Firm threatens U.S. suit to get iPad payout from Apple
Keith Zhai and Bien Perez
The cash-strapped mainland company that claims to own the 'iPad' brand has threatened legal action against Apple in the United States, in an attempt to force a settlement of their dispute over the popular media tablet's domestic trademark.
Rowell Yang Long-san, the chairman of Proview Technology (Shenzhen), said yesterday that the company had sought counsel from three unidentified law firms in the US and could file a lawsuit against the electronics giant as early as this month.
'Proview Shenzhen never signed anything with Apple, so we have the right to use the iPad trademark on the mainland and it is protected by law,' Yang said. 'If we are not compensated properly, then Apple doesn't use the iPad trademark in mainland China.'
The mainland firm, a subsidiary of Hong Kong-listed computer monitor manufacturer Proview International Holdings, yesterday said it estimates the compensation from Apple could reach up to US$2 billion.
The Intermediate People's Court in Shenzhen in November ruled against Apple in a trademark-infringement lawsuit, declaring that the company had no claim to the iPad name because the rights to that brand on the mainland belonged to Proview Technology (Shenzhen).
Instead of choosing the expediency of a settlement, Apple and IP Application - a company it set up in 2009 to acquire trademarks to the iPad name - lodged an appeal last month to the Higher People's Court of Guangdong province.
Carolyn Wu, Apple's spokeswoman in Beijing, declined to comment on Proview's plan to take their litigation to US courts. She reiterated an earlier statement released by Apple: 'We bought Proview's worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honour their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter.'
Apple's legal resolve on the mainland has not stopped Proview Technology, which was declared bankrupt in 2010, from enforcing its rights. This month, the mainland firm filed a complaint to a Shanghai court to ban the sale of iPads on the mainland.
In the past week, iPads have been reported to have been seized in Qingdao, Shijiazhuang, Xuzhou and Zhengzhou. Proview Technology confirmed that it has received support from more than 40 cities and that more than 30 commerce bureaus across the mainland have taken action against the sale of iPads.
'By Chinese law, Apple could only use the iPad trademark after an agreement approved by the Chinese trademark office,' Proview Technology lawyer Ma Dongxiao said. 'Apple used the iPad name without getting the official approval from the Chinese authority. They made a stupid mistake in the Chinese market.'
Apple's claim to the iPad brand, however, was upheld by Hong Kong's High Court in July last year, when it ruled against the disposal of mainland iPad trademarks by defendants Proview International, its subsidiaries and Yang, the company's Taiwanese founder and former chief.
Mr Justice Jeremy Poon Shiu-chor decided there was 'a serious question to be tried' involving the defendants' alleged breach of a December 2009 deal to sell the trademarks to Apple and IP Application. The litigation started in May last year.
The High Court found that Proview International had agreed to sell its iPad trademarks to Apple for GBP35,000 (HK$439,440).
While drawing up the agreement for that sale and the so-called country assignments, Apple and IP Application discovered the two mainland iPad trademarks were not, as they were led to believe, owned by Taiwan-based subsidiary, Proview Electronics, but by Proview Technology in Shenzhen.
That resulted in the China country assignment provided to IP Application becoming ineffective. Apple said the defendants, while acknowledging the mistake, refused to rectify it and asked Apple to pay US$10 million for the two trademarks.
In his decision, Poon said 'the conduct of all the defendants demonstrate that they have combined together with the common intention of injuring Apple and IP Applications by acting in breach of the agreement'.
Li Su, of public relations firm Heijun Vanguard, which represents Proview's mainland creditors, said Apple halted negotiations with Proview International last year when the debt-laden company's assets were frozen by eight mainland banks.
Yang said Proview had released more than 10,000 iPad-brand products since 1998, but stopped production because they failed to sell.
Trading of Proview International's shares was stopped in August 2010 as it scrambled to restructure and sell off assets on the mainland to pay its debts. The Hong Kong stock exchange has targeted it for delisting for failure to file its financial reports since the second half of 2010.
iPads sold by Apple worldwide in the quarter ending in December. The company has not said how many it sold in China