HONG KONG/SHANGHAI (Reuters) - A Chinese tech firm that claims it still owns the iPad trademark will seek a ban on exports of Apple Inc’s (AAPL.O) computer tablets from China, which could deal a blow to the U.S. technology giant’s sales worldwide.
Proview Technology (Shenzhen) Co Ltd is petitioning Chinese customs to stop shipments of Apple’s popular iPads in and out of China, but has not received a response, lawyer Xie Xianghui told Asian Legal Business, a Thomson Reuters publication.
Apple said it bought Proview’s worldwide rights to the trademark in 10 different countries several years ago, including rights to the iPad name from a Taiwan subsidiary. However, Proview claims the sale did not cover the trademark’s use in China.
“Proview refuses to honor their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter,” an Apple spokeswoman said.
Customs officials could not be reached for comment, and Proview declined to comment.
Apple could be in a very difficult situation if it had mistakenly bought rights from the wrong Proview subsidiary, said Thomas Chan, a Los Angeles-based attorney who has represented companies in trademark licensing negotiations with Apple.
“They’ve got a real, real problem,” Chan said. “They’re going to pay through the nose.”
Apple’s legal tussle with Proview Technology (Shenzhen) over the trademark name iPad, is emerging as the latest headache for the U.S. giant in a booming market and highlights the legal challenges facing foreign multinationals operating in China.
Not only is China a huge consumer market but it is also a major production base for the U.S. company’s iconic products including the iPad, iPhone and iPod media player.
This week Apple announced it had agreed to an outside inspection of working conditions at its main contract manufacturers, including Foxconn’s plants in southern China.
Apple lost a case to Proview Technology (Shenzhen) in a Shenzhen court in southern China late last year when the court agreed that Proview owned the iPad trademark.
Apple has appealed the decision and a final hearing is due to start in the southern Guangdong High Court on Feb 29. This court’s decision will be final under the Chinese legal process.
Proview’s latest salvo comes a day after media reports that authorities in some Chinese cities had ordered retailers to stop selling Apple’s iPad due to the dispute. It has asked authorities in about 20 cities, including Shijiazhuang near Beijing, to stop the sales.
Proview has also filed lawsuits against Apple in Shanghai and Shenzhen, and retailers selling iPads in Futian and Huizhou, located in the south of the country.
Apple’s options are limited to either settling with Proview Technology (Shenzhen), appealing to a higher court, or facing devastating enforcement actions in China, legal experts said.
“There are two views we can take here. One view is, Apple was not sufficiently prudent and therefore, this was missed by Apple and its attorneys,” said Elliot Papageorgiou, a Shanghai-based partner and executive at law firm Rouse Legal (China).
“A more charitable view would be that, Apple said that for business reasons we need to use this brand and as far as the name in China is concerned, let’s cross the bridge when we come to it,” he said.
Proview lawyer Xie, partner of Grandall Law Firm’s Shenzhen office, said Apple is not in negotiations with the Chinese firm.
Local media reported recently that Proview was taking legal action, seeking up to 10 billion yuan in compensation from Apple for trademark infringement.
“Without a win in that Shenzhen case, all the other actions, whether it is administrative or with different courts, customs, Apple is not in a good position at all,” said Stan Abrams, an IP law professor at Beijing’s Central University of Finance and Economics.
Additional reporting by Lee Chyen Yee in Hong Kong and Dan Levine in San Francisco; Editing by Neil Fullick and Richard Chang