Apple Pays $60M to Settle iPad Trademark Dispute in China

This is a retelling, in our own words, of the Associated Press report published July 2, 2012.

Apple paid $60 million to settle its dispute with Shenzhen Proview Technology over who owned the iPad trademark in China, the Guangdong High People's Court announced on July 2, 2012 — clearing a potential obstacle to selling the tablet in Apple's second-largest market.

Apple said it had bought the global rights to the iPad name from Proview in 2009. But Chinese authorities said the rights within China were never transferred: Proview had registered the iPad trademark in China back in 2001, and a Chinese court ruled that December that Proview still owned the name in China, unaffected by Apple's purchase of the rights elsewhere. Financially struggling, Proview had even asked Chinese authorities to seize iPads from store shelves as leverage.

"The iPad dispute resolution is ended," the court said. "Apple Inc. has transferred $60 million to the account of the Guangdong High Court as requested in the mediation letter."

Proview had hoped for far more — its lawyer, Xie Xianghui, said the company sought as much as $400 million — but felt pressure to settle because it needed to pay its debts. "This is a result that is acceptable to both sides," he said.

The dispute turned on a chain-of-title question: Apple had acquired the rights from a Proview affiliate in Taiwan for £35,000 (about $55,000). The Chinese court held that the affiliate's sale did not bind Proview in China — even though, as a Hong Kong court separately found, both entities were under the control of the same Taiwanese businessman and had acted together "with the common intention of injuring Apple." Hong Kong's judgment had no automatic force on the mainland, which runs a separate legal system.

For Apple, the settlement cleared the way to launch the new iPad in China, where demand was high. For foreign companies generally, the case was a warning about doing business in China's trademark system: unlike the trademark squatters who register famous foreign brands to extort settlements, Proview had registered the name years before Apple ever planned a tablet — which was precisely why Apple had to pay.

This was not Apple's first trademark scramble. Before launching the iPhone in 2007, the company had to settle with Cisco Systems, which owned the iPhone trademark and sued — a dispute resolved with an undisclosed settlement before the launch proceeded.

Based on Associated Press reporting (July 2, 2012).