A mediated settlement on June 25 in the Higher People’s Court of Guangdong Province has brought to an end a dispute between Apple and Shenzhen’s Proview Technology over rights to the trademark in China.
Apple has now paid US$60 million for the acquisition of rights to the iPad name in China.
In a two-year long court case, the Hong Kong-listed LCD screen maker Proview International Holdings disputed the ramifications of a previous settlement: that the iPad trademark rights covered China. Its Shenzhen subsidiary, Shenzhen Proview Technology took the case to court, claiming to be the exclusive owner of the iPad label in China.
Apple maintained that it had already acquired the global rights to use the iPad trademark in a settlement with Proview – through its Taiwan subsidiary. That was in 2009 and Apple paid US$54,800 for the rights. The transfer was mediated through the London-based IP Application Development.
Proview argued that even if its iPad product has been discontinued it is still the rightful owner of the registered trademark. In fact, it gave credence to Proview’s position that the iPad trademark had been registered years before Apple launched its iPad tablet. The trademark registration, in this view, was not a tactical move of co-opting a label in anticipation of its future sale.
Proview’s pleading was upheld by a ruling in a Chinese court in December last year but it has been contested by Apple.
Shenzhen Proview Technology hoped for more, a US$400 million settlement. It tried to bolster its position in the case by asking Chinese authorities to seize iPads and prevent them from being shipped in or out of the country. But the size of that task might have been too big for customs authorities. Proview’s demand was that iPad sales should be stopped in about 20 cities.
But on the verge of bankruptcy and in need of liquid assets to pay debts, Proview opted to accept Apple’s offer. It may have been urged to do so by its creditors or by the court.
The sum of $60 million may not be enough to keep the bankruptcy proceedings off and its facilities in Shenzhen are run down with production limited.
China is Apple’s second-largest market after the US. The court settlement is expected to boost its sales further.
“It is a good deal for Apple, because sales of iPads, which are in great demand, can compensate for this $60 million cost,” said You Yunting, a legal advisor to the DeBund law office in Shanghai.
Analysts have mixed view about the consequences for doing business in China. An international company lost a case in which the litigant pleads for support from Chinese authorities. On the other hand, the Chinese court system has showed that it can handle intellectual property rights cases and that it prefers mediation between the adversaries to an imposed judicial ruling.
GB
