A Shanghai court Thursday rejected a struggling Chinese company's request to bar Apple (Nasdaq: AAPL) from selling its popular iPad computer tablet in China over a trademark dispute.
The Shanghai Pudong New Area People's Court said in a statement that it rejected a request by the mainland unit of Proview International Holdings Ltd. for a temporary injunction that would have suspended sales of iPads in Shanghai, where Apple, of Cupertino, Calif., has three flagship stores.
The court said sales of the iPad may continue, as the right to use the trademark is still under dispute.
Proview Technology Shenzhen, a unit of Proview International Holdings, holds the trademark of iPad it registered in 2001, according to the official Web site of China's trademark authority. The dispute revolves on whether Proview's Taiwan unit, to which Apple paid 35,000 British pounds ($55,163) to use the iPad name in China, had the right to sell it.
China is Apple's largest market outside of the U.S., accounting for 12 percent of Apple's global revenue in 2011. Demand for Apple's products in China is growing rapidly. In 2009, the country only contributed two percent to Apple's total sales.
Apple's lawyers said stopping iPad sales in China would cause the company huge losses,The Associated Press reported.
They (Proview) have no market, no sales, no customers. They have nothing, Apple lawyer Qu Miao said, according to the AP. The iPad is so popular that it is in short supply. We have to consider the public good.
However, Proview Technology Shenzhen's lawyer, Xie Xianghui, argued Qu's point is irrelevant.
Whether people will go hungry because you can't sell iPads in China is not the issue, Xie said, according to the AP. The court must rule according to the law. Do you absolutely have to sell the product? Can't you sell it using a different name?
The victory for Apple follows a string of defeats in other Chinese courts. Proview has won cases in smaller cities, forcing some retailers to stop selling iPads.
Its attention will now shift to the appeal Apple has filed against an earlier decision in Proview's favor by a court in Shenzhen, in the southern province of Guangdong.
It's a great help to Apple by giving it some breathing space, Ren Wenfeng, a lawyer at Guo Ce Law Office, told Reuters. The firm is not involved in the Proview-Apple dispute.
But it's not clear whether Apple will eventually win the trademark infringement case in China, as the crucial thing will be the ruling by the Guangdong higher court, Ren said.
Proview took a huge hit during the financial crisis. Its parent, Hong Kong-listed Proview International Holdings (SEHK: 0388), was the first Taiwanese technology company to list in Hong Kong.
Trading of its shares was suspended in Hong Kong in August 2010 after creditors in China, including Bank of China, China Minsheng Banking Corp. and China Merchants Bank Co. Ltd., went to court to recover assets. The company faces delisting in June if it can't provide the Hong Kong Stock Exchange with a viable rescue plan.
Apple shares rose $2.03 to $514.18 in Thursday midday trading. The stock has gained 27 percent in value since the beginning of 2012.