When Apple paid £35,000 to the Taiwan branch of Shenzhen Proview Technology for the iPad brand rights in various countries, it thought these included China. The China arm of SPT thought different and sought seizure of all iPads on sale in China, claiming trade mark infringement. Hannah Willson reports the multi million settlement now agreed.
Who: Apple, Inc and Schenzen Proview Technology International Holdings Ltd
When: July 2012
Law stated as at: August 2012
Apple, Inc's ("Apple") long-running trademark dispute with Chinese electronics company Shenzhen Proview Technology International Holdings Limited ("Proview"), over the ownership of the trademark iPad, has finally reached a conclusion.
The High People's Court in Guangdong Province in China announced recently that Apple has agreed to pay Proview $60m, equivalent to £38.2m to settle the dispute and for all rights in the trademark iPad in China to be transferred to Apple.
Apple claimed that they obtained the global rights to iPad in 2009 when they purchased the rights from Proview's Taiwanese affiliate for $55,000. Apple had set up a company called IP Application Development Limited in the UK through which it (thought it had) purchased the global rights to the trademark. However, Proview's trademark in China, registered in 2000, was not effectively incorporated into that agreement and therefore the two companies have had to reach a settlement through mediation to transfer the ownership to Apple.
Proview, who were declared bankrupt during the case, will use the $60million to pay off creditors. For Apple however this was a small payment in comparison to its annual turnover in 2011 of $108 billion. Proview had been hoping for a larger sum, initially claiming for as much as $400m for 'lost sales', but due to pressure from its creditors settled for the considerably lower figure.
This legal dispute also spilled over into the United States where Proview lodged a claim against Apple for deceiving it into selling the rights to the iPad name by setting up the UK company to purchase the rights. The US courts were, however, quick to dismiss this claim.
Why this matters:
The dispute between the two parties had led to a noticeable impact on the sale of iPads in China (although the courts rejected a ban on sales in Shanghai) and has delayed the launch of the new iPad 3. China is a big technology consumer and is Apple's second largest-market after the United States (in 2011, profits from Apple’s China sales reached $12.5b, comprising 11.5% of its global revenue) and therefore this settlement will be very welcome to Apple.
As this settlement shows, the act of ensuring that your trademarks are registered to sell in every single of your intended territories is as crucial as it is as an obvious step.
The initial fear that this settlement will fuel the appetite of trademark squatters and act as a precedent for settlements in the future should not receive too much concern as this was an example of an originally genuine trademark application, many years before Apple's iPad had come to market. It does highlight, however, that China is a first to register trademark jurisdiction, giving rise to some risk of trademark squatting, and companies are well advised to ensure all rights are secured in the markets in which they wish to exploit their products or services at the earliest possible opportunity.
And Charlotte Hayes-Sennett