With the next big step in the ongoing Apple vs. Proview battle on its way, it is as good a time as any to break down the situation so far, and look at what we can expect to see in the next few weeks.
Tomorrow, on February 22nd, a court in Shanghai will be hearing a request to ban iPad sales in the city, China's largest city by population.
If the court rules in favour of Proview, as they did with Sundan in Huizhou, then Apple loses its iPad sales grip in one of China's biggest cities, which could be an unfortunate sign of things to come.
Although it still seems extremely unlikely that an imports and exports customs ban will be enforced, a significant setback in Shanghai would be damaging for Apple.
Today, Apple's lawyers have threatened to sue Proview over damages from defamation, potentially adding another lawsuit to an already complicated legal fray.
Back to the basics: Who is suing whom?
The situation began when Proview International Holdings registered the 'IPAD' trademark in the EU, China, Mexico, South Korea, Singapore, Indonesia, Thailand and Vietnam between 2000--2004.
Proview Electronics (Taiwan), a branch of Proview International Holdings, agreed to sell on the "global trademark" in 2006. The rights were sold to a company called IP Application Development (i.e 'IPAD'), for $55,104.
This company was later revealed to have connections to Apple, who then bought the trademark from them.
Here is where things start to get a bit tricky.
In 2010, Proview began the process of suing Apple for trademark infringement over the 'iPad' brand. The reasoning behind the legal action was that trademarks for the Chinese market were not included in the rights sold by Proview's Taiwan arm. Those had been filed by Proview (Shenzen) in 2001.
In ongoing cases in Shenzen and Hong Kong, Apple won the preliminary injunctions, which prevented Proview from being able to sell the trademark before an agreement could be made. This effectively stymied any hopes Proview had of selling on the trademark to another bidder.
Apple's own case against Proview -- suggesting the company was infringing on its trademark with their own product -- was rejected at the end of last year by a court in Shenzen. Apple is appealing this decision, and the next hearing for this case is apparently on February 27th.
Proview began filing complaints with local authorities in around 40 cities. This saw some follow through last week, when the Chinese Administration of Industry and Commerce (AIC) were reported to have performed a raid in Shijiazhuang, in which 45 iPad 2 tablets were seized.
Despite reports of other isolated cases of tablets being confiscated at resellers, no nationwide enforcement has been confirmed. Following this news there were reports of sellers removing iPad stocks from shelves and hiding it to avoid confiscation.
Not long after that, Amazon's Chinese website took down all iPad stocks from unofficial sellers. Several other big Chinese e-commerce sites followed suit, although Proview has claimed no knowledge over this particular action.
It was revealed to have been requested by Apple as the resellers were not authorised to list the product.
Proview has also suggested they might take the legal battle back to the U.S., although that has yet to come to fruition.
Yesterday, Apple's lawyers sent a letter to Proview's chairman Yang Rongshang. In it they stated they would "formally reserve all rights to take further legal action against any individuals or entities for any damages that may result from defamatory statements and unlawful actions."
What all of this amounts to is a complicated web of lawsuits, counter lawsuits and appeals with the potential for even more on the way over defamation.
What can we expect?
- Do not expect a customs ban. Although an imports and exports ban would be powerfully damaging to Apple, considering that Foxconn in China produces the iPad, there is the issue of costs. Raising the bond to seize shipments is an expensive process, and the iPad 2 is a popular product. This outcome is unlikely to say the least.
- Apple might settle. It doesn't seem likely that the company would take their other major option, selling the iPad 2 under a different name, so a settlement could be the cleanest way of resolving this dispute.
- Proview is pushing for $1.5 billion, which is a drastic jump up from the $55,104 the name originally went for. Whether or not Apple settles for that big number, or battles down to a much lower figure is another issue entirely.
- There is still a chance Apple could win its appeal in Shenzen on the 27th, which could be the first step to turning around this entire situation. While it seems that Proview is currently doing well in the rulings, if Apple were to be recognised as the owners of the trademarks, they could put a stop to any current enforcement by local authorities.
What did they say about it?
Apple has been largely quiet on the issue, but released a statement to China Daily last week.
"We bought the worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honor their agreement with Apple, and a Hong Kong court has sided with Apple on the matter."
This statement is likely in reference to the injunction issued by the Hong Kong court to prevent Proview selling on the trademark before the dispute is resolved.
A lawyer for Proview apparently countered this statement with their own, saying that "the root cause of the dispute is Apple's underestimation of the legal complications in China."
Considering Apple's serious threats over defamation, Proview might be keeping its head down over the next few weeks; at least until details of the court hearings emerge.
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