In Apple’s latest technological product launch, the iPhone 5 now has a Chinese counterpart that was released prior to Apple’s launch, the Goophone i5. The makers of the Goophone i5 have already patented the technology in China and may be suing Apple’s iPhone 5 when it goes on sale in China. The Goophone has a 4 inch screen and a smaller docking system (as does the iPhone 5), the only thing that physically differentiates it from the iPhone is their honeybee logo at the back. The phone is sold at about $300 USD and runs on the Google Android system, however its functionality is very limited compared to the iPhone 5.

Goophone suing Apple is made possible by China’s patent troll business which in the recent years has been gaining a lot of momentum.

Patent trolling is the act of filing for a technology, design or trademark (without the intention of producing the specific technology themselves) before it is actually produced/designed by global brands. Patent trolling allows individuals to cash-in large amounts of money once the respective patent has been infringed and due to the recent success they’ve had with suing companies such as Apple, more and more people are seeing the benefits of patent trolling.

Just in the last year, of the 530,000 patents granted, 107,000 were invention patents, and of the 857,000 patent applications, only 258,000 were for invention patents. So for every 3 patent applications, only 1 is for actual invention patents, the other 2 are for design or utility model patents (related to the shape or structure of a product) and thus will likely be used for patent trolling.

Further exacerbating the issue is the fact that China’s government pushes for rapid growth in new patents by providing preferential policies and cheap credit to facilitate the registration of patents. They aim to reach 2 million patent applications by 2015.

Chinese patent filers hope that by targeting foreign trade marks that are yet to be registered in China, it will block their entry into the Chinese market and thus force them to negotiate a purchase with the respective patent holder.

Source: Bloomberg Business Week
Image of Goophone i5: SOHU

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