Apple Wins a Battle in China, but the iPad War Rages On
Feb 24, 2012 5:00 AM PT
Apple won a round Thursday in its fight for ownership of the iPad name in China, but the bout is far from over.
The world's most valuable publicly traded company gained its victory when a Shanghai court refused to block the sale of iPads in the city pending the outcome of a lawsuit over the iPad name.
The company that claims to own the trademark on iPad, Proview International Holdings, of Taiwan, had won its first skirmish with Apple when a court in Shenzen, China, rejected the American company's claim on the trademark. That decision is being appealed.
Proview hoped for more of the same in Shanghai but it was not to be -- at least for now. Apple beat Proview's injunction play, but the Shanghai court still must decide on ownership of the iPad name.
A Matter of National Interest
During the Shanghai proceedings, Apple reportedly argued that an injunction against the sale of iPads in the city should not be granted because Proview had no products, markets, customers or suppliers in China, while Apple has huge sales in the country.
Apple's attorneys also contended that preventing iPads from being sold in Shanghai would hurt China's national interest.
It would hurt Apple's interests, too. It has three retail outlets there which account for a lot of the company's sales in China. It the tablet market alone it has a 76 percent share.
"China is important to Apple because it's one of the largest markets in the world," Gartner Analyst Michael Gartenberg told MacNewsWorld.
Thursday's court decision is just the latest turn in a case that has grown increasingly byzantine.
Apple purchased the iPad trademark in 2009 for around US$55,000 through a Proview business unit based in the United Kingdom called IP Application Development, or IPADL, a move Apple says gave it worldwide rights to the trademark, including rights in China.
However, Proview's mainland subsidiary in Shenzhen, now in the Chinese version of receivership, has owned the iPad trademark since 2001 and is arguing, as are its creditors, that its parent company had no right to sell the trademark to Apple in 2009.
"I suspect Apple's argument is that there was deception and that the two companies should be treated as one," Dan Harris, a partner with Harris & Moure, which sponsors the China Law Blog, told MacNewsWorld.
A Good Decision
At its core, the issue underlying the Apple-Proview case isn't about trademark infringement, Harris continued. "It's about whether Proview signed over the trademark rights to Apple or not," he explained.
He praised the decision by the Shanghai court. "They're saying, on the trademark side, it's clear who owns the trademark, but this is a legal dispute and we're going to let it be resolved in the courts," he said.
If an injunction were issued against Apple, it could have resulted in incalculable economic harm to the company, he noted. "Injunctive relief is supposed to be granted when economic relief is not really available," he explained.
"The harm to Apple would be impossible to measure," he continued. "This is one of its core products."
"Proview, on the other hand, is going to know exactly how many iPads Apple has sold so it'll know exactly what their damages are," he added.
The outcome of the Proview case will be incredibly important for Apple in the long term, according Bob O'Donnell, who follows the tablet market for IDC.
Although Apple's tablet numbers in China have been modest thus far -- in the single digits as a percentage of worldwide sales -- but that's expected to change, he continued.
"China is the biggest PC market in the world, there's no reason why it couldn't theoretically become the biggest tablet market in the world as well," he told MacNewsWorld.
"It's absolutely essential that anyone in that market -- Apple or anyone else -- be in China," he added.