According to the media report, the Guangdong People’s High Court announced on the 2nd of July that Apple has concluded a mediation agreement with Proview in the iPad battle, which will be finally settled with the trademark transferred to Apple on its payment of $ 60 million. After the news, the settlement amount of $ 60 million offered by Apple has soon been the focus of the public, and in this essay, we would like to discuss has Apple gained a bargain in the settlement?
For Apple, the payment may be less than its value for the following reasons:
I. Previously in 2009, Apple paid $ 3.65 million for I-phone trademark from Hanwang, a local digital product manufacturer in China, which was the record after then. And this time for the iPad transaction, Apple signed a contract covering the transfer of 8 mark ownership including the one used in mainland China of Shenzhen Proview Technology’s property, with the payment made in the mediation of this time, Apple has actually double paid for the same article and moreover the second payment is much higher than that agreed in the transfer contract. Therefore who could deny the fact that Apple has encountered a very expensive deal.
II. The expenditure paid by Apple when it lost the case shall be less than $ 60 million, and the expenditure could include:
1. the compensation claimed by Proview under the civil procedure;
2. the administrative penalty for the complaint made by Proview on iPad infringement;
3. the costs for the brand exchange for iPad in mainland China;
4. the costs for the industry transfer for the OEM is banned for manufacture.
The total amount of the above costs may be a large number, while the major two parts of it “the civil compensation” and “the administrative penalty” is preconditioned with the malicious intention to infringement. However as we know, Apple has legally purchased the trademark but was claimed the infringement due to the performance of the contract, and for these reasons, it’s less possible to see a judge of huge compensation or penalty. On the other hand, for the less stock of Apple products, the cost of brand change could not be expensive. As to the industry transfer, considering it will influence the job of millions of people, China custom house is not likely to ban the export of OEM product. Therefore, there are little chances to see the above losses totaling $ 60 million or even half of it.
III. Despite the first registration of iPad by Proview, the reputation of the mark is mainly contributed by Apple’s effort, hence it will be unfair shall Proview gained the brand premium for its first registration and unfaithful performance of the contract.
But for all existence has its reason, as one of the most successful companies, Apple may find a sound base with its knowing in commercial ration for the high offer to the iPad dispute settlement:
First, it’s obvious that the IPR team of Apple has a clear understanding of the iPad ownership in mainland China, which is of Shenzhen Proview rather Taiwai Proview who signed the transfer contract with Apple (I used to believe there may be errors in Apple’s due diligence investigation, but so far it has been found less demonstrative). If Apple could have suspended the launch of iPad in mainland China and spared more time to its IPR team, it could be foreseeable that Apple could guarantee the cooperation in mark transfer by both Taiwan and Shenzhen Proview.
But for the business opportunity ranks first in the daily running, Jobs may have a full preparation to the possible trademark risk when iPad trademark was maintained in others’ hand. And in consideration of the long lasting hot-sell of iPad and its dominance in the tablet market, the choice made by Jobs is proved to be at a right time, and to Apple the gains from an earlier start is more than the payment this time.
Second, The New iPad could soon be seen in the markets. Apple’s irresolution in the iPad battle also makes it face a dilemma in the new product launch in China, where contributes 20% of its global income. In the dilemma, Apple shall either take the risk of law to sell the new iPad with the name unchanged or to admit its lose in the dispute and change the new device’s name. Consequently, so far there has sold no new iPads in mainland China. The settlement in the case removes the last obstacle to the new iPad launch in China, and from this aspect not saying the high benefit, an exempt from its irresolution also means a big gains to Apple.
Third, supposing Apple lost the trial, the direct losses thereby suffered could still less than $ 60 million, while on the other hand, instead of the focus on operation, Apple will be distracted and exhausted by endless trademark compensation claims and administrative penalties. And with these, the indirect losses come to Apple may be more than $ 60 million. So the payment made this time, though vast, seems to be acceptable for it could give a one-time solution.
Finally, in the iPad dispute, Apple paid $ 60 million for its lesson since it chose to compete for commercial opportunities, and that may also help other transnational companies to have a more clear understanding of a difference commercial practice and judicial standard encountering them when operating in China, as well as the poor faith in performing the contract. All these will aggravate the distrust of foreign companies in local enterprises, and thereby it could naturally see a high cost in the transaction between local and foreign companies.
More iPad news, please check the following posts:
2. According to China Court’s First Instance Judgement, Apple Loses the iPad Trademark;
3. The Extension of the iPad Trademark Battle: Proview Charged iPad Distributor GOME in China;
5. Once Apple Lost iPad Trademark: Would There be A Name Change on iPad3 in China?
6. When Could Come the Decision of the 2nd Instance on the iPad Trademark Dispute?
7. Latest News: Proview Plans to Apply for iPad Import Prohibition in Custom;
8. iPad Trademark Dispute: Amazon China Stops Selling iPad on Demand of Apple;
9. Where Apple’s Confidence Comes from in iPad Trademark Dispute?
10. iPad Trademark Battle and China Corporate Personality Confusion System;
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