Last updated: February 20, 2012 11:38 pm

Apple threat to Proview over iPad dispute

Apple levelled a new legal threat on Monday against the struggling electronics company that has claimed it owns the iPad name in China, as a court in southern China ordered a large retailer to stop sales of the gadget.

The festering dispute, which has cast a cloud over Apple’s sales in one of its biggest potential markets, is expected to come to a head in the next two weeks, with a court in Guangdong due to hear the US company’s appeal against an earlier ruling that found against it.

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Apple bought the iPad trademark for several countries from Proview Taiwan, an affiliate of a struggling Hong Kong-listed electronics company, in late 2009. However, while the agreement included two trademarks in China, it later turned out that these were owned by a separate affiliate, Proview Shenzhen.

While Apple insists that the China trademark was included in the acquisition – a view a Hong Kong court backed last year as it issued an injunction in support of the US company – Proview disagrees, and is so far being supported in its position by mainland courts.

In a letter on Monday to Rowell Yang, chairman of Proview Shenzhen, lawyers for Apple threatened action for defamation and other actions that they said were damaging the company’s business as a result of the trademark dispute. The letter, a copy of which was seen by the FT, claims that Mr Yang himself knew of an authorised transfer of the trademarks to Apple, but had continued to make “false and misleading statements” by claiming the Shenzhen unit had known nothing about the sale.

Mr Yang could not immediately be reached for comment on these allegations.

The letter followed a ruling on Friday by the People’s Intermediate Court in Huizhou, a city in the southern province of Guangdong. The court found that a local branch of Sundan, a Chinese electronics retail chain, and Apple were infringing upon the rights of Proview Technology (Shenzhen), by selling the device, said lawyers for Proview and Sundan.

Sundan itself did not reply to a request for comment. The court could not be reached for comment.

The judgment’s effect is likely to be limited because it could potentially only stop iPad sales by one retailer in one city, and Sundan can appeal against the decision within 15 days. But the ruling is likely to give Proview a boost in its attempts to fight Apple on all fronts. Alongside the Huizhou case, Proview had also sued another big iPad retailer in Shenzhen in December. That case is still pending.

Xie Xianghui, a lawyer working for the Shenzhen company, said that following the Huizhou ruling, Proview’s legal team was planning more such court cases against resellers.

The decision is the latest step for Proview in its escalating battle with Apple. Last week, industry and commerce officials in a northern Chinese city stopped retailers from selling iPads citing the trademark dispute. In December, a Shenzhen court rejected Apple’s request that the China trademark be transferred to its name. Apple has appealed that ruling.

A Shanghai court is set to hold a hearing on Wednesday on a request for an injunction against iPad sales there.

Chinese customs has also yet to act on an attempt by Proview to get imports and exports of iPads through Chinese ports blocked – the measure with the largest potential for damage to Apple because all iPads that the US company sells worldwide are manufactured in China.

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