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A man walks past an advertisement of Apple's iPad 2 on Feb. 28 in Shanghai, China. Proview Electronics said it is now seeking to regain worldwide rights to the iPad name and is suing Apple Inc. for alleged fraud and unfair competition, hoping to have a 2009 sale of the trademark ruled void.
BEIJING – Apple’s recent market valuation of over $500 billion has invited countless comparisons, even inspiring a website that gleefully chronicles the places and things the tech giant is now valued more than.
Among other things, Apple is now worth more than the entire GDP of Poland, all the gold in the U.S. Federal Reserve Bank of New York and America’s entire aircraft carrier fleet.
But is that enough to take the sting out of the $1.6 billion in compensation Proview Technology (Shenzhen) is rumored to be demanding in exchange for settling the thorny dispute over ownership of the iPad trademark in China?
Last Wednesday, Guangdong’s Higher People’s Court heard an appeal from Apple after a lower court ruled in favor of Proview and declared them the actual owner of the iPad name in China.
The significance of the case has not been lost in Chinese. Both local and foreign media were said to be staked outside the courtroom. In response to greater calls for transparency from the government, Wednesday’s legal proceedings before the three-judge panel were actually live-blogged by the court on a twitter-like service called Tencent Weibo.
The court now has almost 80,000 followers – but their decision has not been announced yet. According to Chinese law, the time limit for ruling on an appeal is three months.
The stakes are high for everyone involved: Apple, Proview, the Chinese government and other Western investors.
High stakes
China is Apple’s second largest market behind the United States. It is also where most of its products are made – including the highly anticipated iPad 3 which some tech-watchers are speculating may be released as soon as tomorrow.
This court is typically the final word on legal proceedings in China, although Apple could still appeal to the Supreme People’s Court in Beijing. A loss would leave two undesirable options: An appeal to a Supreme Court that is not known for overturning many decisions of its lower court; or settling with the cash-strapped Proview.
Alvin Chan / Reuters
Reporters wait outside the Higher People's Court of Guangdong in Guangzhou on Feb. 29 for Apple's appeal to the higher court in the Proview case.
For Proview, a company that at one time was an industry leader in the manufacturing of computer displays before falling on hard times, a win or an out-of-court settlement could set the stage for a dramatic revitalization of a company that now counts the Bank of China and China Banking Corp. as creditors.
According to a Chinese-language report out last Friday, Proview’s consortium of creditors are said to be seeking $400 million from the cash-strapped company.
A settlement with Proview may be anathema to Apple; effectively inviting similar copycat suits against them in other jurisdictions, but the alternative of changing the name of a product they’ve already sold 32 million of worldwide is an equally bitter pill to swallow.
A warning for Western investors?
The need to legally resolve this issue is also uncomfortable for the Chinese government, which stands to lose politically regardless of who wins the case.
Should Proview prevail and receive control of the trademark in China, it would stir up a certain crisis-of-faith among the foreign business community, whose concerns about intellectual property have become louder in recent years.
Sixty-six percent of respondents to the American Chamber of Commerce’s 2011 China Business Climate Survey said intellectual property rights protection is “very” or “critically” important to their business.
One U.S. businessman, who declined to be named for this piece, noted that while Apple’s spat with Proview is over the sale of a trademark and not the legal standing of the trademark itself, he would nevertheless be concerned about the strength of his company’s own trademarks in China should Apple lose.
“Remember that line from the movie, ‘The Social Network,’ ‘You better lawyer up!’? You bet we have our lawyers looking closely now at all our company’s legal arrangements.”
It’s an example of corporate skepticism of the legal system here and a growing sentiment among the foreign business community of economic inequality between foreign and domestic companies.
That’s a sentiment that China’s ruling Communist Party wishes to avoid at all cost. In recent years the government has worked hard to improve intellectual property rights law in the country. They touted them as the Guangdong Higher People’s Court did on its Weibo feed of the court proceedings, inviting China’s web sphere to “witness the progress of intellectual property right protection in China.”
Ironically, the enforcement of those laws could potentially unravel the goodwill they were intended to build with foreign companies and investors.
Best for all? Out-of-court settlement
An Apple victory may mollify Western companies. It will also likely draw the ire of a more nationalist section of the population here that may view it as an example of China serving foreign interests before those of its own companies.
As unlikely as it may seem that a decision in Apple’s favor could lead to any mass resentment towards the government, in this sensitive time leading up to China’s leadership transition later this year, the Party is hyper-attuned to perceived public discontent.
So in the meantime, China’s government is quietly pushing through the court’s judges their dream solution to this dispute: out-of-court settlement. At the end of the hearing on Wednesday, the judge apparently gently urged Apple and Proview to consider a private settlement.
The financial motivations are there for both parties to come to the bargaining table, but Apple’s participation will either require a dramatic change of heart by the company which has refused to come to the table so far or a more pessimistic analysis of their chances in court.
Either way, you can bet the Apple CEO Tim Cook is thinking twice about his bold earlier statement last month that the company “has more money than it needs.”
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I would just pay the $1.6 billion, but with the caveat that doing so means moving some manufacturing operations elsewhere, if the Chinese government does not silently intervene in the case.
Apple has too much to lose. No where else in the world can you get workers for $17 a day and on call 24/7. Apple has let the Chinese government create sweet shops and now Apple will be taken over by China or like you said Apple will be forced to make its products somewhere else. How about Mexico, where a person making $40 a week can become a kidnap victim? American's will never be able to compete with Chinese workers unless Romney becomes President and we all move in to his homes and pay his rents and eat his food and where his clothes. Good Luck America
just a couple of things to point out. 1. China is costing the legit companies of the world billions if not trillions each year by selling cheap copies of everything. 2 China is poisoning westerners with "well let’s see" just about everything, selling their pollution in goods is part of the policy in china to the west specifically. 3. The manufacturer foxconn gives just about the best of everything to its employees and that’s why soo soooo many Chinese want to work for em, granted that does not include the highest salaries. I dare you to compare foxconn with many Chinese own operated factories??? 4. No Chinese
judge may rule in favor of a foreign company, that’s the general law in China and according to Chinese law Chinese companies may do as they wish, provided it benefits the country including cheat, lie, steal, copy provided you grease a few palms along the way. 5. Chinese are taught in school at a very early age “I am a Chinese you must support me, he/she is a Chinese I must support him/her. So going to court in a rampantly racist country that hates the west. Expecting to win might be asking toooooo much. However the best part is that Apple just needs to march into the court room and ask Proview to show a license, registration and payment slip for this year and state each that year is decided year by year. Proview won’t have one as they only paid once for one year. and dont even get me started on copy iphones running MPR and java. did you know Chinese consider anything bad that happens to the west is a victory for the chinese??? i take my hat off to anyone whom tries to do business in China. if you are Cantonese you are not included in this text. the texts in this post are in no way directed at the Cantonese people.
This is just the tip of the iceberg. China has a standard practice of aggressively marketing illegal copies of everything from Disney movies to Rolex's. The enforcement of intellectual property laws there is a joke. Who do you complain to when the government is the one stealing your ideas? So far nobody has stood up to them because the market is so big you can still make a profit even with the Chinese stealing you blind. Sooner or later this has to stop. Who better to make a stand than the richest company in the world? This is indeed a landmark case. If the mighty Apple can't protect its rights, what hope is there for anybody else?
There is option number three that wasn't brought up. Apple could just pull out of China and ban the sales of iPads in China. It would hurt their bottom line more than 1.6 billion, but it would send a resounding message to China and anyone else who hopes to do a copycat lawsuit. Proview would go belly up in under a year.
Or FOXCONN could be Prohibited from selling the Products it Manufactures through Non-Chinese Companies. Then it would have to sell ProView iPads.
Foxconn is actually a taiwanese based manufacturer , they just use china for cheap labor too , they could just shift manufacturing back to taiwan or SE asia
our office has a ProView monitor with the iPAD(r) emblem on it.... When is the suit to filed in the US? (Build date is February 2006)
Unfortunately most of the other commentators choose to ignore the simple fact you are providing here so they can go on with their usual business of China-bashing.
So, the country that literally rips off every piece of intellectual property from everywhere else is pissed off because their Hong Kong subsidiary granted the license use to Apple in exchange for compensation many years ago? Hmmm...sounds like extortion to me.
I would like to jump in on this. I am an American teaching English in China. I recently bought a cell phone here in China. It certainly looks like an iphone 4s. It has all the stuff that an iphone 4s has. On the back it says designed by Apple in California just like the real iphones. My girlfriend has a real iphone. When one compares them it is impossible to tell the difference. The difference? The real iphone costs about $750-800 here in China. Mine cost $75.00. As the rest of the world knows the Chinese also know that intellectual property rights are a huge problem in China. I really haven't seen more than talk about enforcing IPR here in China.
Go tell apple this and they will give you millions of dollars and you can just come back to the US and have a happy life with the money apple has givin you. this should be information should be in the court.
It's extortion pure and simple. There should be a deadline for a company to make this type of complaint. Not 6 years later. It really doesn't matter who brokered the deal, they sold the name. Whether Apple eventually wound up with it is irrelevant. I can understand why Apple wouldn't have wanted it known they were behind the purchase, they are pretty close mouthed about projects in development and if it had gotten out it would have let the cat out of the bag so to speak. Plus they probably had a concern that this company would attempt to take advantage of it if they had known it was Apple wanting the name. As things stand now, a valid concern.
I hope China wins!!!!!
Let's see. $1.6 Billion (with a B) is a pile of money. How much did Apple save by building the iPad in China?
Maybe now they will see the advantage to being able to mark their products "Made in the USA". At least they could sleep at night....
Apple steals the iPad name from ProView. Apple needs to pay for the trademark.
Ipads suck. Go IBM case closed lols
Heinrich, Apple paid for the iPad name and paid Proview for it.
The issue is if Proview also sold the iPad name rights in China to Apple as Apple contends.
I suppose this could be Resolved if FOXCONN were ONLY allowed to sell the Products it makes through PROVIEW.
I don't believe anything from a country that rip's off any idea from other countries and pawn them off as there own. I've been to China more then I can count on two hands and seen first hand how these people rip off and copy every idea from the US and other countries. If Proview wins, shame on them and it would open doors to other law suits from other companies on copy right infringement. Has anyone seen what Proview has called there iPad? It's a joke! which they probably copy pasted dates, spec's, etc. on a data sheet to make it look like it was there idea year's ago. Remember, there master crooks on copying everything! Bad at it to boot. It would be the biggest mistake the Chinese would ever make, which are many. I'm sure somebody will come forward with a forged document in China, saying it was there idea for the "Apple" name.
The best idea is a settlement.This is any interesting case indeed.It seems from this story that China is working hard to do what the West has been pushing them for,strong intellectual property rights laws.But now comes this case.One that from the story a few weeks ago,Proview,actually has a good case on their side.Now we have those very companies basically saying,"we want strong property rights laws when we are in the right.But when we're not in the right,we want weak property laws".It seems China can't win for losing here.
quickest way to lose your golbal market, "make a settlement". then every other country follows. end of company.
Proview Technology (Shenzhen) has NO claim! apple just needs to wak in to the court room and demand that the company show a receipt and a licence issued by apple for this year. apple issued a receipt for one year only many years ago. if they disaree then they should refer to the apple documents of policy. hint apple remains the owner of all propery investment and all documents contained within. all licences and paid receipts are bound to apple policy and ACCORDING TO THIER DISCRESSION. such receips and documents can be pulled anytime at the discression of the apple company. get a lawyer.
I'm pretty sure Apple has a lawyer. And ProView didn't lease the name from Apple, Apple bought the name from ProView (ProView sold a monitor at one time that they called I-PAD). The question is whether they also bought the rights to use the term in China (ProView says no, Apple says yes), and now they are tacking on the question of whether it was ethical for Apple to use a third party to buy the name in the first place so that ProView didn't know who they were selling the name to (I don't think it is in Apple's best interest for third parties to know what they are doing before they announce they are doing it so I don't see an ethics problem with this transaction).
Proview's IPAD was a cheap knockoff of the iMac G3, that Apple didn't sue them then goes to show the difference between our cultures. Instead they bought the name from them and now that Proview's cheap copy business model has finally crashed they sue for money.
Hopefully we'll pull all US manufacturing jobs out of China as a result. Put South America to work, they have plenty of kid labor available.
Seems apple could just name it's product to Seed it takes a seed to plant an apple tree. That'll teach em to go foreign in my opinion hate to say it about an American owned company but I hope they lose their case over a off the wall name like Ipad. I'd never buy an Apple anyways to expesive for the slave labor they employ anyways.
China has, does and will continue to steal any and all ideas, inventions and products it can get away with.
That is the way of life in chinese business and thaat is the way the repressive government of china has operated for decades and will cotinue to do so.
Anybody or any product that takes a stand against the pirating practices of china is either forced to move out of their corrupt country or give in to the chinese and let them continue along their merry ways of ripping everybody and everything off for their benefit.
Look at the recent case involving Google, (or was it some other company) either way they eventually caved in to the chinese and lost.
This is just the way china rolls. They steal and copy everything.
Even worse than that are the literally dozens of sports jersey websites operating out of china and claiming to sell jerseys for a fraction of the price, then by use of non HTTPS secure shoping they steal your credit card information, rip you off and leave you at a loss. They also do not send you the product. They know an angry sports fan wouldn't fly all the way to China to beat their ass, which they deserve for stealing from a country that provides all they need to survive: food, work, and our money. Ungrateful and selfish. If they weren't taught to worship money maybe we wouldn't be in this mess. The solution IS to remove all USA manufacturing from China. Americans most likely would be willing to pay a bit more for stuff made by their own citizens who are now desperately in need of unskilled labor jobs.
Can you say Karma.
When you deal with the devil (self servers) and you yourself are a self server, you get what you deserve. FoxConn made Apple a lot of money, now it's time for payback. You reap what you sow.
I hope all other companies doing bussiness with China finally get it. China plays by their own rules, that unlike in the USA you can't lobby to get things changed for your own best interest, not that Apple hasn't tried.
I hope this takes a big bite out of Apple, unfortunately it won't be big enough. We are all putting our eggs in one basket when it comes to building up one company by spending so much $ buying only its products. Nothing lasts forever.
If I were at apple I would change the name of the product and hold the middle finger up to this company. I'm sure if they called their product Sh!tbox, it would still be a hit. It's not the name of your product as much as what it can do. Then again selling a Nova in mexico was not a good idea, nova means "it wont go" for those that dont hablas espanol. Not a good name for a car.
Sooner or later American companies will quit investing in foreign labor so they can save a dollar. This case will be expensive to all of them.
On the other hand, Apple should have known that the trademark purchase should have taken place with the parent company, not the subsidiary.
Apple needs to close up shop in China and move elsewhere. The US would be good, but I wouldn't bet on that. When it moves, destroy everything still left in China, including any leftover iPad 2's and new iPad 3's already built. When the Chinese work fork shows up for work, their government can explain what happened to all those jobs.
Hmmmm.... Maybe Walmart needs to pay attention as well.
The Chineses don't show up for work. They have dormitories at the manufacturing plant and can be called to work at any time for any reason. They get paid squat and Apple has been stabbing Americans in the back for years with their offshore manufacturing and overpriced products. Marketing made them what they are not the best products. I hope Jobs died a painful death for the way he was disrespected his countrymen.
regeanomics strikes again
Just looked up Proview's market cap.. a big whopping 155 mil. Apple should just buy the whole company and liquidate them.
Ohh wait, foreign companies can't own Chinese companies. Why is the U.S. doing business there again?
this is ironic. Many years ago Steve Jobs and his guys visited Xerox PARC and were proudly shown a user interface for a computer the next thing you know Apple releases the Macintosh with a similar interface. The rest is history. Jobs didnt mind stealing IPR from others. That why Apple is agressive here. They dont want to be like XEROX not protecting its rights remember everyone calls a copier a xerox. Apple doesn't want to be in a position that folks start to use the ipad term for ANY tablet device manufactured be anyone. Thats the argument
Apple received a 700 MILLION dollar US Tax Refund in 2010. That was more then what it cost them to run their cult in Cupertino. With 90% of their business outsourced, paying less that 2 bucks to make an IPOD (retail $599.00 US) so less than 5 bucks to make an IPAD (retail $1,200.00 US), all shipped to the US IMPORT TAX FREE, because they are an 'American' corporation. So, how does it figure they can get 700 million of our tax dollars as a refund, more then what they paid in? Well folks, drumroll..... it's called NAFTA. This is just the beginning of these 'patent' fights between US Corporations, and I use that term loosely, and the countries they patent their 'inventions' in and 'store' millions and billions in their banks. Using Apple as the example, they patent the IPOD/IPAD 'off shore' and then they send the profits from America to 'pay' the offshore patent holding shell company, which they also own. When they file their US Tax Return, they show the 'profits' as an 'expense' and literally STEAL from American taxpayers. So they mark up their products by 800 percent and rip you off at the front end and then scam us via the back door. That is not capitalism, that is a flim flam. Therefore, it would have been easier for a camel to pass through the eye of a needle then it would have been for Steve to get to heaven.
America has been very very good to Apple and Apple has been very very bad to America and to China. We need a law to protect us against these corporations and the political crap that is NAFTA as a whole.
Proposed Law:
A US Corporation is not an individual and the SCOTUS ruling is overturned.
A US Corporation will be defined by a majority 'physical' presence in the contiguous United States:
a) The HB-1 Visa program is acknowledged as discrimination against US Citizens and an immediate investigation is launched into the abuses of that program by US Corporations and specifically HR Representatives, Federal and State Employment divisions including State School Districts nationwide and Recruiting companies being paid by foreign job seekers to enter the US under this program and the Employers who seek to profit by hiring HB-1 Visa holders from these recruiters, paying below scale wages without benefits and displacing US Citizen Employees.
b) Eighty percent of the corporations employees will be located in the United States and be United States Citizens.
c) Eighty percent of all business and manufacturing employees will be located in the United States and be United States Citizens.
d) The manufacturing of products offshore will be subject to full Import Taxation at the Retail Value Rate to be charged in the United States for said product.
e) Profits made in the United States for products made offshore by US Corporations will remain in the United States and expenses incurred for offshore manufacturing may not be used for 'deduction purposes' or treated as 'Royalty Payments' on a corporations US Tax Return.
f) Goods Imported into the United States may NOT be transported within the United States by foreign owned transporation.
(F stops Mexican trucks from transporting Mexican Ford, Kenmore, Lear, etc. products throughout the United States from Mexico. Yep, those trucks get a nod and a wave right through the border check so that is how the bulk of the drugs will be coming over the border now. This little NAFTA item was put in just for the Teamsters Union, a little corporate sans Repod kiss kiss)
This is a good start. NAFTA must be stopped!