According to the Enterprise Bankruptcy Law, “where an enterprise legal person fails to pay off its debts, and that if its assets are not enough to pay off all the debts or if it is obviously incapable of paying off its debts, its debts shall be liquidated in accordance with the provisions of the present Law.” That is to say the bankruptcy could only be applicable when the company’s assets are not enough to pay off its debts or it’s obviously incapable to pay off its debts. In the case, it’s arguable to say Shenzhen Proview is under such situations. For one hand, Fubon claims Shenzhen Proview has not made the payment on its debt and seems to be incapable to make the payment, while on the other hand, Shenzhen Proview disclaimed the accusation and insisted the iPad trademark is valuable enough to clear all the debt once it could be realized, and therefore it shall not be liquidated under the bankruptcy procedure.

It’s also provided in the Enterprise Bankruptcy Law that, even there submits the objection from the debtor, the applied court shall adjudicate on the case filing within 10 days after the expiration of the objection period. And in practices, the court will make such adjudication within 30 days after the application of bankruptcy. To the case, Shenzhen Proview is obviously noticed by Shenzhen Intermediate Court and has made the objection, but the court did not make the decision on the acceptation within the legal period.

By our experience, in addition to the creditor’s opinions, the court will also take the opinions of the enterprise, other creditors and the employees of Proview into account once the liquidation is under proceeding. The main reason of the decision delay may from the court’s consideration of the social stability issues concerning the arrangement of the employees and the bad debts of the bank.

We have also noticed that, as reported by the news, the assets of Shenzhen Proview has been frozen by its 8 creditors, who also make its influence in the iPad trademark battle and has higher credit right to Shenzhen Proview than Fubon. These banks shall be more active to claim the bankruptcy of Shenzhen Proview, but till now no intension to bankruptcy of Proview has been implied by them, that means the main creditors of Shenzhen Proview would not like to see Proview’s going broke.

For what reason did they choose to stand by? The main reasons are follows:

I. The iPad trademark dispute in the Guangdong Higher People’s Court may be delayed by the bankruptcy application

According to Article 22 of China Civil Litigation Law, the un-judged cases concerning the debtor shall be adjudicated suspension till the assets of the debtor has been taken over by the administrator after the acceptation of the bankruptcy application. And for this reason, once the Shenzhen Intermediate Court judged the bankruptcy of Proview, the lawsuit on the iPad ownership in the Guangdong Higher Court will necessarily be suspended till the administration to take over the lawsuit position of Proview in the lawsuit.

II. iPad trademark will not be transferred even the bankruptcy is not claimed now

The creditors of Shenzhen Proview will consider the application of bankruptcy shall Proview is at a disadvantage position, while Shenzhen Proview has won the 1^st instance and the 2^nd instance is near the end with only 2 months remained. Therefore, the main creditors of Proview would not like to see the suspension of the lawsuit, for the iPad trademark in China has been frozen and by no means to transfer to a third party. Once Shenzhen Proview is supported by the court of 2^nd instance, the creditor could claim the realization of the trademark to pay off the debt. That means the iPad trademark has already been in the pocket of the main creditors regardless of the bankruptcy procedure, who would like to see no newly cropped up problems.

III. Apple is also afraid of the suspension

In our opinion, the suspension of the hearing is also unfavorable to Apple also. The reason is that with the coming iPad3, Apple would like to see a certain judgment and once it is decided to lose the trademark, Apple may change the device’s name in China to avoid the infringement, while once the final decision is uncertain, Apple could face a dilemma situation on the name change, to change the name to confess its losing in the battle or to continue using the name which may bring a higher compensation, both from the civil lawsuit and the administration of industry and commerce, when the final decision supporting Proview is made.

In a word, acceptation of the bankruptcy application by Fubon is unfavorable to both Proview and its main creditors, and is also a bad news to Apple, therefore, we estimate it’s less possible for Shenzhen Intermediate Court to accept the bankruptcy application.

Other recommended posts on our website:

1. The Actual Term of Trademark Registration in China
2. How to Apply for the Trademark Record in China Custom
3. How to improve the success rate of trademark registration in China?
4. Matters for Attention in Trademark Refusal Review in China
5. Introduction of China’s Legal System of Trademark Renewal
6. Introduction on the Regulations concerning the Capital Contribution in IPR or Domain Name in China
7. The Copyright Registration in China Could Be FREE?
8. China Copyright Protection Term Longer than EU’s?
9. Matters for Attention in the Patent Preliminary Injunction Application in China(I)

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.