BEIJING—Apple Inc. defended its claim to the iPad name in China before a high court
Wednesday, alleging that Proview Electronics Co. of Taiwan knowingly
signed away the Chinese rights to use the trademark and is trying to
unfairly reap financial benefits.
The Cupertino, Calif., computer and gadget maker—which on Tuesday
invited the media to a March 7 event widely expected to mark the
unveiling of the latest iPad model—argued Wednesday that it previously
purchased all of Proview's rights to the iPad trademark, including one
for the name "IPAD" in mainland China owned by another subsidiary of Proview International Holdings Ltd. based in the southern Chinese city of Shenzhen.
"Proview's actions, driven by its own financial benefits, are
conspiratorial," Apple's attorneys said, according to a Twitter-like
microblog feed maintained by the Guangdong Provincial High People's
Court. Proview "refused to execute" the contract over the trademark
transfers, the lawyers said.
Proview Electronics responded that Apple, "considering its economic
power, is setting a terrible example in the Chinese intellectual
property market," according to the court's microblog feed.
The high court hasn't yet ruled on the case but said Wednesday
afternoon that a decision was pending. A lower Chinese court in December
sided with Proview Electronics, prompting Apple to appeal to the high
court.
"We are disappointed by the result from the first case," Apple
argued, according to the microblog, adding, "it is the management of
Apple that creates the value of this trademark."
"We are pretty firm on the ownership of this trademark, but we are
open to talk about other issues such as compensation," said Xie
Xianghui, an attorney for Proview Electronics. A spokeswoman for Apple
reiterated its earlier statement that Proview "refuses to honor" the
agreement it made several years ago and that the case is still pending
in China.
If the court upholds the earlier decision and the companies fail to
reach an agreement, Apple might face more challenges in one of its most
important markets. It faces a separate lawsuit in Shanghai filed by
Proview in which it sought to halt sales of the iPad in the city. The
Shanghai court has agreed to postpone proceedings until the Guangdong
court makes its decision.
Foreign companies have long complained about poor
intellectual-property protection in China, mostly because of the rampant
piracy of everything from handbags to pharmaceuticals to digital music
and movies. But Apple's current battle highlights a new type of
challenge for rights owners as Chinese companies and Chinese courts
become more sophisticated in dealing with intellectual-property law.
Though Apple has faced trademark challenges before, its dispute with
Proview has fast become one of the most high-profile trademark battles
in China—where, as in the rest of the world, Apple is the leading
tablet-computer vendor in the market, according to research firm IDC.
Its iPhones have been popular as well, selling out quickly from stores
and sparking fights between customers outside its retail stores.
Proview International, which has filed for bankruptcy, and its
subsidiaries own the trademark for "IPAD" for a computer with rounded
edges launched in 1998 that bears some resemblance to old models of
Apple's Macintosh desktop computers.
In 2009 Proview Electronics sold a portfolio of related trademarks
registered in several regions, including Taiwan, Indonesia and Mexico.
Apple says that the deal included China.
Proview Electronics argues that the deal didn't encompass trademarks
owned by the Shenzhen subsidiary because the Taiwan subsidiary doesn't
have the right to bargain for those trademarks on the Shenzhen
subsidiary's behalf. The companies bickered over the issue until Apple
sued for the trademarks in Guangdong last year.
Proview Electronics said an employee who was involved in the 2009
trademark sale, named Hui Yuan, "is a staffer of Proview Shenzhen but he
didn't represent the company, and he had no rights to deal with the
trademark." It added, "Why didn't the appellant come directly to Proview
Shenzhen if they really wanted to complete the transfer?" Apple said in
court that the staffer participated in the entire process.
Proview Electronics has also sued Apple in a U.S. court, accusing it
of fraudulently buying the trademark by not explaining its true purpose
and asking for damages of as much as $2 billion. When the spat made it
to Hong Kong, a court there ruled in Apple's favor.
China last year surpassed the U.S. to become the world's largest
personal-computer market by quarterly unit sales, and is already the
world's largest mobile and Internet market by number of users. Apple said last year that its stores in the country are among the company's
most high-traffic and high-revenue stores anywhere.
The dispute has generated heavy traffic on China's popular
microblogs, the nation's most open countrywide discussion forums, with
some users following live updates about Wednesday's court proceedings
online and posting comments cheering on the sides.
online.wsj.com
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