China iPad Trademark Holder Seeks $1.6 Billion from Apple

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Chinese company Proview Technology is suing Apple for CNY10 billion—that’s ten billion Chinese Yuan, or US$1.57 billion—for trademark infringement for the company’s Chinese trademark on “IPAD.” The news comes in the wake of a court case Apple lost over the trademark earlier this week when the Intermediate People’s Court ruled that Proview’s trademark was legal.

Apple in China

New details of the case have emerged since coverage of the verdict itself. For one thing, there’s the basis for why Apple thought it could sue its way into a trademark registered more then ten years ago in China. According to documents released by the court, Apple originally bought what it thought was the worldwide trademark from Proview’s parent company, Proview International Holdings, but failed to file the necessary paperwork to transfer the rights in China itself.

The suit filed in the Intermediate People’s Court in Shenzen was an effort by Apple to have those rights acknowledged as part of the original deal. The court was having none of it, however, and ruled that as the buyer of the trademark, Apple bore “a higher duty of care” to make sure that the “necessary procedures for the transfer of a trademark” were completed (see the awkwardly worded Google Translate version of the court’s announcement for more information).

All of which means that Proview Technology of Shenzen found itself in possession of the trademark for “IPAD” that its parent company had already sold once to Apple. Accordingly, the company is now trying to leverage Apple’s bureaucratic embarrassment to extort additional money to the tune of $1.6 billion.

According to DMWMedia, Apple can appeal the case, while Proview Technology is busily suing Apple resellers for selling iPads in the city of Shenzhen. The law firm representing Proview said it will sue other Apple resellers should it be successful doing so with its test cases in the city. There’s no word on whether the company also intends to sue makers of counterfeit iPads and the fake Apple Stores that sell them.

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14 Comments Leave Your Own

Absurd!!!!!

This is absurd!
The system is broken when company A sells company B X then company A sues company B stating that company A still owns X. Any logical person knows this is a joke.

iVoid

So Apple should pull production of it’s hardware out of China and see how fast the Chinese government steps in to ‘correct’ the court.

Apple’s production in China is worth much more to China than 1.6 billion.

DamenS

The system is broken when company A sells company B X then company A sues company B stating that company A still owns X. Any logical person knows this is a joke.

Actually, what’s most absurd about this case, is that a large, well-resourced company like Apple made such a rudimentary and costly mistake in not understanding the laws required for Trademark transfer in what is their fastest expanding (and potentially most important) market - that being China.

It really doesn’t look as though Apple’s lawyers are earning their money at present.

RonMacGuy

It really doesn?t look as though Apple?s lawyers are earning their money at present.

DamenS, the company I work for does significant business in China.  People forget that China is a communist country - the government develops laws that are in the best interest of China.  I would not be surprised if the wording was sufficiently vague to convince Apple’s lawyers that everything was legitimate, but then current interpretation is different, and of course the courts will side on Proview’s side.  I mean, look at the name of the court - the “Intermediate People?s Court” - I mean, really?  You wouldn’t believe the situation we are going through with our intradivisional rebilling between other countries and China - it is a complete mess.  Proview can flat-out lie and the China government will still side with them.

Good news is, these situations will hopefully start to convince American CEOs that there additional (sometimes unforeseeable) costs to doing business in China, which will help to retain more jobs in America.  But unfortunately the direct cost differential is so great that American companies can see past a lot of this BS and continue to justify moves to China.

DamenS

I’m not quite sure why China being a “communist country” makes any difference - what non-communist form of government does not develop laws which are in their country’s best interests ?  To do so would be incompetent governance.

I think your difficulty with China is that you believe China to be corrupt, rather than merely communist.  Whilst there are many companies (even listed on USA stock exchanges who have displayed “suspect” accounting practices), one must differentiate between individual companies and the Government.  The Chinese government is nowhere near as corrupt and malleable as you suggest (though “Human Rights” is not exactly their strong point).

If a government’s laws were “sufficiently vague as to convince Apple’s lawyers that everything was legitimate”, then this alone would be sufficient to suggest Apple’s lawyers did not perform adequate due diligence in assessing previous cases to see how the laws were being interpreted (in which case they could have raise these as guiding examples in the current case) or in not seeking further guidance and clarifications from the appropriate sources (whether government or law makers).

To even ENTER into a contract or rely upon a law which was “sufficiently vague” would be a blunder of epic proportions.  Who (even an individual let alone a multi-national corporation) ever signs a contract where the terms are vague, or does not seek clarification on laws which are vague prior to making a large purchase (the iPad name) ?  Caveat Emptor, due dilligence and knowing the applicable (in this case, Patent) laws of the countries in which you operate is what makes this a mistake on Apple’s part. 

I would need more detailed information from you to rather ascribe Apple’s loss in court to a corrupt government, relying upon legal loopholes and previously unknown legal vagaries to “patriotically” side with a Chinese company to the chagrin of Apple - and thus potentially to the Chinese people, pending Apple’s response.

As to Proview being able to “outright lie”, this is incorrect and Apple would not stand for it.  As to the name “Intermediate People’s Court” being evidence of the incompetence of China’s legal system, I would suggest countries other than the USA may have words and names which seem funny to you (especially in translation into english).  If it is evidence of British stupidity and incompetence that the British call “jelly” “jam” instead, then I believe your veiws could probably do with some “global expansion” rather than being so insular and narrow.

FlipFriddle

China being a country run by a communist government absolutely makes a difference. China’s business culture is ultimately organized and run by the state for the benefit of the state. The autonomy of large businesses in China is an illusion which becomes apparent as soon as their benefit to the state diminishes.

The mere fact that a Chinese court is trying to conduct a copyright suit when such a huge proportion of their economy is based off of cheap ripoffs of Western Companies (see the fake Apple Stores recently) is hypocritical and ludicrous.

The only solution is for US companies to stop doing business there. But like RonMacGuy says the economics don’t make it a reality for publicly traded companies right now.

RonMacGuy

The only solution is for US companies to stop doing business there. But like RonMacGuy says the economics don?t make it a reality for publicly traded companies right now.

I will say that even with a 23% across-the-board pay raise in Shanghai mid-2011 (engineering design center) we still had double-digit attrition there.  From an engineering perspective, at least our Shanghai site is no longer a low-cost site (medium-cost for sure), and it will not be long (in my opinion) until their salaries are approaching an entry-level USA engineer.  5-7 years out at double-digit raises.

skipaq

The debate over US - China trade relations is an important discussion. Some politicians are correctly calling into question some of the issues involved. There is no question that American corporations build manufacturing and other facilities outside the US. It makes good business sense to do so. That won’t change until America changes its’ attitude towards business.

But as far as this trademark issue is concerned; Apple missed the filing and has no one to blame but themselves. They will have to pay and the amount will likely be resolved by negotiation. So what? Fire or discipline the person/s responsible and move on. Outside of that this is not a huge issue.

daemon

Bryan, if Google’s translate is so poorly translated in your opinion, why don’t you hire some one to translate it properly for you, instead of using a free service?

Or I guess you could use Apple’s auto translate, I’m sure Siri can help you with that…

Lee Dronick

So Apple should pull production of it?s hardware out of China and see how fast the Chinese government steps in to ?correct? the court.

I think that sooner or later a business having moved production out of China would prove to be a good thing. They may be the only business able to deliver the goods.

mhikl

Here?s an easy solution. Forget about iPad or iAnything in China. Just use Pad but place an eyeball in front of it. Maybe even make a few introductory media adverts that actually say ?eyball-Pad”. Then just use the image.

Everyone will be referring to eyeball (icon) Pad as iPad and Bob?s your uncle, Apple?s clear sailing.

mmmm. Once my patent lawyer gets out of jail, I should get working on this little gem.

mhikl

Someone?s in a nasty mood this morning.

Inappropriate.

Nasty has just been pulled.

Bryan Chaffin

daemon, you’re looking for a fight where none exists.

1.) The poor translation is not a matter of opinion.

2.) I LOVE Google Translate and think it’s the bees knees. I use it all the time. Poking fun at a poor translation is not mutually exclusive of my appreciation of what I think is the best tool available.

You’ve been throwing casual insults my way recently and I personally think you’re embarrassing yourself by doing so.

zewazir

1.6 BILLION for a trademark - especially one that was already purchased once? How many iPads do they plan to sell over there? What is their profit margin on iPads, anyway?  If Apple makes $100 profit per iPad, they’d have to sell 16 million of them in China just to cover this ridiculous BS.

This is just one more indication that China defines “free trade” as “bend over and smile”. There are numerous other places which manufacture electronics. I’d be willing to bet South Korea would love to arrange for their businesses to take over a large portion of Apple’s manufacturing contracts.

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