Apple In The Crosshairs Of Chinese AI Firm's $1.4B Patent Infringement Lawsuit

Apple Inc. (NASDAQ: AAPL), which announced stellar quarterly results last week, is reportedly facing a patent infringement lawsuit in China related to the technology it uses in its virtual assistant Siri.

What Happened: Shanghai Zhizhen Network Technology said in a statement it has filed a 10-billion yuan ($1.43 billion) patent infringement lawsuit against Apple in a Shanghai court, alleging Apple's products violated a patent owned by it for its virtual assistant, the Wall Street Journal reported.

Shanghai Zhizhen, also known as Xiao-i, applied for the patent in 2004 and was awarded it in 2009. The Chinese company previously filed a patent infringement lawsuit in 2012 and China's Supreme People's court had ruled in its favor.

With the most recent lawsuit, Xiao-i seeks to prevent Apple from selling products that use the voice-activated function. 

Xiao-i reportedly said that it demands the iPhone maker to cease "manufacturing, using, promising to sell, selling, and importing" products that infringe on the patent.

Why It's Important: Apple uses Siri in its key products such as iPhones and iPads. The iPhone is the tech giant's flagship product and it contributed about 44% to the top line in the recent third quarter.

A setback in the lawsuit could mean Apple may have to settle with the Chinese company, and could even face the predicament of paying a royalty on sales.

AAPL Price Action: Apple shares were trading 3.4% higher at $439.49 at last check Monday.

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Photo courtesy of Apple.