Welcome Cyberlaw Students Spring 2012 – Chinese case example

This site is intended for students enrolled in Cyberlaw: Privacy. Ethics, and Digital Rights in the IA program.  This semester’s blog will feature new cases and laws, discussions related to our coursework, and guest bloggers from fields such as Information Assurance, IP Law, Cybercrime, and others.

For the year’s opening entry I would like to highlight the diverse nature of law and business decisions by courts around the world.  If I say the word “iPad” most people think “Apple, Inc.”  However, according to a court in China last month, that may no longer be the case. 

Will Apple have to change the name of theiPad in China?  A Chinese court has dismissed a trademark lawsuit brought by Apple against a company called Proview Shenzhen.  Incredibly, the Shenzhen Intermediate People’s Court held that Proview Shenzhen is the lawful owner of the iPad mark in China.  The case is titled: Apple (UK) IP Application Development Company Limited v. Proview Technology (Shenzhen) Co., Ltd., (Shenzhen Intermediate People’s Court, Dec. 6, 2011).    

Now, China’s trademark business is booming.  In 2009 China’s Trademark Office (TMO) accepted a total of 830,000 trademark applications, 55,804 trademark renewal applications, 39,436 trademark opposition submissions, and 64,517 applications for trademark transfer.  Amazing.

This case is the latest development in a series of back-and-forth lawsuits between the two parties since 2006.  The story starts in 2000, long before Apple launched its iPad product. Proview’s subsidiaries registered the marks “iPad” and “IPAD” in the China, Mexico, South Korea, Singapore, Indonesia, Thailand, Vietnam and the European Union.  Proview then introduced a tablet computer in 2001 under the IPAD mark.  It was not a runaway commercial success.

In 2009, Proview’s Taiwan subsidiary (which is a flat screen contract manufacturer) entered into an agreement to sell the global trademark rights for IPAD to a UK company (connected to Apple) for approximately $55,000.  The deal transferred all of Proview’s iPad trademark registrations, including two Chinese trademark registrations for iPad registered in 2001 by Proview Shenzhen.  The purchaser then assigned the rights to Apple.

In 2010, prior to launching its iPad tablet computer in China, Apple, as any good company would, applied to the China TMO to transfer ownership of the two Chinese trademark registrations to their control.  The TMO rejected Apple’s request because, according to the TMO, the Chinese trademark registrations were not owned by the Taiwan subsidiary that assigned the trademarks, but instead were owned by Proview’s Chinese subsidiary, Proview Shenzhen.  In other words: you can’t assign what you do not own.

The Shenzhen Intermediate People’s Court explained that 1) Proview Shenzhen was not involved in the negotiations between the UK purchaser and Proview Taiwan, 2) Proview Shenzhen did not sign the trademark transfer agreement, and 3) Proview Shenzhen had not authorized others to dispose of its trademarks.  The court also held Apple to “a higher duty of care” to make sure that the “necessary procedures for the transfer of a trademark” were completed.  Here in the states we call that Due Dilligence,  Proview has now sued Apple resellers in China, seeking to halt sales of Apple’s iPad tablets and seeking damages of approximately $1.5 billion.  It seems a bit high for a trademark that the world over thinks is owned by Apple.  Combine that with the original 2000 IPAD failure, and I think Apple may appeal the judgement.  I can only assume this may settle – with a large (but not $1.5 billion) offer for the proper transfer of rights to Apple. [NOTE: Apple turned down their original offer of $10 million for the trademark transfer and chose to resort to legal means as a result - and this is the outcome.... lesson learned for Apple in a foreign court.]