Where Apple’s Confidence Comes from in iPad Trademark Dispute?

For the battle between Apple and Proview, we think the only way to guarantee the mutual benefit is the conciliation, in which Apple could continuously use the iPad trademark and Proview could gain the transfer fee thereby, otherwise it will leave nothing for the creditors of Proview while Apple still holds its leeway.(the image today is the showcase of a Apple retailer in Shanghai)

On the evening of 14th February, Apple pulled iPad from Amazon China and halted its stop. Also Apple stated that “We bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honor their agreement with Apple in China”. All these show that Apple determines to hold its hard line in the battle over the iPad name, and even may stop the sale of the device. Then why shall Apple be so hard? The reasons may be the follows:

First, Proview does not take advantage morally to Apple. The core problem of the dispute on the iPad trademark contract is the signing subject, which is actually not Shenzhen Proview but Taiwan Proview, its affiliated company. However, the transfer contract is globally binding and with dozens of countries involved, where Proview has all fully performed its obligation unlike that in China the performance is affected by Shenzhen Proview’s creditor for the company’s going bankrupt. Therefore, the dispute is mainly aroused by Proview’s violation against Apple, who is not in wrong and has paid the money by the signed documents.

For the rumor that Apple is not the direct signing party with Proview in the contract but to be engaged in the agreement through a “white glove” company, which to someone’s understanding is kind of fraudulence, however, that’s the misinterpretation on the commercial practice since the major companies tend to make the transaction through agency in purchasing the trademark or domain name. Either the trademark or the domain name, though is valuable to some extent itself, may enjoy a sharp growth only being supported by the reputed product or service behind it. And once the major companies participate in its transfer negotiation, a bargain for a unreasonable high price is inevitable, and for this reason to transact through the “white glove” could honestly reflect the value of the transaction object and be more complying with the economic rule.

Second, Apple is so strong that all the combats designed by Proview’s attorney in the available all channels have made little influence on Apple, furthermore, with the introduction of the iPad of next generation, Apple may still has its leeway. And the following is our analysis on it.

I. The complaint in the custom house

By the report, Proview has applied to China Custom for the ban on the import and export of iPad with the claim that it infringes the company’s trademark right. Nevertheless, iPad is assembled and manufactured in bonded area in China, and the overseas trademark right of iPad is owned by Apple, and thus to sell the device in other countries and regions will not be illegal. Once the export is banned mandatorily, the consequence is that the device is no longer available to global consumers, more than millions of labors employed by Foxcom, iPad’s manufacturer, will be influences for Apple is its main client. For these two reasons, it’s not likely to order the ban by the custom house.

II. The lawsuit on the trademark transfer contract

Apple has lost the 1st instance of the iPad trademark transfer contract dispute and there’s little possibility to overthrow the judgment in the 2nd instance, therefore the worst result to Apple may be the loss of iPad trademark and being forced to change the name of the device. For the widely acceptation of iPad around the world, the stock products could be consumed by the market soon, for the new iPad is coming in next month, Apple may take the chance to change the name of iPad, either globally or just in China. On the other hand, the name change will not hinder the buying of the device in the market, therefore, Apple is not afraid of the countermeasures by Proview.

But as to Proview, the iPad trademark could be the only valuable asset of the debt-hidden company, which facing the bankruptcy, therefore, once the mark is abandoned by Apple, it’s inevitably face the vast devaluation, also Apple’s competitor will not risk the infamy to purchase the trademark, as to those knockoff manufacturers, they are not likely to make a high offer. The key element to a trademark is the reputation of the product and service behind it, and once the acknowledged producer replace the original name with a new one, the original company will no doubt be less valuable.

III. The trademark civil lawsuit and administrative complaint

Proview also filed the lawsuit against Apple over the claimed trademark infringement in Shanghai, also it has made a report and complaint to local industry and administrative organs. For these two measures, the administration report is more damaging to Apple, which may bring the fine to Apple. As discussed above, the trademark of iPad is not a malicious infringement, and all the penalty and compensation will be disclosed with the media reports, furthermore, the calculation of the penalty and compensation will be reasonable which could hardly be a whopping price, also Apple will not abandon the administrative lawsuit. Furthermore, basing on the principle of “no twice punishment on a same case”, even the industry and commerce administration of the place where Apple is located decide the punishment, and no chance to see punishment decided by other industry and commerce organs in theory but the punishment on the dealer of Apple. Besides, Apple may choose to sue Taiwan Proview after the payment of the penalty to claim liability taking by Taiwan Proview.

In conclusion, for the battle between Apple and Proview, the only way to guarantee the mutual benefits are the conciliation, in which Apple could continuously use the iPad trademark and Proview could gain the transfer fee thereby, otherwise it will leave nothing for the creditors of Proview while Apple still holds its leeway. Therefore, Apple stands to its hard line for their plans of the name change, also meanwhile they are preparing to negotiate a transfer price for Proview.

The essay is first posted on Beijing News.

Our related posts:

  1. No “iPad” Chinese trademark right for Apple after payment in the transaction, and our analysis——the Key points to the trademark transaction under the frame of China laws
  2. According to China Court’s First Instance Judgement, Apple Loses the iPad Trademark
  3. How to apply for the trademark registration in China?
  4. How to apply for the trademark record in China custom?
  5. How to improve the success rate of trademark registration in China?
  6. How to handle the trademark refusal?
  7. How to renew the trademark in China?

Author: Mr. You Yunting
Founder & Editor-in-Chief of Bridge IP Law Commentary
Partner & Attorney-at-law of Shanghai DeBund Law Offices
Email: Bridge@chinaiplawyer.com, Tel: 8621-5213-4900,
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Bridge IP Law Commentary is a website focus on the introduction of commercial laws in China, especially the intellectual property laws. All the posts here are our original works. And all news or cases referred here are from public reports, and our comments or analysis are of due diligence, neutrality and impartiality, representing our own opinions only and are our original works. You may contact us shall you have any opinions or suggestions.

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