China is one of Apple's most lucrative markets, although legal disputes in the country have caused trouble for the iPhone and iPad maker. Having earlier experienced a sales ban of the iPad in some jurisdictions in China, Apple has settled with Proview Technologies, the company that claims ownership over the trademark "iPad."
Apple Now Owns iPad
Apple has paid US$ 60 million to the Shenzen firm to settle a dispute over the ownership of the "iPad" name. Proview, which produces computer and TV displays, registered the "IPAD" name in 2000, intending to use it to market a tablet computer, although that plan never came to fruition. Proview has since sold the trademark to Apple through its Taiwan subsidiary.
Proview claims that the trademark acquisition was not done in good faith. Apple bought the name "IPAD" for US$ 55,000 through a proxy company, IP Application Development LTD, supposedly intending to use it as an acronym. Proview says Apple did not disclose its intent to market a tablet computer using the brand.
Chinese authorities have agreed that the rights to the iPad were never transferred as far as China is concerned. In December 2011, a court ruled that Proview still owned the rights to the iPad name in China, as was not bound by the sale, even though it was part of the same company. The court sought to mediate between the two companies for a possible settlement.
Proview had been struggling financially, and needed to pay debts. Apple, meanwhile, insisted that it had bought global rights when it acquired the name.
Proview had been hoping for more money, but was pressured to arrive at a settlement, in view of its burgeoning debts, says Xie Xianghui, lawyer for the company in Shenzen. Proview was seeking as much as US$ 400 million. However, Xie adds that "[t]his is a result that is acceptable to both sides."
"The iPad dispute resolution is ended," says the Guangdong High People's Court in a statement. "Apple Inc. has transferred $60 million to the account of the Guangdong High Court as requested in the mediation letter."
Good for Apple, But How About Others?
The importance of the Chinese market may have influenced Apple to go for a settlement instead of suffering losses from sales bans. "It is a good deal for Apple, because sales of iPads, which are in great demand, can compensate for this $60 million cost," says You Yunting, a lawyer for the DeBund Law Office in Shanghai.
Apple has yet to release the new iPad in China, although the tablet has already been given regulatory approval by the authorities.
Observers say the ruling might put off technology investors in the country, as the court's decision is likely to influence how disputes will be handled in the future. This is especially important, given the rampant intellectual property infringement in the country, which includes software and consumer goods. However, it is clear that Proview registered and owned the trademark long before Apple planned to use the name. Apple did well to acquire the "iPad" trademark, although it did not cover all its bases when it failed to ensure the transfer of ownership included all possible jurisdictions.