A Chinese appeals court has mediated a settlement in a trade mark dispute which saw the launch of Apple’s latest iPad delayed in that country for a number of months.
The terms of the settlement will involve Apple paying $60 million to acquire the rights to the IPAD trade mark in China from Proview Technology (Shenzhen) Co. Ltd., a near-bankrupt affiliate of the Taiwanese Proview company from which Apple thought it had purchased all rights to the trade mark back in 2009.
Apple learned the hard way in this case about the importance of ensuring ownership of a trade mark before launching a corresponding product in China. Chinese trade mark rights generally belong to the first party to file an application, and secure registration. The fact that Proview had no significant reputation of its own in the IPAD trade mark, while Apple’s brand is famous in China and throughout the world, was of little assistance to Apple in this case.
Proview had originally sought as much as $1.6 billion through its court action, so in some ways Apple should be pleased with the outcome. However, the reason the trade mark is valued so highly is because of the substantial investment that Apple has made in the iPad brand. Proview has contributed nothing to this value. In effect, therefore, Apple has been forced to pay twice for the same thing. By comparison (although it does not mean a great deal in these circumstances) the typical cost to obtain a trade mark registration in China, including attorney and official fees, is around $3000.
Proview’s creditors, who are owed a substantial amount of money by the ailing company, will also be pleased. The $60 million settlement will be paid into a court-designated account, and used to repay Proview’s outstanding debts.