China Prepares to Fine Apple, Possibly Ban iPad for Trademark Abuse
February 7, 2012 12:09 PM
comment(s) - last by
Apple will have to pay $38M USD and likely be forced to pay new licensing fees unless it can win its appeal
Apple, Inc. (
) is in hot water over its use of the trademarked name "iPad". In fact, appeals pending,
a lawsuit loss
has put it at risk of a complete sales ban in the world's largest consumer electronics market -- China.
Chinese holding company Proview International Holdings ltd. (
) sold Apple the Chinese market rights to use the trademark for a mere $55K USD in 2006, via an Apple subsidiary IP Application Development. Apple has increasingly turned to using shell companies to sue people and buy patents, a
traditional method of the patent troll
Of course Proview, ostensibly had no idea that it was really dealing with Apple, or that Apple would use the trademark towards a billion dollar product. Of course Apple did exactly that, and today the tablet is a much-coveted piece of electronics in the world's largest nation -- one that some people would
(literally) trade a kidney
Proview looked to settle with Apple out of court, but Apple's lawyers apparently did not take the company's threats seriously. So Proview called Apple's bluff and sued it in Shenzhen Intermediate People's Court over the trademarks iPAD (China Trademark No. 1682310) and IPAD (China Trademark No. 1590557). Proview sought 10B yuan (RMB) ($1.586B USD) in damages [
The iPad 2
launched in China for a whopping 3.688K yuan (RMB) (~$585 USD) for the 16 GB Wi-Fi version [
], $85 USD more than its U.S. retail price. This is actually slightly lower than the even more inflated price points of the first generation model. The iPad has suffered slightly from its
incompatibility with local 3G standards
. Internationally, the iPad (first gen.) sold 15 million units in 2010. The iPad 2 sold 40 million units in 2011 [
Apple far ahead
of would-be Android tablet competitors.
The iPad is the hottest tablet in China. [Image Source: EPA/Diego Azubel]
The crux of Proview's argument is that it sold the rights to IP Application Development -- not Apple.
Apple argued that Proview was in the wrong and that it fully owned the trademark, via a transfer. It sought 4M yuan (RMB) ($634.5K USD) in legal fees, for what it says was a defense against false claims.
But the local court
did not see Apple's logic
, ruling it to be in infringement. It is on the verge of ordering a 240M yuan (RMB) ($38.07M USD) fine [
]. Emboldened, Proview has filed more lawsuits against Apple's retail partners, including one that will be heard in court in the Pudong district of Shanghai later this month.
Proview Shenzhen's lawyer Xie Xianghui demands that in addition to paying the fine leveled by the Shenzhen court, Apple must either pay a licensing fee or stop selling the product. And it wants an apology, for what it sees as Apple trampling its IP rights.
States Mr. Xie in the
, "We ask the court to stop selling and marketing for Apple's iPad in China. We also demand an apology."
Xiao Caiyuan, another lawyer, told the
, "We have prepared well for a long-term legal battle."
But Proview may need outside cash from another Chinese firm or venture capitalists in order to fuel a successful IP war against Apple. The holdings company, which owns some display manufacturing capacity in Taiwan, appears to have listed its website for
Proview's webpage appears to be for sale -- which could be a sign of cash troubles.
For those who fear the Shenzhen court may be favoring the local firm, consider that Shenzhen is far more reliant monetarily on Apple than on Proview, so the ruling indicates that Proview must have a very strong case.
Apple is indirectly one of the biggest employers in Shenzhen, using the majority of the manufacturing capacity of
the local electronics mega-factory complex
-- owned Hon Hai Precision Industry Co Ltd. (
) subsidiary Foxconn -- to produce its iPhones and iPads. Apple has been criticized for reportedly
ignoring poor labor conditions
at the factory, whose employees describe it as a
disputes these claims
Workers assemble electronics at a Foxconn factory. [Image Source: Kotaku]
One thing is for sure -- the Proview case illustrates the danger of firms dealing with holding companies, as you never know who you're dealing with. As an IP firm you would expect that would be something Proview would be aware of, given that IP-heavy firms are among the biggest abusers of shell companies.
As this is an oft-occurring headache in the tech industry, the real question his how to stop shell company obfuscation.
The answer seems simple; just limit the number of subsidiaries that any one corporation can hold. This would go a long way to preventing this kind of potential abuse and reduce these "he-said-she-said" legal spats.
This article is over a month old, voting and posting comments is disabled
RE: Silly precedent
2/9/2012 10:14:48 AM
It's people like you, who deny the painfully obvious, who encourage people to rip off other devices with no thought or effort put into coming up with their own designs, leading to small manufacturers being unable to protect their innovative designs from the hands of greedy corporates.
Design rights are there for a reason, don't be so ignorant. Recent is also entirely subjective.
And no device was ever banned for being minimalist or a rectangle. The Galaxy Tab was banned for being too similar to the iPad. The revised tab (which is also minimalist and rectangular) was deemed OK as it had at least some semblance of originality.
RE: Silly precedent
2/9/2012 11:33:29 AM
don't be so ignorant
Good advice, perhaps you should heed it as well.
The Samsung, in yours and Apples
, was to similar, in reality it wasn't no matter how many times you or Apple claim it. They even TRIED to get the NEW tablet banned.
So many differences it's not even funny.
“Then they pop up and say ‘Hello, surprise! Give us your money or we will shut you down!' Screw them. Seriously, screw them. You can quote me on that.” -- Newegg Chief Legal Officer Lee Cheng referencing patent trolls
Apple CEO Tim Cook Fires Back About Asian Suppliers' Worker Abuse Claims
January 27, 2012, 1:15 PM
Report: Apple's Suppliers Continuously Violate Code of Conduct, Apple Does Nothing to Change It
January 27, 2012, 4:24 AM
Apple Has Another Blowout Quarter with $13B in Profit; Sells 37M iPhones, 15M iPads
January 24, 2012, 5:02 PM
Quick Note: Tablets Sales Surge to 15.5m in Q3 2011, Apple Still on Top
January 5, 2012, 3:11 PM
Apple Wins In-Call App Switching Patent; USPTO Blatantly Ignores Prior Art
December 21, 2011, 10:45 AM
Smart Security Cameras: 5 Good Choices For Any Budget
July 25, 2016, 7:13 PM
Top 5 Smart Watches
July 21, 2016, 11:48 PM
Retiree Sues Apple For $7,500 for Wiping Honeymoon Photos From His iPhone
November 30, 2015, 10:23 AM
iPhone 7 May Pack 3-4 GB Memory, More Storage; 4-Inch Comeback is Rumored
November 20, 2015, 10:12 PM
OnePlus One, OnePlus 2 Will Receive Android Marshmallow in Q1 2016
November 16, 2015, 9:58 AM
Lenovo Whoa: Motorola Droid MAXX 2 and Turbo 2 Break Cover in Leaks
October 26, 2015, 3:12 PM
Most Popular Articles
Say Goodbye to Data Plans - Sprint and T-Mobile offer Unlimited Data
August 22, 2016, 6:12 AM
2 NEW PlayStation 4 Models - Unveiling September 7th
August 23, 2016, 6:23 AM
Uber - Everyone's Autonomous Car Driver?
August 20, 2016, 6:01 AM
iPhones May Get Curved Screens Next Year
August 24, 2016, 6:45 AM
Lenovo vs. Asus vs. HP - Best Laptop Under $500.00
August 19, 2016, 4:00 AM
Latest Blog Posts
Coming Soon - Drones and Airports
Aug 24, 2016, 12:40 PM
SolarCity’s Gigafactory: A Milesone in Emerging Technology by Lily Emamian - 15 August 2016
Aug 15, 2016, 6:30 AM
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information