AAPL Apple Inc

By Eva Dou and Daisuke Wakabayashi 

A dispute between Apple Inc. and Chinese regulators broke into the open after Beijing's intellectual property authority said that the design of the iPhone 6 and iPhone 6 Plus violate a patent held by a Chinese company.

The notice by the Beijing Intellectual Property Bureau, dated May 19, ordered Apple to stop sales of both phones in the city. Apple said Friday that the order had been stayed while it appeals, and that all of its phones remain available for sale. Some mobile-phone stores in the city had already stopped selling the two models months ago, switching to the current iPhone 6s and 6s Plus phones.

Apple also said it is appealing the decision.

It wasn't clear what impact the regulator's order would have if allowed to go ahead. Apple will soon end production of both models, according to a person familiar with the production plans.

Still, the order marked another setback for the company in a key overseas market.

The two iPhone models infringe on a Chinese patent for exterior design held by Shenzhen Baili for its 100C smartphone, the Beijing Intellectual Property Bureau wrote in a statement on its website dated May 19. It wasn't clear when the statement was posted online or when the stay was ordered.

A phone operator at the Beijing Intellectual Property Bureau on Friday evening said no one was available to answer queries.

It is the latest challenge for Apple in China, its largest market outside of the U.S. Falling iPhone sales in China was a major factor in Apple posting its first quarterly decline in revenue in 13 years in April. China also shut down Apple's iBooks and iTunes Movies services that month, with regulators telling the company it didn't have the necessary licenses, according to people familiar with the matter.

Apple last month announced a $1 billion investment in Chinese ride-hailing company Didi Chuxing Technology Co., an unusual investment for the company. Analysts said it was likely made in part to curry favor with Beijing, as Apple faces challenges in the country on multiple fronts.

Write to Eva Dou at eva.dou@wsj.com and Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com

(END) Dow Jones Newswires

June 17, 2016 10:55 ET (14:55 GMT)

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