Apple iPhone 5 Rumors Update: Chinese Company Uses Leaked Photos Of iPhone 5 To Patent Design, Releases Knockoff GooPhone I5 (VIDEO)

Reports of the Chinese company copying and patenting the design in China first appeared in the blog GizChina Sept.4.

What this means to Apple is that the company may face a possible patent dispute when it tries to launch its next-generation iPhone in China.

Apparently, this is not the first time the Chinese company has engaged in such practices. In the past, it has created duplicates including for those of Samsung Galaxy S3, HTC ONE S and iPhone 4, Wired reported.

It is not clear how Apple addressed the "lookalike" model pertaining to iPhone 4, but what industry watchers and technology enthusiasts concur on is that Apple is not going to take this rip-off kindly.

This is especially significant as smartphone sales are heavily influenced by Asia. In the smartphone market, currently China leads U.S. as research from International Data Corporation (IDC) indicates that China will account for 26.5% of all smartphone sales in 2012 against 18.3% reported in the previous year. On the other hand, the U.S. is expected to witness 17.8% smartphone shipments in 2012, BGR Media reported.

Also, another headache that Apple has to contend with in Chinese market is that it is already waging several legal disputes including those pertaining to iPad trademark, Siri technology and Snow Leopard operating system, Wired indicated.

A discussion thread on the topic in Reddit Technology attracted 1845 comments so far and is likely to grow as the countdown for unveiling the next-generation iPhone begins to draw closer.

The Chinese model, GooPhone I5 runs on Android, and comes with a quad-core 1.4Ghz processor, 1 GB RAM, 8 mega-pixel camera, high-definition screen with 3.5 inch display and a desktop theme that is similar to the leaked images of the next-generation iPhone, GizChina noted.

Commenting on the probable plans of the GooPhone to sue Apple on release of next-generation iPhone in Chinese market, Robin Feldman, Professor of Law at UC Hastings and author of the book 'Rethinking Patent Rights,' told Wired: "It would be unfortunate if a country's patent system were designed to allow this type of behavior."

Patent law varies from country to country, so what flies in China, may not be possible in the U.S., or vice versa. "If this behavior had occurred in the United States, Apple would have an action for misappropriation of trade secrets," Feldman added, according to Wired.

This particular incident pertains to practice of trademark squatting that has become big business in China as individuals understand "first-to-file," system. In such instances, Chinese companies target foreign trademarks that are yet to be registered in China, and file those trademarks in their name blocking the entry of original trademark owner in Chinese market, The Huffington Post reported.

Meanwhile, the Apple (AAPL) scrip appeared oblivious to the development as it continued to post gains on the street Friday, reaching a new high of $681.50 in early trade, touching $682.48 in the afternoon and ending Sept.7 at $680.44 up $4.17 or 0.62 percent higher than the previous close.