iPad Rumble in China: Apple Slaps Amazon, Grapples With Proview
Feb 17, 2012 5:00 AM PT
Amazon's Chinese website is no longer offering Apple iPads for sale.
That follows a request from Apple to drop the product because Amazon isn't authorized to sell the device in that country, according to a Wall Street Journal report.
Meanwhile, officials in various Chinese cities are confiscating iPads from retailers, apparently in connection with a legal dispute between Cupertino and Taiwanese firm Proview, which asserts it has rights to the iPad name in China.
However, that issue is not related to the stoppage of Amazon's iPad sales in China, Carl Howe, a vice president at the Yankee Group, told MacNewsWorld.
"Authorized sellers of Apple products vary by country, so it isn't surprising that Amazon USA can sell iPads while Amazon China can't," Howe explained. "Proview did grant Apple the iPad trademark everywhere except in China."
It could be that Apple has requested Amazon China and other online retailers to stop offering the iPad because of problems with gray market sales, Rob Enderle, principal analyst at the Enderle Group, speculated.
"Apple watches this activity very closely, and there's been a lot of illegal gray market sales of Apple products in China," he told MacNewsWorld.
Who Isn't Selling iPads Anymore
Several brick-and-mortar retailers have also lost their stock of iPads. The authorities in several Chinese cities, including Shijiazhuang, Xuzhou, Zhengzhou and Qingdao, have shut down sales, The Washington Post reported.
More seizures may be on the horizon -- Proview has reportedly asked regulators in more than 40 cities to investigate possible trademark violations.
The Confusing Case of Proview
One of Proviews subsidiaries is Proview Technology in Shenzhen. This is the firm that has filed suit against Apple. Another subsidiary, Proview Electronics, is based in Taiwan.
Proview trademarked the iPad name in the EU, China, Mexico, South Korea, Singapore, Indonesia, Thailand and Vietnam between 2000 and 2004, The Financial Times reported.
Proview Electronics (Taiwan) reportedly sold the worldwide rights to the iPad trademark in 2006 to IP Application Development in 2006 for about $55,000. That company had apparently been set up by Apple.
The trademarks for the Chinese market weren't included in the sale because they were filed by Proview Technology (Shenzhen) in 2000 independent of the other filings, which were conducted by the Taiwan branch, Proview Chairman Yang Rongshan told The Financial Times last year.
Weaving a Tangled Web
Proview International Holdings, the parent company, appears to be dealing with financial trouble. It's reportedly facing expulsion from the Hong Kong Stock Exchange if it doesn't turn its business around by June, and there's speculation that Proview's lawsuit against Apple is a bid to raise some much-needed cash.
The company, which had filed suit against Apple in Hong Kong and Shenzhen over the iPad trademark, lost its case in Hong Kong but won in Shenzhen.
However, Proview's battle against Apple isn't going smoothly. iPads are still available in China directly from the Apple Store, the Yankee Group's Howe pointed out.
Further, a judge is looking into the relationship between Proview and its Taiwanese subsidiary and "has granted a temporary order barring Proview from transferring rights to the iPad name in China," Howe said.
Proview had thought of applying for a legal ban on shipments of iPads into and out of China, but it was told by Chinese authorities that this would be difficult to enforce because of the size of the market and the strength of the demand for iProducts.
Ending the Legal Battle
It's quite possible for Apple to resolve this problem quickly by shelling out some money to Proview.
"Given the cost of protracted litigation in a foreign country, [Apple] may decide to do this anyway at some point as the least costly path, given they are unlikely to be able to recover expenses from a bankrupt company," Enderle speculated.
Apple and Amazon did not respond to requests for comment for this story.