(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own)
By Wei Gu
HONG KONG, July 3 (Reuters Breakingviews) - Apple (AAPL.O)
just got gently bruised in China. The U.S. gadget-making giant
can easily afford the settlement it has agreed to use the iPad
name in China. And a new lawsuit over Snow Leopard poses little
threat. Still, the Middle Kingdom is increasingly alert to such
things as trademarks and patents. Western multinationals wanted
that, but Apple’s experience shows it may increasingly cut both
The $60 million settlement with Proview Technology
(Shenzhen) is a rounding error for Apple, which had $110 billion
of cash at the end of March. Yet it is significant by Chinese
standards. Already, Apple is facing another suit from Jiangsu
Snow Leopard Everyday Chemicals over the use of part of its name
for Apple’s operating system, according to China Business News.
The Chinese firm is only asking for $80,000 in damages, but it’s
a trend that might eventually get expensive – or at least
annoying – for Apple and other Western firms.
China accounted for a fifth of Apple’s sales in its latest
reported quarter. It hardly registered a few years back when the
spat with Proview started. That might explain why the Silicon
Valley firm wasn’t perhaps as thorough as it might have been in
making certain it had dealt with the right Proview group company
and fully secured the iPad name.
The irony in the situation is that Western firms, including
the likes of Microsoft (MSFT.O), are the ones that pushed hard
for China to toughen up its intellectual property rules. It
seems they have unleashed something of a beast, though as yet
nothing on the scale of the litigiousness of the United States.
The country saw the fastest growth in the number of
international patent filings last year, up by 33 percent,
according to World Intellectual Property Organisation. Chinese
telecommunications company ZTE (000063.SZ) overtook Japan’s
Panasonic to become the world’s top filer of international
patents in 2011.
All that said, China remains a haven for piracy despite
having strengthened its laws to comply with World Trade
Organisation rules. The U.S. government claims that, on average,
20 percent of consumer products in the Chinese market are still
counterfeit, and American companies lose more than $1 billion a
year to piracy. That means there’s plenty of room for Western
firms to benefit from tougher enforcement. But Apple’s
settlement is a reminder that they need to do their homework to
make sure they aren’t too often on the receiving end.
SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS:
- Apple has transferred $60 million to the creditors of
Proview Technology (Shenzhen), the Guangdong High Court said on
its website on July 2. The payment settled a lawsuit over the
use of the iPad name in China. The Intermediate Court of
Shenzhen on July 2 notified the State Administration for
Industry and Commerce that the iPad trademark will be
transferred to Apple.
- Apple claimed it bought ownership of the iPad name in
various countries from Proview, once a global monitor maker. But
the Chinese firm said Apple dealt with only one unit within
Proview’s group of companies and hadn’t properly acquired the
Chinese rights to the name. Local media at one time reported
that Proview, now near-bankrupt and struggling to repay
creditors, was seeking as much as 10 billion yuan ($1.57
billion) from Apple.
- Separately, the People’s Court in Shanghai’s Pudong New
District will hear a case on July 10 from Jiangsu Snow Leopard
Everyday Chemicals which seeks $80,000 in damages over Apple’s
use of the name Snow Leopard for its operating system, according
to China Business News.
- Reuters: Apple pays $60 million to settle China iPad
trademark dispute [ID:nL3E8I2224]
Great leap sideways [ID:nN1E80406C]
- For previous columns by the author, Reuters customers can
click on [GU/]
(Editing by John Foley and David Evans)
Keywords: BREAKINGVIEWS CHINA/APPLE
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