China faces conflict of law, business in iPad row

BEIJING — Chinese officials face a choice in Apple’s dispute with a local company over the iPad trademark — side with a struggling entity that a court says owns the name or with a global brand that has created hundreds of thousands of jobs in China. Experts say that means Beijing’s political priorities rather than the courts will settle the dispute if it escalates.

Shenzhen Proview Technology has asked regulators to seize iPads in China in a possible prelude to pressing Apple Inc. for a payout. There have been seizures in some cities but no sign of action by national-level authorities.

Proview has a strong case under Chinese trademark law, but that could quickly change if Beijing decides to intervene to avoid disrupting iPad sales or exports from factories in southern China where the popular tablet computers are made, legal experts say.

“If this becomes political — and it’s very easy to see this becoming political — then I think Apple’s chances look pretty good,” said Stan Abrams, an American lawyer who teaches intellectual property law at Beijing's Central University of Finance and Economics.

The dispute centers on whether Apple acquired the iPad name in China when it bought rights in various countries from a Proview affiliate in Taiwan in 2009 for 35,000 British pounds ($55,000).

Apple insists it did. But Proview, which registered the iPad trademark in China in 2001, won a ruling from a mainland Chinese court in December that it was not bound by that sale. Apple appealed and a hearing is scheduled for Feb. 29.

“My gut reaction is that many of these activities really could be seen as pre-settlement brinksmanship,” said David Wolf, a technology marketing consultant in Beijing. “Proview’s motive is money, not to shut down Apple.”

Shenzhen Proview Technology is a subsidiary of LCD screen maker Proview International Holdings Ltd., headquartered in Hong Kong.

Chinese news reports say Proview is deeply in debt, increasing the pressure for it to demand a substantial payout from Apple. Proview International, meanwhile, has been suspended from trading on the Hong Kong stock market since August 2010 and will be removed in June if it cannot show it has sufficient assets, business operations and working capital.

In a rapid-fire series of moves, Proview has filed a trademark-violation lawsuit that goes to court Wednesday in Shanghai.

That deadline is likely to prompt Apple to agree to a settlement within a few days to avoid the uncertainty of a court fight, said Kenny Wong, an intellectual property lawyer for the firm Mayer Brown JSM in Hong Kong.

“I think Apple will be under immense pressure to have this settled as soon as possible,” he said. “Obviously, it depends on the amount the Shenzhen company is asking.”

An Apple spokeswoman in Beijing, Carolyn Wu, declined to comment.

Apple ran into a similar issue before it launched the iPhone in 2007.

Cisco Systems Inc., the maker of networking hardware, had owned the trademark since 2000 and used it for a line of Internet-connected desk phones. Cisco sued, the companies reached an undisclosed settlement and the phone launch went off as planned.

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