Apple's plans to expand in mainland China may be affected after the company lost its major trademark battle for the name "iPad" in the country.
Apple's plans to expand in mainland China may be affected after the company lost its major trademark battle for the name "iPad" in the country. Reuters/Jo Yong hak

Apple's lawsuit to protect the iPad name in China was rejected by local courts, according to a local news outlet, which could create turmoil for the company's plans of expansion in the country. The Cupertino, Calif.-based tech giant hopes to make a settlement with Taiwan-based Proview Technology in order to retain its iPad trademark in mainland China.

Apple is such a Goliath and has a good image, so people wouldn't imagine that Apple could possibly infringe on our intellectual property rights, said Xiao Caiyuan, a lawyer from the Guangdong Guanghe law firm representing Proview Technology.

Apple originally accused Proview for infringing on the iPad trademark, but the Municipal Intermediate People's Court in Shenzen, China found that Proview had actually registered the name legally in mainland China back in 2001, and in Taiwan in 2000. Apple bought Proview's iPad trademark in 2009, but that only applied to the trademark in Taiwan; Apple would still need Proview to authorize a transfer of the trademark for mainland China. The case was dismissed due to the lack of facts and legal proof.

After the judgment was delivered, an official from the Hejun Vanguard Group, which helped Proview revamp its debt restructuring, said it will file a $1.6 billion lawsuit against Apple for copyright infringement.

Their copy infringement is very clear, a Proview representative said. The laws are still there, and they sell their products in defiance of laws. The more products they sell, the more they need to compensate.

The back-and-forth disputes will likely derail Apple's plans to build more Apple Stores in China, which didn't receive its first retail store from Apple until 2008. In 2011, six Apple Stores in Shanghai and Beijing produced the highest average revenue of any of its 357 stores.

The China progress has been amazing, said Apple CEO Tim Cook in the company's third quarter conference call with investors. If you look at our Greater China revenue, it represented just 2 percent of Apple in our fiscal year '09. And in the fiscal year we just ended, it accounted for 12 percent, and if you look at the quarter that we just ended, it accounted for 16 percent. So it's our fastest growing major region by far.

Apple reeled in $4.5 billion in revenue from China in the current quarter, increasing the company's total revenue for the fiscal year to more than $14.3 billion.

To further put that in context, a year ago in fiscal year '10, we were just right above $3 billion. So it is growing at a feverish pace, Cook said.

The hysteria surrounding Apple's products in China is unprecedented, and without a settlement with Proview, Apple could take a significant hit in the world's second largest personal computer market.

Proview currently uses the iPad name on several of its products, including computer monitors. The company may ask Apple to pay for a trademark transfer for compensation, but has not yet decided on the monetary amount. Xie Xianghui, Proview's attorney, says the company has been talking to Apple and hopes the two parties can resolve [the dispute] through peaceful talks.

In the meantime, Proview seeks to immediately block Apple's sale of iPads by suing Apple resellers in two Chinese cities, Shenzen and Huizhou.

We are starting with these two cities, and if we are successful in getting iPad sales stopped, we will consider going after Apple resellers elsewhere in China, Xianghui said.

Apple representatives declined to comment.