The Global Trademark for iPad

The Financial Times: In 2006 Taiwan-based Proview Electronics chairman Rongshan Yang agreed to sell the global trademark for IPAD to IP Application Development for £35,000 without knowledge the company had ties to Apple. The IPAD trademark for the Chinese market was filed by Shenzhen-based Proview Technology, an affiliate of Hong Kong-based Proview International.

Proview Technology defaulted on loans worth US$400 million and a group of Chinese creditor banks seized the company’s assets, including the IPAD trademark for the Chinese market. Proview Technology shareholders and creditors planned to sell the trademark to the highest bidder. This is when Apple and IP Application Development sued to have the Chinese market IPAD trademark assigned to IP Application Development. The problem lies right here: Yang claims the purchase agreement for the global trademark for IPAD did not include the Chinese market.

Financial Post: On Tuesday, the Intermediate People’s Court in Shenzhen, China rejected Apple’s claim that Proview was infringing its iPad trademark.

FT: After the court’s ruling Proview Technology has sued Shenzhen and Huizhou based Apple resellers to block iPad sales. If Proview Technology successfully blocks the sales of iPads in these two cities the company may target Apple resellers in other cities in China.

There is Proview International, the holding company based in Hong Kong, Proview Electronics an affiliate in Taiwan, and Proview Technology another affiliate in Shenzhen. Proview Electronics sells the global trademark for IPAD to IP Application Development. But it’s the Shenzhen-based Proview Technology, a company that defaulted on millions of dollars worth of loans, who owns the IPAD trademark in China, which for some reason wasn’t included in the sale to IP Application Development. Sounds fishy to me, but this might be a simple case of Proview International/Electronics/Technology swindling Apple into buying a not-so-global IPAD trademark. If so Apple may be forced to pay dearly for its mistake, to the tune of US$1.5 billion.

Update: Mike Elgan, Datamation:

In order to squeeze Apple, the company has convinced authorities in several cities to send police into stores to confiscate iPads. So merchants are taking iPads off the shelves preemptively. The company is trying to do so in more than a dozen other major cities as well.

This leads to a strange reality in those cities: Police are cracking down on the sale of legitimate iPads, while counterfeit iPads based on Apple’s stolen intellectual property are sold freely in the same stores.

Welcome to China.

I see this as an opportunity for Apple to initiate building its manufacturing capabilities in the U.S. If Apple were building the iPad in the U.S. the only country that would be impacted by China’s pseudo-legal system would be China: Apple would be prevented from exporting iPads there, but other parts of the world would not be affected. If Proview continues to gets its way with judges and government bureaucrats in China, Apple’s global iPad business might come into jeopardy. And that point a couple of billions of dollars might be the price Apple is forced to pay to sell iPads in China, and only for the time being.

Update 2: Wang Huazhong, Cao Yin, and Yuo Yannan, People’s Daily Online:

“We bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago,” according to a statement Apple sent to China Daily on Wednesday.

“Proview refuses to honor their agreement with Apple, and a Hong Kong court has sided with Apple in this matter,” according to the statement, which also said the case is still pending on the Chinese mainland.

Unfortunately, what happens in Hong Kong might not have much relevance in mainland China:

Yu Guofu, a Beijing-based lawyer specializing in intellectual property rights, said the verdict of the Hong Kong trial or that of the mainland will not have any influence on one another or vice versa.

“The root cause of the dispute is Apple’ underestimation of the legal complications in China,” the lawyer said, adding the case also serves as a warning to companies in China to think twice about risks before “going abroad”.

Update 3: John Paczkowski:

In it, Judge Hon Poon writes that Proview’s conduct smells of conspiracy driven by financial desperation, and that there’s reason to believe that it acted in breach of its agreement with Apple by wrongfully refusing to honor its obligation to hand over the iPad trademark in China.

In this particular case, it seems law in mainland China is enforced based on the strength of personal relationships, for financial gain. And have a look at the additional documents AllThingsD acquired; to me it’s clear: Proview sold it’s rights to the iPad trademark to Apple.

Update 2012.02.18: Proview’s iPAD was an iMac ripoff.

Update 2012.02.23: Mat Smith, Engadget:

According to Chinese news outlet Xinmin, a Shanghai court has rebuffed Proview’s demand for an injunction halting the sale of the Apple tablet due to licensing issues. The Pudong New Area People’s Court made the decision yesterday, stating that while the Guangdong court case has yet to make a final decision on who owns the “iPad” trademark, there wasn’t enough evidence on Proview’s side to honor an injunction.

Here’s the link to Xinmin (Chinese). With the imminent announcement of the next iPad this trademark fiasco with Proview is cutting it pretty close. I’d like to see Apple take this as a warning and start building manufacturing capabilities elsewhere, just in case.

Update 2012.07.03: The cost of selling the iPad in China just rose by US$60 million for Apple. Joe McDonald, Associated Press:

Apple has agreed to pay a Chinese company $60 million to settle a dispute over ownership of the iPad name, a court announced Monday, removing a potential obstacle to sales of the popular tablet computer in the key Chinese market.

That Chinese company is Proview Technology.