iPad Dispute in China Settled Cheaply

The imbroglio between Apple and Proview in China has been settled with an agreement fee of $60 million, which The Wall Street Journal calls “far short of the as much as $2 billion that a Proview arm had asked for in a U.S. court”. The price for Apple to continue selling its iPad in China “represents a tiny sum for the world's most valuable company,” whose daily income in the country over $87 million.

The case was opened two years ago, as the Shenzhen unit of Proview International Holdings Ltd, a Chinese manufacturer of computer monitors and other media devices, announced that Apple infringed upon its right by selling the popular tablets in China under the name of iPad. From The Wall Street Journal:

Apple's dispute was rooted in an agreement signed in 2009 to transfer the ownership of iPad trademarks in several countries, including China, from Proview and its affiliates to an Apple representative. The contract was signed by Proview's Taiwan subsidiary, but Proview's mainland China arm argued that it didn't sign the agreement and so could keep the China rights.

Xie Xianghui, an attorney for Proview Shenzhen, also told The Wall Street Journal that the company is currently in bankruptcy and has about $400 million in debt needed to settle with its creditors. China Hearsay's Stan Abrams speculates further:

All along, I was wondering if Proview’s creditors were going to force it to stand tall and try to get enough to pay off as much of their debt as possible. But apparently someone on that side blinked, realizing that Apple wasn’t going to get anywhere near that figure. That explains why settlement talks never went anywhere for so long.

So why did Proview agree to this now? Hard to say, but perhaps the court whispered into their ear and suggested it was time to get back to reality and agree on a much lower figure. We already know that the system here prefers settlements to high-profile cases like this.

Alternatively, Proview and/or its creditors had enough and said let’s take what we can get. Perhaps we’ll know the answer when more information comes out.

The lawsuit stirred up hot debate from both business analysts and Chinese internet users. Some criticized that Apple failed to “do their homework” — business contract and negotiation as well as Chinese law — in advance. Duncan Clark, chairman of consulting firm BDA China Ltd, told The Wall Street Journal that Apple’s sales grew ahead of the company's ability to keep up, and he suggests that it should have “senior management with a deep understanding of China”. Meanwhile, on Weibo, the Chinese twitter-like cyber platform, many people argued about “whether the settlement represented a victory for “thuggish” business tactics”. From China Real Time Report on WSJ:

“Intellectual property awareness is something to be supported, but Proview is definitely guilty of playing the thug,” wrote one Sina Weibo user posting under the handle Gossiper, repeating a common refrain. “Why does Apple’s logo have a bite missing?” asked Twitter user @luosheng. “Proview ate it.”

That’s not to say Proview didn’t have its supporters. “Why does everyone think Proview played the thug?” wrote one user, adding in English: “Business is business.” Wrote another: “The real thug is Apple, illegally using someone else’s trademark.”

Several others joked that Apple’s willingness to settle could set off a stampede to register potential Apple product names in China: “Soon iThis and iThat will all be nabbed and registered by Chinese people,” quipped a Sina user writing under the name Old Citizen Zhang. “Register a trademark, earn $60 million. So begins a trademark squatting craze,” added Ray’s Flying Room.

Even though the settlement fee is far less than what many expected, the lawsuit is still initiating a chain reaction on “biting the Apple”. This week, another Chinese company, Jiangsu Snow Leopard Household Chemical Co., Ltd, “accused Apple of using “Snow Leopard” as its trademark for Mac OS X Snow Leopard. The case has been brought to law proceedings in Shanghai and the Chinese company is seeking 500,000 RMB in compensation, approximately 80600 US dollars. From Caijing:

The Chinese company has registered the trademark of “雪豹”(the Chinese word which means Snow Leopard) for electrical equipment production in 2000, according to chief executive Tong Yu.

Tong said the intangible asset was valued at 31 million yuan in 2001, and now at as much as 420 million yuan.

Apple had tried to apply for the registration of “SNOW LEOPARD” but rejected by Chinese trademark office, according to Tong. He believed the rejection was because his company had already registered the trademark.

Despite that, Apple still names its operating system in China “雪豹”,which Tong said, is “an obvious violation” of his ownership of the trademark.

Despite the messy lawsuits, Chinese Apple fans kept their enthusiasm and are looking forward to the about-to-launch “tablet”. As translated by China Real Time Report: “Now there’s only one thing everyone needs to do: Get ready to extract your kidney to buy an iPad 3,” goes a Weibo user.

Read more about Apple-related issues in China via CDT.