China takes a bite off Apple
February 14, 2012

Apple has taken a sever beating in one of its most patriotic markets ever – China. First it was accusations of poor working conditions of Foxconn laborers where their iconic gadgets the  ipad and iphones are assembled and now a Shenzhen-based enterprise Proview Technology is claiming ownership of the iPad trademark in China, effectively banning the export and import of Apple’s iPad 3.

China is one of Apple’s largest markets. The CEO of consumer electronics company Tim Cook described Apple’s conquest of emerging markets as  “In 2007, when we hadn’t launched the iPhone outside the U.S. until 2008, Apple’s revenue combined from greater China and several other parts of asia, India, Eastern Europe, the Middle East, Africa, and Latin America was US$1.4 billion. Revenue for that group of countries last year was US$22 billion. We’re only on the surface.”

The importance of the Chinese market to Apple cannot be undermined nor can Apple’s mass reverence in China. For a country which has just come to terms with cool technology, Apple is more than a status symbol, its a deity in the middle kingdom – its the only brand name which hasn’t been altered to sound chinese to sell better (McDonalds, KFC, Coke, Mercedes, the Sheraton, Marriott, you name a brand across any sector – has a chinese name and isn’t recognized by its English name throughout China.) Yet on a law that is meant more to keep counterfeiters at bay, a local Chinese company Proview Technology has won a law suit against Apple for the iPad trademark.

“We plan to file the complaints to customs by the end of this month and ask for an embargo on the import and export of the iPad,” Xie Xianghui, a lawyer representing Proview Technology Shenzhen told the China Daily. “We are asking for the ban especially for the iPad 3.”

The move although a massive blow to Apple’s sales in China, conceals a larger problem as Chinese law allows plaintiffs in intellectual property disputes to mobilise customs against the defendant. Most of the worlds products are today manufactured in China. The factory of the world produces everything from pins to planes, from tea cups to trains and mobiles to motorbikes. Click this link to find more detailed information.

“Multinationals frequently use this against counterfeiters, but it is also being used by Chinese companies against foreign firms,” said Li Yongbo, an IP expert with Jijia, a Beijing law firm. He said many foreign companies failed to register trademarks in China because they were not aware that this mattered for exports as well.

“Apple appears not to have done its due diligence properly in this case,” said Mr Wong. “Of course they are well-known and everyone now knows the iPad name in connection with them, but in this case, the trademark is owned by somebody else. They can’t keep selling under a trademark that they don’t own.”

Apple said that it bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago. However, China’s official trademark database shows that Proview Shenzhen registered the iPad trademark in China as early as 2000. In 2006, Apple bought the iPad trademark for several markets, including the European Union, from Proview Taiwan, another affiliate of Proview International, the groups’ Hong Kong-listed holding company. Only after Apple started selling the iPad in China did it realize Proview Shenzhen’s claim to the trademark there.

In December, a Shenzhen court rejected Apple’s request to have the China trademark transferred to its name, a ruling that Apple has appealed against.

According to legal experts, it normally takes up to a month to record a patent or trademark with customs. After it is recorded, customs will seize shipments from a sender other than the rights holder if it discovers them during random checks. Rights holders achieve more regular shipment blockages if they tip-off customs on incoming shipments.

When goods are seized under this procedure, a court has to decide on the infringement claims, but customs can fine the defendant and the shipments remain blocked for the duration of the court case.

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