Proview drags Apple through a legal hailstorm

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When Yang Rongshan threatened more than a year ago that he would sue Apple in China and in the US over the iPad trademark, there was no reaction.

But since then, Proview, his struggling electronics group, has dragged Apple, the world’s most-valuable company, into a hailstorm of litigation.

Proview Technology (Shenzhen) a mainland China-based affiliate, has gone after Apple resellers in two different Chinese courts, mobilised local governments to probe iPad sales and asked Chinese customs to block exports of the tablet.

Proview Electronics (Taiwan), another affiliate of Proview International Holdings, the Hong Kong-listed holding company, has even asked a US court to declare an agreement null and void under which it sold the “global” iPad trademark to Apple in 2009.

“It is the result of some mistakes made when Apple tried to acquire the iPad trademark,” said Kenny Wong, head of the intellectual property practice at Mayer Brown JSM, the law firm, in Hong Kong.

Between 2000 and 2004, Proview Taiwan registered the iPad trademark in the European Union and six other markets. Proview Shenzhen registered it in China.

In 2009, a group of Chinese creditor banks seized the assets of Proview Shenzhen, including the trademark, after the company defaulted on $400m in loans.

Apple, preparing for the launch of the iPad, contacted Proview Taiwan through an agent without identifying itself, and the Taiwanese firm agreed to sell the agent the “global” iPad trademark for just £35,000.

What was overlooked, however, was that Proview Taiwan did not own the China trademark – Proview Shenzhen did, a fact that could have been easily confirmed by a check of China’s trademark database.

Ownership of the trademarks outside China was soon transferred, but that of the China trademark was not. But by then, Mr Yang had discovered who he was dealing with.

“If we had known at the time who we were dealing with, we would not have sold at such a low price,” Mr Yang told the Financial Times.

Apple said it had no new comment on Proview’s claims.

A Hong Kong court ruled that Proview was in breach of the 2009 agreement with Apple. But a Shenzhen court in December last year rejected Apple’s demand to have the China trademark transferred to its name.

A Guangdong court will hear Apple’s appeal against that decision on Wednesday. No ruling is expected immediately, but when it comes, it is likely to be final.

“First-instance rulings rarely get overturned,” said Chen Jihong of Zhonglun, a Beijing law firm. “If the original ruling is confirmed, Apple will be seen as infringing intellectual property rights in China.”

But Proview now wants more. It said that “once the agreement is voided” it was confident it would regain iPad trademarks around the world.

Observers also express bewilderment that the Chinese creditor banks of Proview Shenzhen are not negotiating a settlement.

Legal experts say that the creditors are happy to leave the fight to Proview as long as the company manages to extract some cash.

“These cases are all aimed at putting additional pressure on Apple and forcing it to settle,” said Zhao Zhanling, a researcher at the intellectual property centre of China University of Political Science and Law.

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