The long wrangle over rights to the iPad trademark in China could be nearing an end with both sides now showing a "positive attitude". Jing Wei / China Daily

A customer at an Apple point of sale in Nanjing. The latest-generation iPad has yet to officially hit the Chinese market. Provided to China Daily

Pressure mounts from lost sales, massive debt

International electronics giant Apple Inc and financially troubled Chinese computer display maker Shenzhen Proview Technology may be reaching a settlement to end their two-year dispute over rights to the iPad trademark.

Ma Xiaodong, an attorney for Proview Technology, told China Business Journal that his client "has been trying to negotiate with Apple for a long time" and now the focus has turned to the amount of compensation.

Xie Xianghui, another of Proview's attorneys, confirmed that the two sides are negotiating a settlement figure with the Guangdong High People's Court acting as moderator.

"We can feel an obvious change in Apple's attitude," Xie said. "Before, although they agreed to negotiate, they never actually took any action. But now they are sitting there and talking with us about key problems.

"The process is very tough, but both sides have a positive attitude," he added.

Officials, legal experts and industry observers on both sides of the Pacific have paid close attention to the case.

Fu Shuangjian, deputy director of the State Administration for Industry and Commerce, said at a press conference on April 24 that Proview Technology is still the owner of the iPad trademark.

"According to Chinese law, both parties involved in a trademark transfer should apply with us together (to make the transfer legal)," he explained.

Although Fu's remarks have no legal power, industry insiders believe the statement helped force Apple to back to the negotiating table.

More weight was added by Yan Xiaohong, deputy director of the National Copyright Administration, who said the agency regards the Shenzhen company as the rightful trademark owner.

His words "could put pressure on Apple to find a solution to the standoff", noted the New Zealand Herald newspaper.

Teresa Stanek Rea, deputy director of the US Patent and Trademark Office, said China should "make a number of improvements in its system, examining patent and trademark filings more closely".

But a comment in Forbes magazine by Tim Worstall noted that Apple "failed to do its due diligence and make sure that it was buying the China rights to the iPad brand".

Third-generation iPad

It has been two months since Apple unveiled its third-generation iPad, but the product has yet to officially hit the Chinese market.

Although Apple announced that the delay was part of its marketing strategy rather than related to the trademark dispute, many industry insiders said the lag will surely impact iPad sales in the fast-growing market.

According to the company's most recent financial statement, Apple had "tremendous momentum" in the second quarter of its fiscal year as revenues reached $7.9 billion in China, a record high and more than 20 percent of the company's total sales in the period.

While Apple may be considering potential lost sales, Proview Technology is feeling the pressures of time and enormous debt.

The company's creditor banks filed an application for Proview's liquidation in Shenzhen Intermediate People's Court in March, which the court rejected.

All assets of Proview's Hong Kong-based parent company have been seized as collateral on its debt. The iPad trademark is believed to be its most valuable remaining asset.

The company owes up to $400 million to eight banks that hope compensation from Apple will help pay down the bad loans.

Li Su, Proview's litigation consultant, said he was "invited by not only Proview, but also the eight creditors", which means any settlement must also satisfy the banks.

"The amount that Proview has asked is related to illegal profit from using the iPad trademark," said attorney Xie. "Apple has suggested an amount, which they believe is proper, but there is a gap between the two (figures)."

zhangzhao@chinadaily.com.cn

(China Daily 05/09/2012 page17)