Apple gets bitten, Chinese court rules against it on iPad trademark

A Chinese court has ruled that Apple does not have the rights to use the iPad trademark in China after they failed to do due diligence in the original deal to buy the name. The ruling is the latest round in a long-running dispute between Apple and Taiwanese-owned Proview Technology (Shenzhen).

A computer monitor manufacturer, Proview had built its own, unsuccessful tablet in 2000 which it marketed under the IPAD name. From 2000 until 2004, Proview Electronics (Taiwan) trademarked the IPAD name in a number of territories including South Korea, Mexico, Singapore, Indonesia, Thailand, Vietnam, the European Union and China.

Then in 2006, Apple used an apparently independent agent to buy the trademarks for 35,000 from Proview Electronics, taking pains to keep its identity secret. However, the trademark for China was held not by the Taiwanese company but by its Chinese arm Proview Technology (Shenzhen). Chinese law states that trademark applications can only be made by Chinese companies. That meant that Apple had not bought rights in all the territories it thought it had.

[caption id=“attachment_152627” align=“alignleft” width=“380” caption=“The trademark for the name IPAD in China is held by Proview Technology (Shenzhen), who have demanded 6.4 mn to transfer the name to Apple.”] [/caption]

When Apple asked Proview Technology to transfer the rights for China ahead of the release of the iPad there, they realised who they were dealing with and demanded 6.4 mn. Apple declined to pay, however, and sued Proview in Shenzen. Unfortunately for Apple, the Shenzhen Intermediate People’s Court ruled that it was Apple’s responsibility to find out where each trademark was registered and refused to award Apple the rights it sought. Apple has leave to appeal.

Proview is now seeking a ban on sales of the iPad in two Chinese cities, says the FT :

Proview Technology (Shenzhen) has sued Apple resellers in the southern Chinese cities of Shenzhen and Huizhou, seeking an immediate block on sales of iPads. The Shenzhen Futian District Court is due to start hearing one case on December 30, and the Huizhou Intermediate People’s Court has scheduled a hearing in the other for January 7.

“We are starting with these two cities, and if we are successful in getting iPad sales stopped, we will consider going after Apple resellers elsewhere in China,” said Xie Xianghui, a lawyer with Grandall, another Chinese law firm working for Proview. Apple declined to comment.

XinhuaNet reports that Proview uses the name IPAD on several products, including monitors, and that in October it sued Apple for $1.5 bn over the trademark infringement. Proview says that it’s still open to settlement, but Apple can also appeal the decision, although it is far from assured a win.

Apple has built four stores in Beijing and Shanghai and has 1,000 resellers across China. Shanghaiist reports that “Apple’s iPad had a 74 percent market share in the 2nd quarter of 2011.”

Of course, Apple could simply change the name of its iPad in China. It wouldn’t be the first company to have different product names in different countries. But what alternatives might it go for? The ApplePad? The iTablet? Leave your suggestions in the comments!