iPad Battles for Right to Sell in China

Apple Inc’s plans for continued market dominance were dealt a body blow recently, as bans enforced court rulings that Apple’s tablet technology infringes on the intellectual property rights of a Chinese computer products manufacturer. (Feng Li/Getty Images)

The highly publicised trademark dispute between Apple Inc and China’s electronics maker Shenzhen Proview Technology may see iPads disappear in China, while leaving the billion-dollar tablet market open to rivals like Samsung and Lenovo.

On Wednesday, The Higher People’s Court of Guangzhou will hear an appeal by Apple, in a legal battle, which will set precedent for all lower courts in China.

Apple has found itself in a sticky situation, where the Guangdong-based Proview Technology claimed rights to the world’s most popular tablet name, the iPad.

Proview argues that it registered a computer with the name “Internet Personal Access Device” in 2001, which puts Apple’s iPad in breach of the trademark.

On February 17, the court in Huizhou, a city in southern China’s Guangdong Province, ruled in favour of Proview, ordering all iPads to be removed from sale in China. Proview is also requesting commercial authorities in 40 cities to block iPad sales, which will leave a big dent in Apple’s dominance of the China tablet PC market.

However, another court hearing in Shanghai on February 22nd rejected Proview’s bid to ban all iPad sales, but left the final decision to the higher court in Guangzhou.

According to research firm IDC, Apple enjoys a 76 per cent share of all tablet sales in China, selling a whopping 1.3 million iPads in the third quarter of 2011 alone.

Meanwhile, Apple refutes Proview’s claims to the iPad trademark, saying that it bought all rights to the name in 2009 from a Proview affiliate in Taiwan for £35,000 (HK$429,000).

“We bought Proview’s worldwide rights to the iPad trademark in 10 different countries several years ago. Proview refuses to honour their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter,” said Apple spokeswoman Carolyn Wu, according to AP.

However, Proview has argued that Apple acquired the trademark under a different company registered in Britain and has thus acted dishonestly. Proview won a ruling from a Mainland Chinese court in December that it was not bound by that sale.

So far, iPads have been pulled from shelves in some Chinese cities, but there has been no sign of action at the national level. The company also plans to ask China’s customs agency to block imports and exports of iPads, reports AP.

If Proview can achieve its goal of shutting down all iPad sales, rivals Lenovo Group Ltd and Samsung Electronics will jump at the opportunity, with their Lepad and Galaxy tablets keen to take advantage of the world’s biggest computer and Internet user market.

A basic iPad 2 typically costs 3,688 yuan (HK$4,540.46), roughly the same price as the 7-inch Samsung Galaxy Tab. Lenovo’s Lepad is about half that price, aimed at the entry-level buyer.

China has 505 million Internet users, with the number of microbloggers exceeding 300 million.