New just came out – Chinese Customs will not get involved with import or export issues relating to the disputed iPad trademark.
This is good for Apple, since it puts the issue back in the courts, with less risk of disrupting their supply chain or sales. I guess this means Apple iPads will be able to enter/leave China easily? Not sure what the local governments can/will do about stopping sales (especially Shenzhen’s government, which seems to be pro-Proview).
Also, the HK court case (see link below by “numble”
sheds new light and shows Apple’s position to be much stronger than was portrayed here earlier by Stan.
Stan, I think you realize you jumped the gun with your previous posts decrying Apple attorneys for “dropping the ball.” now we see they didn’t so badly and had the contract tightly defined – though I agree they failed in an important area by not doing the due-diligence to check who actually owned the PRC rights. I suppose in their view, Proview Technologies (HK) owned Proview (Shenzhen), and so the HK parent’s sale meant its subordinate firm also consented. While such an assumption is not wrong, it’s an example of not “dotting the i’s and crossing the t’s.”
And with knowledge that Yang was the principle owner of all three Proview firms, this starts to appear disingenuous on Proview’s part. It appears they were either sloppy (and trying to take advantage of it now), or they were being deceitful by claiming “worldwide rights” in one set of negotiations, but later reneging on that clause.
My guess of the “true, behind the scenes story” is this: Yang truly intended to and believed he (Proview International) sold all rights he had to the trademark, to a small British firm for what he considered a fair transaction. He was going to transfer the PRC trademark to IPAD (UK), and upon trying to do so found they were an agent for Apple. Yang felt cheated by IPAD’s non-disclosure of their Apple ties (though what IPAD and Apple did in terms of contract law was entirely legal in China), and he then had seller’s remorse. He probably tried to contact IPAD about details, who probably confirmed their ties with Apple. And Yang found out (maybe after consulting lawyers about his situation) that he could claim to still hold the PRC trademark (since he hadn’t yet transferred them as the contract stipulated he must do). His attorneys likely informed him that Apple and the original contract would dispute his version. So Yang, knowing Apple won’t pay him more (he probably had his attorneys contact them), decided to hurt Apple by mounting a media and legal/government-backed campaign (whatever support he could get) to try to make Apple give him more. What’s interesting is the US $1 billion in damages he’s seeking for trademark infringement. That seems outrageous considering the only real damage he’s suffered is embarrassment from knowing he could have gotten more than £35,000.
The Shenzhen court’s ruling seems valid and correct, that Proview (Shenzhen) owns the PRC trademark, but Apple’s point (I believe) is not whether they/Yang own it but that the contract required them to transfer the trademark to IPAD. Apple taking a breach of contract position will probably not be sufficient, but together with the clause for Hong Kong law to apply, this becomes an issue of whether PRC courts will remedy a HK breach of contract case. Since the only material asset Proview (all) seem to have is this one trademark, and given its creditors would be automatically included as parties to the contract, the only remedy possible for Apple (in a HK breach of contract case) is for them to be awarded Proview’s asset(s) as damages. It could be proven (and probably Apple’s reason for allowing Proview to continue in their destructive actions) that damages to Apple caused by Proview’s actions are far beyond what Proview (or its creditors) can/will pay – thus the PRC trademark should be the damage reward.
At the end of the day, the sole issue ultimately is how PRC courts will rule on HK law/contracts and their applicability within China. It seems difficult for PRC courts to rule against Apple, since that would mean they’re also reducing HK’s shine as a major business destination/gateway for foreign companies (i.e., showing that Hong Kong is NOT a stable/reliable business location because it’s laws are NOT supported / enforced by PRC). Don’t belief China would do that. Either way, Apple “wins”.
However I agree the legal issues may not be settled soon. A court-only battle benefits Apple since their distribution/sales probably won’t be affected (see news today), but this hurts Proview because their creditors won’t wait years (signaling them to settle earlier, and for much less than the $1 billion they’re dreaming of). The irony is, if Proview had taken a reasonable amount from Apple ($1 million), and invested that in Apple/Foxconn stocks, they will be much better off. Maybe Apple’s strategy is sound after all — they know more of the details than any of us. We should assume they are fully competent in this matter, in the absence of contrary evidence.
