SHANGHAI Apple Inc's (AAPL.O) trademark battle moves to one of China's richest city on Wednesday when a Shanghai court will deliberate a request by troubled technology company Proview to halt the sale of iPads across the city.
Proview Technology (Shenzhen) claims it owns the iPad trademark in China and a Shenzhen court ruled in its favour last December. Proview has since launched a multi-pronged approach to get Apple's iPads off the shelves -- with mixed success.
Apple's iPad has a huge lead over rival tablet PCs in China with a 76 percent share. But it's not only the consumer market in China that is important for Apple because the country is also a major production base for the iPad and other Apple products.
Indeed, Proview Technology (Shenzhen) has already petitioned Chinese customs to stop shipments of the iPad in and out of China, although authorities have indicated such a ban would be difficult to impose.
Previous court rulings have covered specific retailers in smaller cities, but a Shanghai order, if imposed, would eat into one of Apple's biggest markets in China, which is home to three of its five flagship stores in China.
"This is a court in Shanghai which means that it has jurisdiction, and its order should be observed in Shanghai, which is one of the biggest cities and biggest markets for Apple iPads in China," said Kenny Wong, head of Mayer Brown's intellectual property practice in Hong Kong.
Proview is hoping that the district court will rule in its favour and grant an injunction to stop the sale of iPads in Shanghai, Proview's lawyer Roger Xie told Asian Legal Business, a Thomson Reuters publication, on Tuesday.
Lawyers said the judgement is not expected for a few months and that Apple would in any case have the option to appeal should it lose.
Apple disputes Proview's ownership of the trademark, saying it bought the trademark from Proview in 2009. The firm has appealed the Shenzhen judgement with a higher court hearing set for Feb 29 in China's southern province of Guangdong.
Apple's Shanghai unit is the defendant in the case due to be heard on Wednesday. Losing could mean the city's three Apple retail stores would have to stop selling the popular tablet PCs. Apple has two other flagship stores in China, both in Beijing.
Over the past week, Proview's efforts have borne fruit as local media reported that certain cities have started enforcing Proview's request to remove the iPads.
Proview's lawyers said on Friday it had won a lawsuit in the southern city of Huizhou against a retailer selling Apple's iPads, not boding well for its case in Shanghai.
"The Proview people probably remain fairly confident, in view of their success in Guangdong province already," Wong said of the Shanghai hearing on Wednesday.
The fortunes of Proview parent, Hong Kong-listed Proview International Holdings Ltd, stand in stark contrast to Apple's.
Founded by Yang Long-san in 1989, Proview was the first Taiwanese technology company to list in Hong Kong and by the end of the 1990s numbered itself among the top five computer monitor makers.
In 1999 it partnered with U.S. chip maker National Semiconductor to launch the I-PAD, a stripped-down desktop computer whose main selling points were its Internet connectivity and ease of use.
Proview continued to grow, shifting from computer monitors to become the world's third-largest OEM manufacturer of flat panel TVs. But by August 2009, when Apple began trademark talks through a proxy, Proview had been badly hammered by the financial crisis.
Since then things have only gotten worse. Trading of its stock was suspended in Hong Kong in August 2010 after creditors in China went to court to recover assets. The company faces delisting in June if it cannot provide the Hong Kong Stock Exchange with a viable rescue plan.
On Monday, Apple fired its own shot back at Proview, threatening to sue "individuals and entities" for damages that may arise from defamatory remarks that hurt Apple's reputation.
In a letter addressed to Yang, who remains chairman of the China subsidiary, and posted online by IDG News Service, Apple warned Yang against giving false information to the media and public (here). Reuters has confirmed its authenticity .
"It is inappropriate to release information contrary to the facts to the media, especially when such disclosures have the effect of wrongly causing damage to Apple's reputation. You will be held legally responsible for such activity," Apple said.
Calls to Proview went unanswered and Apple declined to provide fresh comment.
(Additional reporting by Artemisia Ng with Asian Legal Business in HONG KONG; Chyenyee Lee in HONG KONG; Editing by Jeremy Wagstaff in SINGAPORE)