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Apple’s Settlement with Proview over “iPad”

Apple’s Settlement with Proview over “iPad”

After more than two years since Apple’s release of the iPad in the US, they actually own the name “iPad”. In 2001 a Taiwanese company called Shenzhen Proview Technology trademarked the name “iPad”. The statement is that Apple paid the company $55,000 in 2009 but the Chinese authorities ruled last year that Proview still owned the name. Very recently this dispute was ended by Apple by transferring $60 million to the Guangdong High Court.

China is Apple’s second largest market and is showing signs of growing much more in the next few years so gaining this title is a big deal. Proview was hoping to get as close to $400 million out of Apple but as they have their own debts to pay they agreed to settle for the 60.

The statement from Proview was that had Apple negotiated in bad faith in earlier deals. Claiming that Apple used a shell company called IP Application Development (IPAD) to hash out the deal. According to them IPAD promised not to make competing products under the iPad label. They even went as far as to say the negotiator concealed his allegiance to Apple, gave them a false name, and claimed to represent IPAD. This all seems a little fishy, but we may never get the truth.

A search into IP Application Development shows connections with an Apple shell company called Slate Computing. From what can be seen there is no hard evidence connecting the two but it appears IPAD and Slate were applying and attempting to gain the iPad internationally as early as 2010 so it is certainly curious.

This ordeal has not hindered iPad sales or slowed the demand for the high priced tablet in China. Last year alone there were as many as 22 fake Apple Stores found in a single city. We don’t know if the products were actually Apple products or not, but what this proves is that there are vendors willing to sell whether the product is real, fake or illegal.

This Whole argument was apparently focused on the assumption that Apple gained the name in China when Apple make a deal with a Proview affiliate in Taiwan. They state that the agreement was did not include China despite being part of the same Company.

Worry is developing in the Chinese court that despite the fact they can resolve intellectual property disputes, that the negative outcome for Apple might dissuade other companies or investors from moving in on China. As there wasn’t a formal ruling in the Chinese court it is difficult for companies to gauge how these disputes will be handled in the future. All this shows us is that the Chinese would rather push for a settlement rather than an actual ruling.

For those that didn’t know iPads are all made in China as a vast portion of the rare metals used in its production are only being mined in China. This is curious as it hints towards a monopoly that China has barely hidden.

Another twist in this curvy ruling came from Hong Kong. The separate court system stats that both Proview and the Taiwan company were very clearly controlled and ran by the same businessman. The Hong Kong judge stated that the companies worked together with the goal of hurting Apple. This held no weight as the Hong Kong court system is separate from the Chinese system.

It appears that Apple ran into a similar trademark dispute with Cisco Systems Inc. in 2007. Cisco was using the trademarked name “iPhone” for its internet-connected desk phones and after Cisco laid out their law suit the two reached a undisclosed settlement.

This whole fiasco is now at an end which is great for Apple, but it sheds some light on the some interesting facts. It is important to point out that Proview had owned the trademark for years before Apple moved in unlike many people who are referred to as Trademark Squatters. These guys register the names of products sold abroad and then demand payment for Chinese rights to their product as they own the trademark. The most important thing to take away from this experience is to make sure you check and be wary of your transactions and contracts. Do it right the first time or you may be paying a lot just for a slip up. On the bright side Apple is improving the working conditions of hundreds of thousands of Chinese workers.


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