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Customers test out Apple iPads in the company's flagship store in Beijing's Sanlitun area on Wednesday. A Chinese tech firm, Proview claims it still owns the iPad trademark In China and will seek a ban on exports of Apple Inc's computer tablets from China, which could deal a blow to the U.S. technology giant's sales worldwide.
BEIJING – “This is the user manual and spec sheets for the IPAD,” said Ma Dongxiao, a patent lawyer in Beijing. In his hands he held a simple black and white pamphlet that laid out the technical aspects of his client’s product.
Absent from the front page was the familiar Apple logo we have come to expect. Rather, he held just a simple description in English for a boxy wireless device shaped like an old TV that was ponderously dubbed a “Professional Color LCD Monitor.”
Simple as the device might appear, it is the linchpin in a new phase of Shenzhen-based tech company Proview’s latest attack on Apple: A restraining order filed this month in a Shanghai court demanding Apple cease using the iPad name in China.
Just days after the euphoria of a $500 stock valuation, Apple has been dealt a series of significant legal blows in China that casts doubt on the legality of the tech giant’s control of the iPad trademark here on the mainland.
And the worst might be yet to come.
The legal issue at hand for Apple is simple enough: Does the Cupertino-based company own the “iPad” trademark in China? Or does it belong to Proview (Shenzhen), a subsidiary of Hong Kong-based Proview International Holdings Ltd. – at one time one of the largest manufacturers of computer displays in the world.
NBC/ITN
The cover of Shenzhen-based tech company Proview's owner's manual for their IPAD device, called a "Professional Color LCD Monitor."
Murky trademark deal
Proview began trademarking the term, “IPAD,” in China and other countries back in 2000. The company coined the name for a handheld device it claims was the actual start of what later would be dubbed “tablet computing.”
The project never came to fruition, though, and the name sat unused until 2009 – a year before the debut of the iPad we know today. That’s when Apple allegedly swooped in and paid a Proview subsidiary in Taiwan $55,000 for the trademark rights in ten countries, including they claim, China.
Not so, says Proview in Shenzhen, which argued that it – not the subsidiary in Taiwan – had registered the iPad name in China and thus controlled its trademark on the mainland.
In 2010, Proview took Apple to court in Shenzhen and won a decision last December that ruled Apple had incorrectly purchased the China trademark from the Taiwan-based subsidiary, resulting in a legally non-binding agreement.
An appeal filed last month by Apple in a Guangdong provincial court was similarly rejected, paving the way for Proview to file a slew of trademark violation complaints across China with local Industrial and Commercial Administrative Bureaus. In 20 cities across four provinces, these departments began enforcing the decision, confiscating iPads from sellers and exposing Apple to fines up to five times the profit from iPad sales.
Online retailers are also taking note of the complaints, with Amazon China and Suning.com, a Chinese e-commerce site, also pulling iPads off their websites.
Undeterred, Apple has appealed the ruling to a higher Guangdong court. Carolyn Wu, a spokesman for Apple in China, told the Wall Street Journal Tuesday, “We bought Proview’s world-wide rights to the iPad trademark in 10 different countries several years ago… Proview refuses to honor their agreement with Apple in China.”
More suits to come
Talking about the upcoming Shanghai suit for which Ma says arguments will begin next week, Chinese legal experts are already arguing that Apple faces long odds of winning. As one lawyer put it, Apple’s negotiating with Proview’s Taiwanese subsidiary is “like negotiating with a son and expecting the father to go along with what was agreed upon.”
NBC/ITN
The user manual for Proview's IPAD shows off its boxy wireless device shaped like an old TV. Proview claims it has the rights to the trademark "IPAD" in China , locking it in a legal battle with U.S.-based tech giant Apple.
With Proview’s ownership of the iPad trademark already established in the Shenzhen courts, it seems doubtful that the Shanghai court will side in favor of Apple and effectively overturn the appeals court in Guangdong.
Late last year, China became Apple’s second largest market after the United States. A decision against Apple that results in the ceasing of mainland iPad sales would be catastrophic for the company, which reportedly sold 15.43 million iPads in the last quarter of 2011 alone.
Even more troubling is another complaint Proview plans to file by the end of this month to China’s customs authorities that would ban the export and import of the new iPad 3. Almost all of the 30 million iPads sold last year are assembled outside the U.S., mostly in China. A successful injunction against Apple on exports of its iPad 3 would effectively make its rumored early March rollout date a pipe dream, putting a significant dent in the company’s profits.
Payday ahead for Proview?
All of these lawsuits, injunctions and complaints beg the question, what is Proview’s end game?
After all, Proview can seemingly look ahead confidently to the upcoming customs complaint and Shanghai lawsuit knowing that the Chinese courts have ruled in their favor in regards to ownership of the iPad trademark. Barring some new, compelling evidence from Apple, it will be extremely difficult for Apple to overturn two decisions in favor of Proview.
Bobby Yip / Reuters
A man walks on a bridge in front of the derelict office of Proview Technology in China's southern city of Shenzhen on Wednesday.
So what does Proview want?
The lawyer, Ma, played coy in answering that question and simply said he hoped that the two parties would be able to settle their disputes out of court. Indeed, a settlement between Apple and Proview is increasingly looking like an expensive proposition for the American tech company and a financial windfall for the cash-strapped Proview.
However, rumors of Proview seeking a $1.6 billion dollar payout may seem almost reasonable to Apple if Proview’s multiple suits successfully pass through Chinese courts and an embargo on shipments of iPad 3s is enacted. Although, it’s important to remember that Apple reportedly has $97.6 billion in cash reserves, so a $1.6 billion payout wouldn’t exactly break their bank.
Despite the long legal odds against Apple, and Proview seemingly sitting in the driver’s seat, the chances of such a doomsday scenario occurring seem distant as both sides appear even more poised for a settlement.
After all, while China’s expansive, albeit limitedly enforced, intellectual property laws currently favor Proview, it seems doubtful that a Chinese ruling blocking the shipment of iPad to countries where Apple legally owns the trademark would hold up in a complaint among the bodies that regulate international trade.
Furthermore, during these trying economic times globally, it would simply be foolhardy for China’s Customs Bureau – and by extension, the ruling Communist Party – to invite the swift international condemnation that would inevitably follow any blocking of Apple exports.
Ultimately, as Stan Abrams of the China Hearsay blog put it, Proview’s best strategy would seemingly be to wreak enough legal havoc for Apple so that the disruption of exports, while not an inevitability, would be a big enough threat to bring them to the settlement table.
Whatever decisions are made in the next few weeks, Apple will surely pay dearly for its first significant blunder since its entry into the China market.
Leave a Comment:
So, what is Apple going to do about it?
Answer: kiss ass and keep doing business with China. Just like most other US corporations. Namely, GE.
China cannot sue Apple for the rights of the I Pad because the subsidiary company sold the rights to Apple in the first place.
What needs to be looked at is the legal aspect of how much control Proview gave to the subsidiary company in Taiwan. If Proview gave certain selling rights to the subsidiary company in Tawain to sell or purchase on behalf of Proview then Proview doesnt not have any legal grounds for the complaint.
But given how shisty the Chinese are and their manevolence towards America , remember the lead in the paint that was painted on toys made in China, remember the toys that fell apart when played with that could then be ingested by young children and not the recent lead that has been found in Chinese cosmetics? All are ploys by the Chinese to cause Americans to develop cancer from the lead that is present to kill off a certain number of Americans.
With China's recent crying over a mistake that they made it is clear that China is trying to in fact steal the I Pad from Apple which would then add to China's overall wealth.
Not only would China have the rights to the I Pad they would have the rights to determine what you can see on the I Pad given it would be their device thus effectively spreading Communism to those who use the I Pad.
China planned this economical deceit from the very beginning in order to seize a certain number of business facilities created by Apple that has since been developed by Apple after the trademark was sold to them by the subsidiary of Proview.
Early on American companies went into Chinese "joint ventures" where they paid all the costs to modernize the ancient low-tech factories in China and train the workforce, only to have the Chinese government take back the factory, turn it over to the Chinese partner, and send the American companies home with nothing. China has NO REGARD for legal contracts or laws other than its own and will rip off the "rich Americans" any chance they get because they feel we can afford it.
IPAD =/= iPad......totally different!!!!
i really hope that company successfully blocks exports of the iPad because that is exactly the catalyst needed to bring tech manufacturing back to America.
I'm not sure what I'll enjoy more.
Watching you dolts that hate Apple (or insert any other thing that competes with your thing of choice: cell phone carrier, game console etc) walking around thumping your chest, thinking Apple is actually going to suffer a sifnificant defeat here.
Or..
Watching you dolts that hate Apple in a few months whine like little girls because Apple "got away with something," after nothing of significance happens.
Should have made them here in USA, I hope the Chinies stick it to them good! By the way, try finding any thing made in USA!
This is going to come sooner or later. What we need with China is to absolutely reverse the trade imbalance and protect ourselves in the same way they do. Will it make some things more expensive here in the US, yes. But in the end it will also create a much fairer playing field and bring lots of jobs back home. Additionally, we need to have harsh penalties for Chinese corporate piracy, which is rampant in the country. If we do not do this now, they will simply use us until we are unnecessary and then consume our industries; being as ruthless with us as they are internally.
For crying out loud just give it a different name already! Call it the I-plate, I-Platter, I-book, I-screen, whatever! Film a few new commercials with the new name and kick them out the door.
THEN
Move all your operations back to the US where you wont have your technology stolen out from under you by ungrateful shake-down artist butt heads. They will miss both the new tech features of the I-whatever AND the thousands of high tech jobs!
(I bet right about now you are regretting telling President Obama that you would never move your ops to the US arent you?)
Move jobs BACK to the US? Keep dreamin'. You'll see them in dirt poor parts of South America, maybe even Africa before that happens.
"Mr. Jobs, just think of the huge margin and share price we could command if we used some of that slave labor in Rwanda, right next to the diamond mines operated by children, and oil wells!"
remember the lead in the paint that was painted on toys made in China, remember the toys that fell apart when played with that could then be ingested by young children
Actually, YES I DO remember those! And did you know that when the US companies wouldnt go back and order more dangerous or faulty stuff the following year, the Chinese factories tried to sue because they wouldnt continue doing business with them and getting stuck with stuff they couldnt legally sell because of the safety issues!? No "Sorry we humiliated you and cost you a small fortune on fines and refunds to your customers" just "What do you mean you wont buy any more from us? You HAVE to!! And if you dont we'll take you to court!!"
Karma will get ya every time. No use in trying to explain it it is just the way it is. Doing business with THE you know who always has a price. Who is the axis of evil ? They act stupid and put toxins in the food they sell and claim the fifth. It is about population explosion who cares about civility when it comes to 7 billion people ehh ! Adam ate the apple..Temptation is what did it Grrrreed,,
In the end it is going to be every man , woman and child on their own fighting to stay alive. The tipping point can come with the slight change of the weather. It is always the same it never changes so predictable it is. FEAR ! Ohh yeah right REALITY ! --> The problem IS when you do outsourcing you take a risk by doing business off shore in a pro communist country. The problem "IS" when it(The global economy) collapses communists will claim your business and you ..FOOLs..trickle back jobs LOL...The fact is all those digital signals in the air are not good for the planet so they are doomed anyway..I hope they learn a lesson not to be treasonous and leave us broke and jobless again. Maybe the chinese can put them to work in a hard labor camp when they all lose their jobs.
Does anyone else find it ironic that a Chinese company is suing for trademark infrngement?
I can hear the howling already! Washing machines, autos, clothes, etc.
It's great to see China putting multinational corporations into a submissive position. It's great to see multinational corporations getting a glimpse of what is in their future. They are used to being in complete control of the government here in the United States, but in China they are NOBODY. In China, all the CEO's should just turn over the reigns of their companies and step down. China is going to trample on corporate power and it's wonderful to see just how easily and quickly it will happen. What do they use to bring down the monoliths? The greed of the Board of Directors, something you can count on 100%. Good job, China!
"iPad". Cripes. Anyone been to China? Since the original iMac came out, cheap chinese manufacturers have been putting an "i" in front of freakin' everything: the iToaster, the iThermometer, the iToilet... Fine, Apple can rename it what ever they want, and the Chinese will rip it off just like anything else worth stealing. I don't cry a bit for these companies who run into China seeking cheapest slave labor they can find, getting shilled out of a few $million here and there by the local crooks. Cheers, boys and girls. Just deserts anyone?
Oh, and you people who think China wouldn't let a few hundred thousand jobs die just to show a US and Taiwanese company know who's boss, you obviously have never worked in China. They couldn't give a rip what you think your patent and "rights" entitle you to. Cash talks, others walk.
I think apple should pay for only crown
www.u-joint.net
www.universal-fastener.com
www.snap-blade.com
www.lint-roller.net
www.poly-silicon.com
www.auto-control-cable.com
if the fruit has any sense of decency they'd take the loss and shutdown their contract with foxconn and bluff them by packing up to india or whatnot. but knowing how gay the fruit is, they're just gonna pay up and make it up from you since you'll be going ga-ga over the ipad3 you won't mind another 50 bux extra of what they were gonna sell it for.
ahh another hole in the legacy of Steve Jobs, noted genius - I don't think so. Nothing more than a Plantation Owner sending his slaves out to pick cotton while he engages in frivolous pursuits.
The companies will settle: one will get two billion, the other will lose two billion. But the Plantation will continue to produce and produce and make money for both countries.
How could Apple even think that a deal made with Taiwan would be supported in mainland China? Jeez, what law school did their counsels attend? On line law degrees maybe. This is so ironic and funny, caught with their pants down inside the crapper. Great reading.
Kiss Apple's $500 share price goodbye. No american corporation is safe in other countries. What right do we have to expect other countries to always follow our rules? First, China, next will be India, then Brazil, it will snowball until each country will put their logo on Apple products and guess what?...Nothing can be done about it.
Could that piece of crap look any more like an iMAC? I do not have the time to read through all these posts, Someone probably already posted, but in case not
IBM
HAL
iMAC
iPAD
Make them here. Costs a bit more, but none of this BS.
ALL THESE PEOPLE who think they're cool cuz they use an Apple instead of a PC and like to imagine that they are "sticking it to the man" LOL they got stuck hard by Apple for and expensive made in China toy, by a company no different from the elite "1%". Apple is the "elite 1%" They stole from Xerox PARC too, just like Gates.
so change the name to epad and be done with it
You don't need to know anymore than the Communist Government of China has already told the courts what to decide. You aren't doing business in America. And there is a cost for that. Those new aircraft carriers aren't cheap.
I PERSONALLY hope that china lets this company win and apple has to pay them a small fortune and then starts copying and selling it in china. I hope it gets so bac that they return to the us and beg to start production here. Its time for us the average american to quit buying their junk till they get us to working again and lets make our kids go to school and learn and want to be something instead of a mall hang want a be.
till we bear down on our kids this is gonna get worse instead of better. But i don't buy apple products.