iPad Trade Mark Settlement in China

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Apple Inc. (“Apple”) has recently concluded a dispute with a Chinese company that started back in 2010 over ownership of the iPad trade mark in China. The settlement, worth a reported US$60 million, removes a major obstacle to Apple’s ability to market and sell their iPad device in what is possibly its biggest growing market.

Background – pertinent to this case are two separate but related companies, namely Proview Electronics (Taiwan) Company Ltd (“Proview Taiwan”) and Proview Technology (Shenzhen) Company Ltd (“Proview Shenzhen”). Both are 100% owned by the same parent company, Proview International Holdings Ltd (“Proview International”). The Proview Group of companies produce display devices including LCD monitors, CRT monitors and flat panel digital products.
In 2000, Proview Taiwan registered the trade mark “IPAD” in many countries throughout the world.

In 2001, Proview Shenzhen filed trade mark applications for “IPAD” and related logos in mainland China in class 9, covering, amongst other goods, “computers”. In 2010 Apple announced its new tablet computer branded “iPad” which was launched in the USA in April of that year and in other countries a month later.

Apple’s trade mark searches revealed that the Proview Group of companies owned the above registrations and so before the launch they entered into negotiations resulting from which Proview Taiwan agreed to assign its IPAD trade marks to Apple. It later transpired however that the actual owner of the Chinese IPAD marks was the sister company, Proview Shenzhen, which refused to assign its marks to Apple, arguing that the assignment was from the sister company and hence Proview Shenzhen was under no obligation to transfer the marks.

Given the implications of not being able to use the iPad brand in China, Apple filed for cancellation of the relevant marks on the basis of non-use and also filed a claim against Proview Shenzhen on the basis that the earlier assignment, having been negotiated and signed by representatives of both sister companies, should be binding on both companies.

In December 2011 the Judgment of the Chinese Court was announced holding that Proview Shenzhen was the rightful owner of the marks and was not obliged to transfer them to Apple because the agreement was between Apple and Proview Taiwan, and not with Proview Shenzhen. Proview Shenzhen then lodged infringement claims in various courts in China against Apple and its Chinese distributors and also claims preventing Apple from selling iPads in China. A number of online retailers apparently stopped selling iPads in China as a result.

In July 2012 following a court-mediated settlement, Apple reportedly paid Proview Shenzhen $60M to allow it to get on with selling its tablet computer in one of its most important and growing markets.

The issue highlights the need to perform detailed due diligence of trade marks at the earliest opportunity before product launch to establish what conflicting marks exist and who exactly owns them before entering negotiations.

Further, China is an already important market but one which tends to be overlooked for IP protection on the presumption that it is impossible to police. The case highlights that this is not the case and filing applications and performing watches in all important territories, including China, should be considered at the earliest opportunity. Otherwise, third parties filing conflicting marks first may prevent a legitimate brand owner’s ability to export their product into a given market.

Please contact us for further information on our international trade mark services, which include the filing of applications for registration, watching services, and ownership negotiating.