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The iPad has very quickly become a household name in most of consumer society. But who knew that a Chinese company had registered the trademark as early as 2001? Indeed, perhaps Apple should have known.

And indeed they did. As we know, one of the first rules of protecting Intellectual Property is that before any new product or service is marketed, relevant markets should be extensively researched and trademarks cleared. Of course, Apple knows this too. China, one of the largest commercial markets in the world, would be one of those relevant markets in Apple‘s case. However, the sticky wicket is that the agreement to transfer the rights to the China trademarks was made between IP Application Development Limited (on behalf of Apple) and Proview Electronics, a Taiwanese company under control of one Yang Long-San (Rowell Yang) who filed for bankruptcy in August of 2010, who also controls or controlled during the time of the agreement Proview International Holdings Limited and Proview Electronics in Taiwan, as well as Proview Technology in Shenzhen and Yoke Technology in Shenzhen, where the Proview-companies all seem to belong to the same group.

The problem is that the agreement was made between IP Application Development and Taiwanese Proview Electronics, but when the iPad launched in China in 2010, Chinese Proview Technology in Shenzhen declared they were the legal owners of the China trademarks – not Proview Electronics in Taiwan. Proview Technology in Shenzen thus claims ownership over the iPad trademark, despite Apple‘s claims that they legally acquired the valuable marks via the agreement in seven individual countries, including China, as well as the rights to the Community Trademark in Europe, for the equivalent of £35,000 ($55,000) in 2009. To make a tricky situation even stickier, neither party has released the full contents of the contract. However, e-mail correspondence between the two parties was recently leaked, which includes notarised documents wherein it says that „Proview warrants that the Trade Marks are registered, that it is the unencumbered sole owner of the Trade Marks, and that it is not aware of any opposition, cancellation, infringement or any other proceedings being brought against the Trade Marks by any third parties“.

And so it came about that Apple brought Proview to court, both in Hong Kong and in Shenzhen. A ruling from the Hong Kong court from last June ruled in favour of Apple, going as far as stating in Reasons for Decision from July 14th, 2011, that the defendents in the case* "combined together with the common intention of injuring Apple and IP Application by acting in breach of the Agreement. Proview Holdings, Proview Electronics and Proview Shenzhen, all clearly under Yang‘s control, have refused to take any steps to ensure compliance with the Agreement [...]".

However, the Shenzhen court ruling from last November found differently, stating the agreement was invalid as the actual owner of the marks in question, the Shenzhen affiliate, had not been present at any negotiations concerning the trademarks. Commentators have attributed this obvious difference to the fact that even though Hong Kong is a part of China, they have a separate court system, which does seem to be overly simplified. No doubt, Apple will appeal the Shenzhen ruling, but iPads have already begun to disappear from shelves in China, and not because the sales figures are up.

It therefore seems that Proview is trying to claim ownership on a technicality, but common judgement has that Proview has a clear motive in the case. According to Business Week, the company is in deep financial trouble. As pointed out above, the Hong Kong ruling from last June claims that Apple was deliberately mislead by Proview during the buying process. Indeed, Proview has filed for bankruptcy, which has made commentators believe that the motive is monetary gain, pure and simple, and Proview has ever so politely – and openly - put a steep price tag on the marks. Estimated prices range from $10 million to $ 2 billion, the former suggested by Proview when the discrepancy arose. The latter figure has been thrown around as the worth of the marks for the bankrupt company, with creditors possibly attempting to maximise the worth in an attempt to recover as much assets as possible.

But the plot thickens – iPads are manufactured in China and both import and export has could be halted while the court proceedings get on. Obviously, therefore, Apple faces a huge loss - Apple sold its products for approximately $12.5 billion in China from September 2010 to September 2011. Proview, on the other hand, has argued that Apple deliberately decieved them in the process and that they did not know that Apple was behind IP Application Development Limited (a.k.a. IPADL - perhaps a tad obvious). Arguably, the sellers would have demanded higher figures had they known Apple was the buyer. In contrast, it could also be clamed that Apple was being smart when not revealing their identity, thus attempting to protect themselves from (inadvertently) giving potential competitors information about trademarks they were busying themselves with. Indeed, Apple‘s lawyers before the Hong Kong court argued exactly that.

It is an interesting twist, as the case centres not around infringement in a traditional sense, as might perhaps be somewhat expected when high-tech companies litigate in China, but around rights to a trademark made world-famous by Apple but registered by a manufacturer before the i-generation was reality. However, the threat of the export ban, and the fact that iPads have been removed from retailers in several locations in China, holds the threat of a huge financial loss over the heads of Apple, perhaps making them more willing to settle, which would certainly help Proview.

But more is at stake than Apple‘s revenue. Indeed, since the pads are manufactured in China, Chinese jobs are at stake as well. Moreover, the manufacturer, Taiwanese Foxconn Technologies Group, plans to open up shop in Brazil, thus adding jobs to the estimated million it already fills in China, which is economically vital during a global recession. A local trademark dispute has thus become global, once again underlining the importance of IP.

Updated: Reuters reports that Proview has filed a suit against Apple's iPads, aiming to get them off shelves in Shanghai. Proview's tactics are therefore not only focused around claiming ownership over the mark based on their claim that IPADL's purchase of the trademarks in China was not legally binding, but has also launched a campaign of its own, aiming to rid China of the much-contested pad. Meanwhile, the appeal of the Shenzhen case will be heard on February 29th, at Guangdong High Court.

*Defendants:

1. Proview International Holdings Limited
2. Proview Electronics Co. Ltd
3. Proview Technology (Shenzhen) Co., Ltd.
4. Yang Long-San, Rowell
5. Yoke Technology (Shenzhen) Co. Ltd.

Images 2 and 3 from All Things D
Sources:

• SkyNews Australia
• Businessweek.com
• Wall Street Journal
• CNET - Might Apple lose the iPad trademark? Welcome to the twilight zone
• CNET - Paperwork from Chinese iPad trademark sale emerges
• PC World - Apple faced exploitation in iPad trademark dispute Hong Kong court ruled
• All Things D - Apple: China's Proview Trying to Weasel out of iPad Trademark Deal
• Official page of Shenzhen Court
• Hong Kong Court Reason for Decision