Published by LawTechie - February 20, 2012 - LawTechie

apple trademark lawAfter what can only be described as an epic tug-a-war over the trademark rights in the IPAD name it seems like Apple will have no chance in retaining any rights and will be forced but to settle with Proview Technology (Shenzhen) for an estimated $2 billion dollars and $400 million in damages. Apple now threatens to sue Proview for defamatory statements made by founder Yang indicating that rights were never transferred because Apple bought the rights from a subsidiary company, Proview Electronics (Taiwan).

Proview registered the IPAD trademark with the EU, China, Singapore, Thailand, Mexico, South Korea, Vietnam, and Indonesia between 2000 thru 2004. In 2006 Proview’s attempt at selling a tablet computer was not a success. Moreover, Proview Electronics (Taiwan) – the parent company of Proview Technology (Shenzhen) opted to sell the global trademark to an incognito Apple subsidiary called IP Application Development (IPAD) for £35,000. Upon transfer the IPAD Company assigned all substantial rights to Apple.

Unfortunately for Apple, things went quite sour when Proview Technology (Shenzhen) denied the validity of the Agreement, alleging that Proview Electronics (parent company) did not retain the exclusive right to assign the trademark name. Therefore, Apple has no rights to the trademark in China. Subsequently, China’s State Intellectual Property Office (SIPO) refused to transfer the two of the marks registered to Proview Technology.

As a result, the clouds parted for Proview (Shenzhen) and impending dark skies overcastted Apple when it began raining injunctions. Proview (Shenzhen sought to bar the sale of Apple’s iPads within China. A court in Honk Kong sided with Apple and illustrated that the agreement between Proview and IPAD was valid. However, the court in the southland of China (Shenzhen) did not agree and ruled in favor of Proview, stipulating that the agreement covers only Taiwan. Last week, a substantial number of iPads were seized by authorities from Apple Stores across China (over 30 cities) barring the sale of this Apple product. Although the iPad is still available in some stores in China government officials have removed the tablet from authorized dealers and official Apple Stores.

According to Dow Jones, on Friday Mr. Yang Rongshan indicated at press briefing in Beijjing:

“If we are not compensated properly, then Apple doesn’t use the iPad trademark in mainland China,” said Mr. Yang, who is also the main shareholder of Proview International Holdings Ltd., a Hong Kong-listed company that has been suspended from trading.

The Contract: AKA “The Rotten Apple”

AllThingsd.com recently posted a myriad of images of what looks like the collective written agreement from three years ago coupled with emails indicating that Proview Shenzhen was privy this decision to sell the trademark.

When confronted, Proview Technology did not comment on these documents. A disclaimer whilst looking at these images –there is no way of authenticating whether this is the actual written agreement (although many argue it seems to be). Some of the points:

• £35,000 for the whole portfolio and the marks are all set forth in an appendix (Schedule A).
• The agreement unless missing pages is two pages long.
• The Post-execution responsibilities are indicated in Article 1, page 2 illustrating that in consideration for £35,000, Proview shall transfer all the marks for each jurisdiction. Additionally, Proview will provide IPAD with proper documents to the effect indicating that there has been a transfer of the marks in order for the trade mark offices to establish the legitimacy.
• The signatory is Taiwan Proview.

Comments:

Proview (Shenzhen) filed bankruptcy with China Minsheng (bank) and is currently in a bit of a financial mess. From my understanding Proview Electronics is not a subsidiary company but is a parent company which did not lose control of its rights and therefore, the transfer was legitimate. Moreover, Mr. Yang was involved with the original transfer and is the same person involved alleging that contract is invalid. Proview (Shenzhen) should be bound by this collective written agreement entered into by Mr. Yang and his companies. The creditors do not have any justifiable reasons to decline the transfer to Apple because a representative of Proview Shenzhen, Mr. Yang, was privy to the transfer agreement.

Furthermore, there are a few ways this could go: First, Apple doesn’t comply with Proview’s ridiculous $ 2 billion buy-off for the iPad trademark in China and Proview goes into bankruptcy. What we have here is a breach of contract – the items owed (Chinese trademarks) to Apple would be considered assets owed to creditors. Somehow China’s bankruptcy laws would have to determine who owns these company assets. I think it would be very hard to prove that Apple does not own or isn’t entitled to the asset. Secondly, Apple can continue using the iPad trademark illegally and someone would have to enforce the trademark. Therefore, once Proview goes bankrupt either Chinese government authorities, the trademark office or creditors (China Minsheng) would have to go through the legal system proving that Apple is using the trademark illegally. Only after the aforesaid can the iPad trademark be blocked from sale in China.

Guest author Michelle Addison is a law clerk on Tim’s internet law team at Handal & Morofsky, LLC. She is a graduate of the Queen Mary University of London School of Law (LLB Law, Honors), and is completing her US-based LLM at the Benjamin N. Cardozo School of Law.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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