Chinese iPad Trademark Battle Hits California Court

judgecorp writes "The Chinese company Proview is taking its trademark case against Apple's iPad to the Californian Courts. The company acknowledges it sold the IPAD name to Apple, but denies Apple has rights in China, and has accused Apple of underhand tactics." Says the article: "Any kind of ban in China would obviously be a major headache for Apple, since that is where most of the iPads are manufactured. If Proview is successful, it would effectively stop worldwide distribution of the tablet, and delay the launch of the iPad 3."

Comments

Proview is the Dissed Wife

[retroworks]

Ten years ago, Proview was one of the top 5 contract manufacturers, beside companies like Wistron, Foxconn, BenQ, Lenovo, etc. Where some (like Wistron's Acer and Foxconn and Lenovo) managed to grow larger than their contractors (Dell, Apple, Gateway, IBM, etc.), Proview was stuck in the CRT assembly market and never re-emerged. The company made a billion for awhile re-manufacruring and refurbishing old monitors for resale in India, Africa, etc., but that business was labelled "ewaste" and the company went bankrupt in 2007 I think. Now it's an angry wife and wants some of Apple hubbie's moola.

Re:Proview is the Dissed Wife

[jo_ham]

I don't know - are you implying that Apple stole the IP?

They bought the rights to the trademark, and only later (years after the deal) has the original owner (who had full knowledge and participation in the original deal) decided that the rights don't cover China after all, right about the time when they're going through financial difficulty and need cash urgently. It's very convenient.

Re:Proview is the Dissed Wife

[jo_ham]

Well, the story is pretty cut and dried - they bought the worldwide rights, and Proview's parent company signed off on that. Now they don't believe China is covered under "worldwide".

Or rather, they don't consider that the subsidiary that sold the trademark to Apple's shell company had the authorisation to sell the Chinese rights, despite the parent being party to, and signing, the deal.

Either way, it's something of a desperate grab, since they (Proview) have also already lost a court case on this in Hong Kong.

Calling it "stolen" is a little biased, given that they believe they bought the worldwide rights (they have documents and everything, stating that) but now apparently they didn't... or maybe they did! Who knows!

Lawyers

[girlintraining]

Well... this is ironic. A company in China is suing one in the US for copyright infringement.

Re:Lawyers

[stanlyb]

In this case, i vote for the copyright. Let them eat the same cake. Is it not ironic, China to defend the copyright, and USA to ignore it!

Re:Lawyers

[symbolset]

Actually, trademark infringement, which makes it even more ironic.

Re:Lawyers

[Anonymous Coward]

OK, there are patents, there are copyrights, and there are trademarks. This is a trademark case. Let's be sure we get the nomenclature right because there are enough people confusing the three distinct parts of IP law as it is.

Re:Lawyers

[UnknowingFool]

Because if you knew anything about this situation, you wouldn't be so quick to judge. Facts not in dispute:

• Proview owned the iPad trademark previously.
• Apple paid for the trademark in 2009.
• Apple used a shell company to acquire the trademark so that Proview did not know who was buying it.

What is in dispute: Since Apple used a shell company, Proview says the sale is null and void. I don't know if the contract stipulates Proview had to know the buyer was or if Chinese law has clauses that can invalidate a contract under such conditions. Certainly in the US, it is not a standard clause as corporations buy things with shell companies all the time. For example, Disney was able to build DisneyWorld in Orlando by securing the land rights quietly otherwise if people knew a major corporation was buying the land, they would have raised their prices.

Re:Lawyers

[davester666]

That's only here in the US. In China, where they are also suing Apple, they are claiming that a subsidiary of theirs (a Proview subsidiary) sold the rights to iPad only for a single area within China, and did so without the knowledge or permission of headquarters.

Re:Lawyers

[blind monkey 3]

Not acurate at all from my understanding of the case:
Proview Electronics, a subsidiary of Proview International Holdings, agreed to sell the global iPad trademark in 2006. The rights were sold to a company called IP Application Development (‘IPAD’), for $55,104. The contracts were drawn up by Apple's legal team, listing all trademarks including the one for China, the list was supplied by Proview Electronics (taiwan).
In 2010, Proview Shenzhen (also a subsidiary of Proview International Holdings) began the process of suing Apple for trademark infringement over the ‘iPad’ brand. Proview Taiwan did not own the China trademark, Proview Shenzhen did and not sign over the rights to Proview Taiwan (which had no right to sell it) and did not enter into a contract with Apple to sell it.
Apple claim a mistake was made when the contract was drawn up listing the Trademark as owned by Taiwan but the chairman of both companies was the same person and was fully aware that the China trademark was included and gave permission to sell it, they also claim that they dealt with Shenzhen (it was the Proview Shenzhen people that told Apple Taiwan owned the trademarks).
Apple has had a couple of minor victories in Hong Kong and Taiwan that allows them to keep using the name till the ownership is dicided.
Apple’s own case against Proview that the company was infringing on its trademark with their own product was rejected at the end of last year by a court in Shenzen. Apple is appealing this decision.

The lawyer involved in the assignment of rights from Proview to Apple Inc didn't check the details deed of Assignment correctly and the trademark rights in China were not assigned.
I believe the owner's eyes lit up when he saw that Apple was the real purchaser of the name and is taking full advantage of "buyer beware".
Another twist is apparently Apple's shell company lawyers emailed Proview stipulating that the trademark will not be used in competition with Proview, it was needed only because it was the company name. Apple are not denying this, merely saying it doesn't matter what the lawyers said - this is part of the Proview lawsuit recently filed in the U.S.

Re:Lawyers

[JBMcB]

Over on allthingsD they have the contracts for everything available for download. China is clearly listed in the list of marks being transferred. It may be that Taiwan did not, in fact, own the rights to the mark in China, however, the legal consul handling the sale was from the Shenzen office, so it's going to be pretty hard for Proview to argue that Taiwan was going rogue in selling the Chinese rights.

Translation

[whisper_jeff]

Translation: Look, we know we sold you the trademark and you legally have the right to use it and all but we're failing as a company, about to be de-listed from the stock exchange and _REALLY_ need the money so would you just shut the hell up and hand over some cash.

Yeah, a failing business certainly makes companies pull some stupid, desperate stunts...

from what I've read already

[v1]

Apple has a long-standing tactic of creating shells to do their brand and part buying, to make it difficult for the rumor mills and competitors to figure out what Apple is up to. And it sounds like they're complaining that they sold the iPad name to a company they didn't realize was buying for Apple.. (otherwise they'd have no doubt have tried to charge them more for it)

Too bad. I have no pity for people that like to scheme with "you have more money, so I'm going to charge you more!" getting beat at their own game. These people are only upset at themselves for not recognizing the value of what they were selling, and want someone to cover their loss as a result.

This is no different than a buyer trying to go after a seller for overcharging them for something after they realize they paid too much for it. Just the shoe's on the other foot.

Re:from what I've read already

[Dak RIT]

Agreed. Either the trademark was worth $50,000 to you or it wasn't. It should not matter who was buying it. Nor is there anything illegal about creating a shell company to do acquisitions like this.

They are trying to claim that they were told the name wouldn't be used in a similar market, but if that's the case they should have had that in writing in the contract.

This case is not going to go anywhere.

Re:from what I've read already

[Solandri]

AFAIK, all big companies do this. Microsoft did it when they bought a domain name from my friend. Harvard did it when they bought real estate to expand their campus.

Re:from what I've read already

[Trahloc]

Wait wait, let me get this straight. An *anonymous coward* is saying it is unethical to hide ones identity?! Oh man talk about the pot and the kettle.... There is nothing wrong with creating a company to either A target a specific market or B do your purchasing. Hell that was the *original* purpose behind these things. You incorporated with a charter to get ABC goods to XYZ shore and that's it. The company ceased to exist thereafter.

Prescient call by Vivek Wadhwa, eh?

[theodp]

BusinessWeek, Jan. 10, 2011: China Could Game the U.S. in Intellectual Property: Now China may do with intellectual property what it did with capitalism: adapt our system and beat us at our own game.

Disney did the same

[wisebabo]

I have no idea whether or not it constitutes fraud to hide behind a "shell" company (although common sense tells me it isn't fraud, I mean a small company could've bought the trademark and then Apple bought it from them what's the difference?).

But I do know that Disney, when he was buying up (seemingly) most of Florida for Walt Disney WORLD used exactly this tactic to acquire the (tens of thousands?) of square miles of land he needed. He didn't want to repeat the fundamental mistake of building a theme park but not the land around it thus allowing (other) developers to get rich. (I understand that finally that Japanese American family that owned a strawberry farm right next to Disneyland finally sold, probably for a HUGE amount).

I never heard of Disney getting sued let alone losing.

So this, to me, doesnt seem to be fraud, not unless they lied about something. (I understand that Proview claimed the purchasers said they wouldn't have a competing product; well not only is the iPad completely different from what Proview made, but Proview hasn't made it for years).

Houston, we have a problem

[phonewebcam]

Steve Jobs personally was the only one who knew how to operate the reality distortion field. Now he's gone, it's thrashing about wildly causing all manner of worldwide chaos, such as this zombie Chinese company thinking it still owns the rights to the name it sold to someone because, err, that someone since sold it to Apple.

setting sell price based upon buyer money

[YesIAmAScript]

Is no more ethical than pretending you are poor.

The situation you describe is no different than the old story of getting flat tire at the only gas station in town when you ask the attendant how much it will be to fix the tire he says "how much do you have?".

The seller sets a price, when the buyer meets it a deal is done. Each tries to get the best deal from the other. If the seller would try to bring buyer desperation into the pricing policy, I don't see anything wrong with the buyer doing what they can to eliminate it as a factor.

Wouldn't you be upset if you stood in line at the store to buy the same bottle of pop as the person in front of you and the cashier said it would cost you more because you look like you have more money?

Real kicker

[MisterSquid]

Apple has a long-standing tactic of creating shells to do their brand and part buying, to make it difficult for the rumor mills and competitors to figure out what Apple is up to.

Not only that, but China also has a legal culture where companies use shell companies to make purchases. According to Reuters:

Industry executives have said employing special-purpose entities to acquire trademarks is a frequent tactic in China.

Not that this will prevent Proview from wanting to get more from the deal after-the-fact. In my opinion, the real kicker's gotta be that the name of the shell company Apple used.

Proview accuses Apple of creating a special purpose entity -- IP Application Development Ltd, or IPAD -- to buy the iPad name from it, concealing Apple's role in the matter.

Re:Proview has no claim outside mainland China

[517714]

Don't you mean iANAL?