Chinese city halts iPad sales in trademark row

Local authorities in a northern Chinese city have stopped retailers selling iPads because of a dispute over the trademark for the tablet, a sign of the potential problems that Apple’s intellectual property-rights issues pose to its business in the fast-growing market.

The State Administration for Industry and Commerce in the Xinhua district of Shijiazhuang, a midsize city in the province neighbouring Beijing, is ordering all iPads off the shelves at local resellers, an SAIC official told the Financial Times.

“The sales must stop, as the ownership of the trademark is disputed,” said the official.

A local newspaper reported on Monday that the commercial authorities had confiscated several dozen iPads, but that could not be confirmed.

The crackdown comes in response to a complaint by Proview Technology (Shenzhen), a struggling Taiwanese-owned electronics company in southern China that registered the iPad trademark in China more than a decade ago and is now embroiled in lengthy legal fights with Apple over it.

When announcing annual results last month, Tim Cook, Apple’s chief executive, told investors that demand in China was “staggering” and “off the charts”. However, the company has been battling on several fronts, including criticism by labour and environmental groups of its supply-chain, difficulties in managing its distribution and retail chain, and the trademark dispute.

Proview Electronics (Taiwan), another affiliate of Proview’s Hong Kong-listed group parent, was the first to register the trademark in a dozen other markets including the European Union and several Asian countries before 2004. Proview Taiwan sold those trademarks to Apple in 2006. Only after Apple started selling the iPad in China did it realise Proview Shenzhen had a claim to the trademark there.

In December, a Shenzhen court rejected a demand by Apple to have the ownership of the China trademark transferred to its name. Apple has appealed against the decision, but legal experts have said the appeal is unlikely to change the outcome of the court case.

Proview Shenzhen said it felt encouraged by the court ruling, and has renewed attempts to fight Apple on the retail front. Late last year, the company filed two lawsuits against large Apple resellers in Shenzhen and Huizhou, two southern Chinese cities. Last week, it requested a temporary restraining order over iPad sales in a Shanghai court, which has yet to decide on it.

Proview Shenzhen has also filed multiple complaints to local commercial authorities against retailers offering iPads, demanding sales be frozen because of the pending legal action. The Shijiazhuang move marks its first small success in its long drawn-out battle.

Apple’s iPads remain on sale at electronics retailers in Beijing and many other cities. An Apple representative in Beijing did not respond to a request for comment.