Apple pays $60 million to keep the iPad name
Apple settled a lawsuit over the rights to the iPad name in China. The Chinese court says that Apple paid $60 million to Proview Technology.
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The case gave Chinese authorities a chance to show that their courts could impartially resolve intellectual property disputes but also raised the possibility that technology investors might be put off by a negative outcome for Apple. Chinese regulators said Proview clearly owned the mainland name rights under Chinese rules.Skip to next paragraph
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Without a formal ruling, it will be hard for companies to draw lessons about how Chinese courts will handle such disputes in the future, said Stan Abrams, an American lawyer who teaches intellectual property law at Beijing's Central University of Finance and Economics.
"It's such an atypical case," he said. "Certainly, the details and specifics of this kind of commercial dispute aren't going to give us any long-term lessons."
The outcome reflects Chinese courts' preference for encouraging adversaries in commercial disputes to settle instead of pushing for a ruling, Abrams said. He said the relatively small size of the settlement by Apple's standards suggested Proview gave in, possibly under pressure from either its creditors or the court.
All of Apple's iPads are made in China by Foxconn Technologies Group, which employs more than 1 million people in sprawling factories. Brazil's government says Taiwan-based Foxconn plans to open factories there to produce iPads and other products.
Shenzhen Proview Technology is a subsidiary of LCD screen maker Proview International Holdings Ltd., headquartered in Hong Kong.
A Hong Kong court ruled in July that Proview and the Taiwan company both were "clearly under the control" of the same Taiwanese businessman, Yang Long-san, and had refused to take steps required to transfer the name under the agreement. The judge said the companies acted together "with the common intention of injuring Apple."
However, that judgment had no automatic force in the mainland case because Hong Kong, while Chinese territory, has a separate legal system.
Apple also ran into a trademark dispute before it launched the iPhone in 2007.
Cisco Systems Inc., the maker of networking hardware, had owned the trademark since 2000 and used it for a line of Internet-connected desk phones. After Cisco sued, the companies reached an undisclosed settlement and the phone launch went off as planned.
The dispute came amid complaints Beijing is failing to stamp out rampant unlicensed Chinese copying of goods ranging from music and Hollywood movies to designer clothing and pharmaceuticals.
But unlike "trademark squatters" who register names of products already sold abroad and then demand foreign companies pay for the Chinese rights, Proview registered the iPad name long before Apple planned its tablet computer.
"The only thing companies really should take form this case is, be careful when you do transactions, be careful with your contracts," Abrams said. "Be careful you're doing it the right way or you could pay a lot for your mistakes."