Apple (Nasdaq: AAPL) has settled a long-running dispute with China's Proview Technology (Hong Kong: 0334) over the iPad name. The Cupertino, Calif.-based company will pay $60 million for ownership of the iPad trademark in China, opening sales of the product to the Chinese market, Apple's most profitable after the U.S.
Apple wants to buy its way into the Chinese market, while Proview wants to use the money to cover its debts, which allegedly exceed $400 million, Li Xiaoning, a Guangdong-based lawyer familiar with the case, told the Xinhua news agency. It is a good deal for both of them.
For Apple, a company whose market capitalization Monday was $552.6 billion and whose annual revenue of $108 billion exceeds the GDP of more than 160 different countries, the $60 million settlement will hardly make a dent on the company financially. Apple's cash and investments exceed $110 billion. But, as PC World pointed out, the suit could set a dangerous precedent that would encourage trademark trolls looking to make quick cash from the world's most powerful brands.
When Apple purchased the iPad name in Europe, it did so through a proxy broker for a $55,000 price tag, a sign the company knows how costly its name could be if identified in business deals.
But last February, Chinese authorities pulled iPad 2s from stores in mainland China after Proview filed an official compliant, and the product was taken off of Amazon's China site. Despite the ban, Chinese customers could still buy Apple products from stores and web sites in Hong Kong, where the copyright dispute had previously been settled.
Apple has a notably rocky history with China. At the conclusion of a four-month study last week, an NGO called China Labor Watch found labor violations are common at factories owned by primary contractor Foxconn (Hong Kong: 2038) and in virtually all other Apple supplier factories in the country. These abuses included low pay, unsafe working conditions, long hours without break and the refusal to pay for workers' social insurance, work injury insurance and other insurance required by Chinese law.
In 2010, Foxconn and its gargantuan factory campus won negative international attention after a string of worker suicides believed to have been brought on by long hours and low pay. Hong Kong-based Foxconn currently makes all of Apple's iPads and could soon be opening factories in Brazil.
According to the Hong Kong court that oversaw part of the trademark case, Proview and Foxconn were clearly under the control of the same Taiwanese businessman, Yang Long-san, Japan Today reported. Although the settlement means that there will be no official ruling, a judge believed that the companies acted with the common intention of injuring Apple.
Apple shares traded Monday at $590.68, up $6.68 in mid-afternoon trading.