Posted: August 11th, 2012
By: Cheston Tang *
Before Apple Inc.’s iPad tablet had become the standard of tablet computing, the trademark “iPad” was owned by Proview Electronics, a Chinese computer monitor company. Proview had been using the trademark term “iPad” on its products since 1998. According to the Wall Street Journal, Apple retained British lawyers in 1999 to set up IP Application Development as a United Kingdom subsidiary company to purchase the global rights to the iPad name from Proview. IP Application Development purchased the rights to the iPad name for 35,000 British pounds ($55,000). However, once Apple introduced the iPad tablet with immediate success, Proview began to pursue legal action against Apple. Proview filed a lawsuit in a California Superior Court in Santa Clara County and in Chinese courts.
The suit filed in California on February 17, 2012 claims Apple was acting “with oppression, fraud and/or malice,” when they did not disclose that they would be the eventual trademark holder once it was acquired by IP Application Development. In addition, Proview claimed that while the rights to the iPad trademark were purchased from Proview Electronics of Taiwan, the rights to the iPad trademark in China were owned by Shenzen Proview Technology, the mainland Chinese subsidiary of Proview, and were, therefore, never properly transferred. The lawsuit in the California Superior Court was dismissed by Judge Mark Pierce, who agreed with Apple’s argument that the parties had contractually agreed to settle any disputes in Hong Kong. Proview’s lawsuit in China focused on their claims that Proview Electronics of Taiwan never had the rights to sell the iPad trademark for mainland China. A lower court in China ruled in favor of Proview, which prohibited the sales of the iPad in 40 cities. There were reports by Chinese newspapers that iPads were being seized from retailers because of the trademark dispute.
Apple initially offered to pay Proview $16 million to settle the dispute over the iPad name in China. However, financial hardship and pressure from creditors forced Proview to seek much more in damages in order to satisfy Proview’s debts and remain in business. At one point, it was believed that Proview sought as much as $400 million in U.S. dollars in order to pay its debts. At the beginning of July, a settlement was reached and Apple paid Proview $60 million for the iPad trademark in China. Xie Xianghui, Proview’s legal representative, told the Associated Press that Proview had hoped for as much as $400 million and might still be declared bankrupt in a separate legal proceeding despite the settlement money from Apple.
Apple’s iPad launched in China on July 20, about four months later than the global release date. It is expected that the consumer interest in China will have been diminished by the delay. Many customers who would have waited in line on a launch day four months ago would have bought an iPad through gray market vendors who source their stock through countries that launched the product four months ago.
*Cheston Tang is a second year law student at Wake Forest School of Law from Phoenix, Arizona. Cheston holds a Bachelor of Arts in Political Science and a minor in Business Management from Brigham Young University. Cheston and his wife Adria are expecting their first child, a boy, in November. After graduation in May 2014, Cheston intends to practice in either commercial or criminal litigation.