China faces conflict of law, business in iPad row

February 17, 2012 RSS Feed Print

The dispute comes amid complaints that Beijing is failing to do enough to stamp out rampant unlicensed Chinese copying and exports of goods ranging from music and Hollywood movies to designer clothing to pharmaceuticals.

But unlike "trademark squatters" who register names of products already sold abroad and then demand foreign companies pay for the Chinese rights, Proview registered the iPad name long before Apple planned its tablet computer.

Proview says it plans to ask China's customs agency to block imports and exports of iPads.

Such requests are routine under rules enacted to help stamp out rampant Chinese product piracy that has strained relations with the United States and other trading partners.

But enforcing this one could force regulators to confront the cost of disrupting Apple's business. That might hurt China's image as a high-tech manufacturing center at a time when foreign producers are being squeezed by rising costs.

All of Apple's iPads are made in China by Foxconn Technologies Group, which employs more than 1 million people in sprawling factory complexes. Taiwan-based Foxconn previously did all its production in China but Brazil's government says the company plans to open factories there to produce iPads and other products.

"The government cares about jobs. The government cares about industry. And who is Proview? Nobody cares about Proview," Abrams said. "Apple is a big employer in this country. If it comes to politics, that is a decent argument."

Proview has accused Apple of acting dishonestly when it bought rights to the iPad name from the Taiwan company. According to July's Hong Kong court ruling, Apple set up a company in Britain to buy the iPad trademark from owners in various markets without revealing Apple was the purchaser.

Once the dispute arose, Proview demanded $10 million for the name in China, the court document said.

Apple has other legal options in China, such as asking regulators to cancel Proview's trademark if it can be shown not to have been used for three years, said Wong. But he said that would take 12 to 18 months, extending the uncertainty for manufacturing and sales.