Apple's two-year-long trademark battle with Proview Technology over the use of the name iPad has finally come to a close. The Cupertino, Calif.-based computer giant has reportedly agreed to pay the Chinese electronics maker $60 million to settle the dispute of ownership, which will removes any further obstacles to selling its popular line of tablets in China, the company's second largest market after the US.
The iPad dispute resolution is ended, the Guangdong High People's Court said in a statement. Apple Inc. has transferred $60 million to the account of the Guangdong High Court as requested in the mediation letter.
Here's how the story goes: Proview International, which owns subsidiaries Proview Technology in Shenzhen and Proview Electronics in Taiwan, originally registered the name iPad in Taiwan and in mainland China in 2000 and 2001, respectively. In 2009, Apple comes along and buys Proview's iPad trademark for $55,000 via a company called IP Application Development, but the deal made at the time only applied to the trademark in Taiwan. Yang Rongshan, the chairman of Proview International, said his company did not know IP Application Development was connected to Apple.
It is arrogant of Apple to just ignore our rights and go ahead selling the iPad in this market, and we will oppose that, Yang said. Besides that, we are in big financial trouble and the trademarks are a valuable asset that could help us sort out part of that trouble.
Proview originally threatened to sue Apple in October 2010 for damages in China and in the U.S., to use Yang's words. Reports at the time said Proview registered the iPad name in the EU, China, South Korea, Singapore, Indonesia, Thailand, Vietnam and Mexico, while Apple bought the U.S. iPad trademark from Fujitsu in March.
Proview finally sued Apple in 2011, and Apple retaliated with a counter-suit of its own, but the Chinese court ruled in favor of Proview. But when Proview took its case to the Shanghai Pudong New Area People's Court in February -- hoping to win between $1.6 billion and $2 billion, as well as a sincere apology from Apple -- Proview lost the case, which meant Apple could continue selling its tablet in Shanghai stores.
The lawsuit, which was filed in the Superior Court of the State of California in Santa Clara County on Feb. 17, but previously unreported, claimed that Apple had committed fraud when it used a company set up by one of its law firms, called IP Application Development Ltd., to purchase the iPad trademark from Proview on Dec. 23, 2009 for 35,000 British pounds ($55,000).
Even though Proview hoped to win substantially more money, they felt the need to settle in order off to pay their debts, according to the company's lawyer Xie Xianghui. He mentioned that Proview still may be declared bankrupt in a separate legal proceeding despite the $60 million settlement.
This is a result that is acceptable to both sides, Xie said.
Proview, which is headquartered in Hong Kong, used the iPad name on several of its products, including computer monitors. But Apple will now retain all rights to the name iPad from here on out, which should open up more revenue streams and opportunities to expand in China.
China didn't receive its first Apple Store until 2008. In 2011, six Apple Stores in Shanghai and Beijing produced the highest average revenue of any of its 361 global stores. Revenue from the country accounts for more than 16 percent of the company's annual earnings. In January, Apple CEO Tim Cook spoke about China during the company's quarterly conference call with investors.
It's our fastest growing major region by far, Cook said.