Chinese company takes tech giant to court for alleged infringement

Although no verdict has been handed down as yet, Zhizhen Network Technology Co believes that Chinese companies can effectively use the existing legal channels in China to protect and safeguard their intellectual property rights.

The Shanghai-based company was in the news recently after it took tech giant Apple Inc to court for alleged patent infringement. Zhizhen said Apple's popular Siri application, an intelligent digital assistant, installed in iPhones, iPads and iMacs infringes its patents for the voice-controlled assistant, Xiao i Robot. The virtual assistant is mostly used in smartphones, televisions, cars, Web browsers and even in call centers.

Yuan Hui, chairman and chief executive of Zhizhen, says that by taking on a formidable opponent such as Apple, it knew it was opening a can of worms. "Many people thought that we were taking on Apple just to earn a name for ourselves and our products. But it is really an effort to safeguard our valuable IPR and not for fast bucks," he says.

"Shameless and self-hype were the comments used by several Apple fans to describe us on social networking sites, while some others who supported us called us the 'David who challenged Goliath'. These comments have not really swayed us in any way and we are determined to protect what is rightfully ours," Yuan says while talking to China Daily in his simple but spacious office at a high-tech park in west Shanghai.

"Whatever the result, we have got a business to run," he says, indicating that an IPO is in the pipeline.

Zhizhen filed the lawsuit against Apple on June 21, 2012, just a few days after Apple paid $60 million to Proview Technology (Shenzhen) to end a protracted legal dispute over the iPad trademark in China.

Many viewed the case as another greedy Chinese company trying to blackmail the magnate. Li Yi, secretary general of China Mobile Internet Industry Association, says the case was an example of the industry's woes.

"The huge compensation Apple paid for its trademark has encouraged many to follow in the steps," he says.

"But product is the key," Li says. "Apple redefined the concept of tablet computer, whereas Xiao i is not a competent rival."

Known as the "father of robots" in China, the 40-year-old Yuan has been developing human-computer interaction software for more than a decade after he gave up a lucrative job with Microsoft to branch out on his own. Yuan says that Xiao i Robot was launched in 2004 and subsequently gained popularity on Microsoft's MSN messenger.

Apple's Siri application responds to a user's commands largely through voice recognition software. Siri Inc, a start-up company that Apple acquired in 2010, started producing the virtual mobile assistant in 2007.

According to Yuan, Zhizhen received a patent for its product from China's State Intellectual Property Office on Feb 15, 2006, after filing for it on Aug 13, 2004.

Yuan says that Xiao i Robot currently accounts for more than 90 percent of the domestic market and there are no competitors on the same level. "Although we commercialized the product in 2006, it did not make a profit for more than five years. Since 2011, our fortunes have improved thanks to the mobile Internet boom," he says.

The company's current clients include all the three major telecom operators in China, leading banks such as China Construction Bank and China Merchants Bank, and online vendors such as JD.com and Vancl, as well as several government bodies.

"People don't realize, but our products are actually everywhere and are used by hundreds of millions of people every day, when people enquire about their telephone bill via short message, or talk to a bank's virtual customer service using

Intelligent assistants such as Siri and Xiao i Robot consist of mainly two parts - the voice recognizer in the front side and the human-computer interaction software at the back end.

Pointing to several other similarities between Siri and his company's product, Yuan says that the front end for Siri has been developed through an alliance with the US-based voice-recognition technology provider Nuance. In China, Xiao i Robot is the strategic partner of Nuance.

"Because most of our work was confined to the back operations, we did not have any brand recognition with customers. That could be one of the reasons why we are often bandied as a 'nobody' or a 'blackmailer'. Unfortunately it is the way we have chosen to operate and will continue to do so. It is a criticism that we will just have to live with," Yuan says.

Justifying his IPR claims, Yuan says Xiao i Robot has since moved on to even higher planes. "There are four stages for the human-computer interaction - DOS command, graphical interface, touch screen and, finally, artificial intelligence, or robots."

"What Siri is doing is to create an omnipotent robot. The ultimate form of this would be entities like characters from movies like Transformers or Terminator," he says.

"Only tech giants with deep pockets such as Apple and Google can realistically achieve these goals," he says, adding that language-based services are very much related to knowledge of local culture so local companies have more advantages.

"Apple is a company that has the largest market value in the world. China has for long been accused for not according IPR protection and for lack of technical innovation. It is these factors that have promoted most of our detractors to dub us bad guys."

If Xiao i Robot manages to get a favorable verdict, Apple will have to stop selling all its products with the Siri service in China. "We will primarily focus on establishing the infringement claim, before going ahead with other aspects such as monetary compensation," Yuan says.

"For Apple it's a case they can ill-afford to lose because the Chinese market is crucial to their fortunes. But that's Tim Cook's business, not mine."

"Whatever the outcome, the case will lead to more awareness about IPR and also serve as a valuable reference point for regulatory protection," he says.

China will not resort to protectionism to block foreign companies outdoor. Any disputes would have to end up in the court, facing the merciless law, he says.

Industry experts have opined that there would be several IPR disputes between Chinese companies and their foreign counterparts in the future.