Trademark lawyers often enjoy following trademark disputes involving  famous trademarks. If you haven’t heard about Apple Computer’s court battle over ownership rights for the “iPad” trademark in China, read on.

The Chinese owner of the “iPad” trademark is not Apple but  a beleaguered video display manufacturer known as Proview.  In 2001, Proview obtained rights to the “iPad” trademark in China around the time it was developing a so-called Internet Personal Access Device (“IPAD acronym”), which only saw the brief light of day when it proved to be a market failure.  Later, in 2008, Proview fell into rough financial times when the economy went south along with two of its major customers, Polaroid and Circuit City, who filed for bankruptcy.

In 2009  Apple was developing its own iPad device so it created a company in the United Kingdom called “IP Application Development Ltd.,”  (yet another IPAD acronym)  established for the singular purpose of acquiring trademark rights to “iPad”.  According to the Chinese Court, a Proview subsidiary in Taiwan sold the “iPad” trademark to Apple’s UK company for $55,000.

Apple then sued Proview in China for wrongfully using the “iPad” trademark.  Proview fought back and in late 2011, the court issued its opinion, which rejected Apple’s lawsuit concluding that although Apple purchased rights to “iPad” there was no formal transfer of trademark rights.  Apple, according to the court, purchased the trademark from Proview’s subsidiary, not from Proview itself, which was unrepresented during the negotiations between Apple and the Taiwanese company.  Apple is appealing the decision.

It was widely reported that Proview would take its dispute to the United States and on February 24th, theWall Street Journal reported that it had filed a lawsuit on February 17th  in the Superior Court of the State of California in Santa Clara County claiming that Apple had committed fraud when it used Application Development Ltd., to purchase the iPad trademark from Proview.  What Proview hopes to gain by suing Apple on its home turf is unclear but Apple may be eager to settle to avoid disruption of its Chinese supply chains or sales to Chinese consumers.  It appears that Proview’s comeback strategy is built upon leveraging a lawsuit against the most famous technology company in the world.   Reuters news service reports that “[a] Shanghai court this week threw out Proview’s request to halt iPad sales in the city. But the outcome of the broader dispute hinges on a higher court in Guangdong, which earlier ruled in Proview’s favour.”

Apple, of course, maintains Proview refuses to honor its agreement. Undoubtedly, Apple has enough cash to make this story go away and we suspect that’s just what will happen.  The story also reinforces the well established opinion that enforcing intellectual property ownership rights in China may be problematical.

–Adam G. Garson, Esq.