Appeals Shenzhen ruling favoring insolvent Proview

Apple claims it paid for the rights to the iPad name several years ago, but Proview Technology contends the deal was not valid on the Chinese mainland. [Photo / China Daily]

The latest round in the legal wrangle over rights to the iPad name in China is scheduled for Feb 29 in Guangdong provincial high court as Apple Inc appeals a lower court ruling that favored cash-strapped Proview Technology.

In December, a Shenzhen court ruled that LED maker Preview Technology, also based in Shenzhen, has a valid trademark on the iconic iPad name in China.

In its first public comment on the dispute, Apple released a brief statement on Feb 16, claiming it paid for the rights long ago.

"We bought Proview's worldwide rights to the iPad trademark in 10 different countries several years ago," the statement said. "Proview refuses to honor the agreement and a Hong Kong judge has sided with Apple in this matter."

The rare announcement reflects the growing pressure on Apple from recent investigations by local administrations, industry watchers said.

Hong Kong Judge Hon Poon issued an injunction in July preventing Proview from transferring or selling the iPad trademark, noting Proview and its CEO Yang Rongshan "have refused to take any steps to ensure compliance so the China trademarks are properly assigned or transferred (to Apple)", according to tech news portal All Things D.

The Hong Kong court has yet to fully hear the case, said Ma Dongxiao, an attorney for Proview.

"We just went through some preliminary procedures," he said.

Yet "the injunction reflects the judge's position on the case", Ma Qiang, a counsel of Jun He Law Offices, told China Daily. He predicted the final verdict in Hong Kong is likely to favor Apple.

In response to the injunction, Proview Technology, a subsidiary of Proview International Holdings Ltd in Hong Kong, held a press conference in Beijing last week to refute Apple's claims.

"We feel wronged," CEO Yang told the press.

He said his company invested $30 million in developing an "Ifamily" series in 1998 that included an IPAD, which stands for Internet personal access device. The products were sold in the United States, Mexico, Brazil and other countries, he added.

In 2009, an Apple subsidiary in the United Kingdom bought the worldwide iPad trademark rights from another Proview affiliate, Proview Electronics in Taiwan.

While the global deal included the trademark, Proview Technology insists it is still the owner of the mark on the Chinese mainland and Proview Electronics was not authorized to sell it.

Xie Xianghui, another attorney representing Proview Technology, said there is no direct equity relationship between the Shenzhen and Taiwan firms, so the deal is not binding on the Chinese mainland.

Even if that is true, Proview's business structure could be used to prove agency relations between the two companies, legal experts said.

But when Apple bought the trademark from Proview, it might not have filed documents with industry and commerce authorities that are needed to transfer ownership on the Chinese mainland.

An application with signatures of both the parties to the deal is a key part of the process, said independent lawyer Ma Qiang.

"The absence of the application may foreshadow conflicts in the future," he noted.

But the complaints have targeted Apple's distributors rather than computer giant itself, said Proview attorney Ma Dongxiao.

Proview has not claimed significant compensation other than in a Shanghai court, where it asked for 100,000 yuan ($15,872) to cover legal fees.

Li Su, Proview's litigation counsel, told Tech.qq.com that the insolvent company's eight creditor banks would agree to settle the dispute if Apple could offer $400 million.

"For a lower price, we need to negotiate," Li said.

Li Shunde, deputy director of the Intellectual Property Center at the China Academy of Social Sciences, said Proview would be hard pressed to prove claims for compensation - even if courts recognize the infringement - since its products proved unsuccessful on the market before Apple developed the iPad.

The value of a trademark is to help consumers distinguish between products, and in Proview's case against Apple, there is no confusion between products, Li said.

At the request of Proview, many local administrations of industry and commerce have begun to investigate the case, but Li cautioned them to be "prudent".

"Generally speaking, administrative penalties are involved when infringements are clear and no doubt exists," the professor said.

"Yet in this case, after Apple has lodged an appeal, the ruling of the Shenzhen court has not came into effect," he noted. "In the absence of an effective court ruling, enforcement officials need more prudence.

"After all, the dispute is not about misleading consumers, and a government agency should serve the public interest rather than disputes involving individual companies," he said.