Earlier this week, China Daily reported officials from the State Administration for Industry and Commerce (AIC) took some of Apple’s iPads from reseller’s shelves in the Xinhua district of Shijiazhuang, the largest city in Hebei province.
This is the latest development in a long running dispute between Apple and Shenzhen-based Proview Technology. In 2001, Proview Technology registered the iPad mark in China. A year earlier, parent company Proview in Taipei had registered the mark across Asia and Europe. Apple bought the iPad marks through a UK company for $55,000 from Proview Taipei. That agreement stated that the Chinese mark was included, but the owner of the mark, Proview Shenzhen, was not party to the agreement.
“The China marks were in the agreement apparently, but what happened was [Apple] did not do the due diligence with regards to the owner of the China mark and what is less clear is why they did not mandate a transfer at closing,” said Stan Abrams, of counsel at GoldenGate Lawyers. Apple could have gone to the PRC Trademark Office and initiated the transfer. A source close to the case told China Law & Practice that because the sale included iPad marks from multiple countries, it is possible that the transfer was overlooked. Transferring of marks becomes much more complex when dealing with several trademarks, said the source.
In 2009, Apple took Proview to court asking for the mark to be transferred in its name and the Shenzhen Intermediate People’s Court rejected Apple’s lawsuit. Apple appealed the decision earlier this year and is awaiting judgment. Simultaneously, Proview sent complaints to several AICs across China claiming that Apple’s iPad products infringe its trademarks and should not be on sale. The Shijiazhuang AIC is the first to confiscate the iPad and represents another victory for Shenzhen Proview.
AICs are not under a central authority in China. Those AICs that received complaints from Proview can carry out raids at their discretion. According to Abrams, it is legal to carry out actions with a pending appeal before the court. “The trademark is not under dispute by the Trademark Office, which means Proview is the trademark owner and it is clear sailing for the AICs,” he said.
Proview is also suing Apple in Shanghai for trademark infringement under the PRC Trademark Law (中华人民共和国商标法) asking for Rmb 10 billion ($1.6 billion) in damages. The court is due to pronounce its judgment on February 22. Sina reported this week that Proview plans to file applications before China customs. This could hinder the export of iPads, although Apple would be able to justify the exports on the grounds that they have the iPad trademark registered in all countries that the goods would be destined for. “Proview is going through the motions, with the AICs, filing court actions and talking to customs. They are doing all the things you would do as a trademark owner protecting your rights,” said Abrams.
The high-profile dispute is likely to end in a settlement in the next few months. Apple paid a Chinese company $3.65 million for the iPhone trademark last decade. It may have to pay considerably more to win back the iPad. If not, perhaps iPad will become iTab, but only in China. DT