Engadget uncovers this YouTube video:
Fake iPhone unboxing and demo
Watch the video and see this notice written across the back of the "Fake iPhone":
Notice: iPhone is the world mark registered by Apple Inc in USA
Warning: It will break the law without authorized by Apple Inc if you use "iPhone" logo on any electronic products.
Also take note that it's called the tPhone on the front and iPhone on the back.
The sad thing is Apple can't do anything about this ... this is produced in Taiwan - where copyright exists but isn't enforced and where manufacturers are essentially encouraged to rip off American products by the lack of enforcement.