Apple has paid £38.3m to settle a dispute in China over ownership of the iPad name, a court announced yesterday, removing a potential obstacle to sales of the tablet computer in the key Chinese market.
Apple's dispute with Shenzhen Proview Technology highlighted the possible pitfalls for global companies in China's infant trademark system. It also posed a challenge for the Communist government, which wants to attract technology investors to develop China's economy.
Apple Inc. says it bought the global rights to the iPad name from Proview in 2009 but Chinese authorities say the rights in China were never transferred. A Chinese court ruled in December that Proview still owned the name in that country. Proview, which is struggling financially, asked Chinese authorities to seize iPads in an apparent effort to pressure Apple to settle.
"The iPad dispute resolution is ended," the Guangdong High People's Court said in a statement. "Apple Inc. has transferred $60m to the account of the Guangdong High Court as requested in the mediation letter."
China is Apple's second-largest market after the United States and the source of much of the California-based company's sales growth.
Proview hoped for more money but needed to settle to pay debts, said Xie Xianghui, a lawyer for the company. He said Proview sought as much as $400m and might still be declared bankrupt in a separate legal proceeding despite the infusion of settlement money. "This is a result that is acceptable to both sides," Mr Xie added.
The dispute centred on whether Apple acquired the iPad name in China when it bought rights in various countries from a Proview affiliate in Taiwan for £35,000. The December court ruling said Proview, which registered the iPad trademark in China in 2001, was not bound by that sale, even though it was part of the same company.
"It is a good deal for Apple, because sales of iPads, which are in great demand, can compensate for this $60m cost," said You Yunting, a lawyer for the DeBund Law Office in Shanghai. Apple has yet to announce a China release date for the iPad 3 but the country's telecommunications equipment certification agency approved the tablet in May.
Without a formal ruling, it will be hard for companies to draw lessons about how Chinese courts will handle such disputes in future, said Stan Abrams, an American lawyer who teaches intellectual property law at Beijing's Central University of Finance and Economics.