Proview Lawsuit Accuses Apple of Fraud & Unfair Competition

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Apple vs. ZOMG CROSS UR FINGERS!
Proview Technology announced on Monday that the company has amended a lawsuit against Apple to include accusations that the iPad maker committed fraud and unfair competition. The lawsuit is part of Taiwan-based Proview Electronics’ trademark battle with Apple over the rights to the name “IPAD” in mainland China.

Apple purchased the worldwide rights to the iPad trademark from Proview using a third company Apple set up to negotiate the deal under the name IP Application Development Limited. While Apple believes it purchased all rights to the name, Proview has argued in court that rights in mainland China were not part of the deal, and the company has demanded as much as US$1.6 billion in damages for trademark infringement in that country.

Apple lost an initial suit in China over the trademark, but the company has appealed based in part on new evidence that Apple’s attorneys say proves that the rights in mainland China were part of the deal and that Proview is lying about the case.

Proview has lawsuits against Apple in both China and the U.S. Today’s announcement from the bankrupt electronics firm amends the U.S. suit to accuse Apple of committing fraud and engaging in unfair competition.

At the heart of these allegations is the company Apple set up to negotiate the deal. IP Application Development Limited bought the rights to the “IPAD” trademark for $55,000 in 2009 and eventually transferred those rights to Apple.

Even while acknowledging that this is common practice in the world of trademark negotiations, Proview’s lawsuit said that Apple’s actions are fraudulent.

“While some technology companies create special purpose vehicles in order to obtain trademarks, in this case the sole function of Apple’s special purpose vehicle was intentional misrepresentation, and an effort to fraudulently induce Proview Taiwan into a sale of the IPAD trademarks,” Cal Kenney, Spokesman of Proview Taiwan, said in a statement.

The statement also said, “Among the many allegations in the U.S complaint are fraud by intentional misrepresentation, fraud by concealment, fraudulent inducement, and unfair competition. The complaint provides evidence that the December 23, 2009 agreement that Proview Taiwan entered into was fraudulently induced by the concealment and suppression of material facts by Apple’s agents, and that, as a result, the 2009 agreement is void.”

Proview’s argument also included accusations that IP Application Development Limited misrepresented what it would do with the trademark and insisted that the company wouldn’t compete with Proview—Proview, though bankrupt, is, in theory, a maker of computers, displays, and other devices.

Proview has been on a major PR campaign against Apple in both the U.S. and China. Earlier this month, Apple demanded that Proview stop speaking about the case to the press in China and accused the company of lying.

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7 Comments Leave Your Own

Lee Dronick

?While some technology companies create special purpose vehicles in order to obtain trademarks, in this case the sole function of Apple?s special purpose vehicle was intentional misrepresentation, and an effort to fraudulently induce Proview Taiwan into a sale of the IPAD trademarks,?

In other words they would have jacked up the price had they known it was Apple buying the trademark.

geoduck

One issue that nobody seems to have brought up is that Proview did sell a product with the moniker iPad. The full name was the Internet Personal Access Device and it was a obvious cheap copy of the original iMac. A complete rip off of Apple’s design done badly. An infringing product that should have gotten them sued into oblivion back then. More amazingly they only sold 10-20 thousand of them between ‘98 and ‘09 in a country with a billion people eagerly looking for a way to get on the internet.

What a bunch of cheeze-balls.

Lee Dronick

Processed cheese product with artificial and natural flavorings with formaldehyde added as a preservative.

gnasher729

What Proview claims is actually not true. Apple didn’t induce them to sell their trademarks by forming a company that operated under the name “IPADL”. They induced them to sell by offering the amount of ?35,000 which was then accepted.

Tiger

ProView must be thinking if they throw enough crap at the side of the barn, something might stick. So far, the Barn is coated in Teflon!

geoduck

I’m not the first to mention this but it is worth repeating. In the US Proview is arguing in court that Apple tricked them into selling rights to the iPad name.
In China Proview is arguing in court that Apple DID NOT buy the iPad name from them.

F. Scott Fitgerald once said “The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”
Well, they got that taken care of, except of course, for the functioning part. They’re in bankruptcy you know.

Uplift Humanity

@geoduck:

Proview’s cases in China and the US are flawed and bound to lose. But not for the reason you cite. There are actually three Proview companies, and they are trying to use “slight of hand” (the ol’ shell game) to trick people.

Their case in China claims that “Apple bought the PRC trademark rights from Proview Technology (Taiwan) but they didn’t have legal rights to sell the trademark. Only Proview Technology (Shenzhen) had the right to sell it, but they didn’t sell.”  Apple’s claim is that Proview Technology (Shenzhen) was on the deal and their legal counsel also signed the contract—in addition to the parent company signing, Proview International Holdings.

So Proview is saying sensible & non-contradictory things in the Chinese & US courts.  However, Proview is not telling the full story. The truth will come out in the court cases. Proview is simply trying to increase Apple’s legal costs by filing these nuisance cases, and is hoping Apple settles to avoid further legal costs.

Apple already won a case in Hong Kong in July 2011 who found Proview guilty of breach of contract. Apple filed that case there because the contract with the multiple Proviews stipulated for Hong Kong law to apply (because the parent company Proview International Holdings is based in Hong Kong). And the Hong Kong court also found Proview had an intent to “harm” IPAD Ltd/Apple. They found Proview had sold the trademarks to IPAD Ltd (Apple), but that Proview failed to transfer the rights in PRC (mainland China) to IPAD Ltd’s name, as the contract agreement said Proview would do. They never did the transfer of the two PRC trademarks (even though Proview had agreed to transfer it, when they signed the contract).

In China, trademarks are sold in a two-step process, first you buy it, then the seller notifies the Chinese government that they really did sell it. Well, Proview signed the contract and took IPAD Ltd/Apple’s money (part 1), but they never did part 2 (transfer rights by notifying their government). That’s why in the second lawsuit in Shenzhen, Apple didn’t win. Because today, the Chinese government truly doesn’t have any proof that Proview transferred rights (as they agreed to do in the contract). The Shenzhen court didn’t say Proview won or Apple lost. It said there is insufficient evidence. That’s why Apple appealed to a higher court—new court date is set for tomorrow.

Apple is now in “CHINA LIMBO.”  They have to muddle into Chinese territorial law (differences between laws of the Chinese provinces, including Hong Kong, Taiwan, and the PRC). Apple has to get the PRC courts to recognize Hong Kong law (since the contract was under HK law)—even when Hong Kong is a Chinese province and so should automatically be recognized by the PRC courts.

Two things are in Apple’s favor:

1) Chinese authorities have not stopped sales/distribution of the Apple iPad (a few cities issued local stoppages, but nothing much).

2) This all makes the Chinese legal system look REALLY BAD.  To show that they are fair, Chinese courts have to rule in Apple’s favor.  Otherwise, other multinational companies will think twice before entering Hong Kong or China, because their courts don’t seem to protect you.

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