Brazilian electronics firm retails the device for $300.
Gradiente SA has started sales of its own branded iPhone, which runs on Google's Android OS, while also sporting 3G, wi-fi, 5MP camera, and 2GB memory card.
If you're wondering why Apple lawyers haven't thrown the book at the electronics firm, it's because Gradiente has ownership of the iPhone name in its native Brazil.
It's not the first time Apple has been gazumped for a trademark either, having been forced to pay out $60m to Proview in summer to secure the rights to the iPad name in China.
The Brazil-based electronics firm registered the iPhone name in 2000, and has the rights to the name until 2018. The idea of an Android-based iPhone is likely to upset Apple, given its ongoing attempt to distance itself from Google, which may prompt the firm to offer Gradiente a payout for the trademark.