Apple may face 'sky-high' fines

Updated: 2012-02-08 08:07

By Wang Yi (China Daily)

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On the heels of a court judgment last December in Shenzhen, Guanghdong province that ruled against Apple over an iPad icon trademark dispute, the US-based corporation could face paying "sky-rise fines" to industrial and commercial administrations, according to local media reports.

The other party in the wrangle - flat screen maker Shenzhen Proview Technology - filed with the Xicheng branch of the Beijing Administration for Industry and Commerce early in 2011 claiming that Apple stood in violation of its trademark iPad.

The Xicheng branch held jurisdiction over an Apple store in the Joy City shopping mall. There are five official Apple stores on the mainland with two located in Beijing and three in Shanghai.

Law enforcement authorities have issued a fine of up to 240 million yuan ($38 million), but the court decision remains under dispute by Apple so the punitive penalty was suspended, according to the China Business Journal.

Shenzhen Proview is trying to "stop infringements" through legal proceedings and administrative force, said Xie Xianghui, a lawyer for the company.

"We have two options. One is to sue Apple stores or distributors and the other would be to request local industrial and commercial administrations to launch an investigation," Xie said.

The wrangle can be traced back to more than a decade ago. Before Apple introduced its tablet computer in 2010, Shenzhen Proview registered the trademark in question on the mainland in 2001.

Apple may face 'sky-high' fines


Meanwhile, IP Application Development Ltd (IPAD), owned by Apple, acquired some trademark rights from a Proview subsidiary in Taiwan in 2009. IPAD transferred the related interests to Apple one year later.

"Taiwan Proview and Shenzhen Proview are independent corporations. They have no direct investment relationship," China National Radio quoted Xie as saying.

The Taiwan firm, controlled by Hong Kong-listed Proview International Holding Ltd, is related to Shenzhen Proview, an affiliate indirectly invested by Proview Industry, Xie explained adding that there are "equity relations" between Proview International Holdings and Proview Industry.

"The trademark was registered and used by Shenzhen Proview on the mainland. Anyone could obtain access to ownership information on the national trademark website," he said.

Proview has filed a complaint with a Pudong court in Shanghai and the case is scheduled for a hearing on Feb 22.

Apparently either the legal proceedings or an administrative investigation appears to be a maneuver to get Apple to the negotiating table.

A trademark license or transfer is only what Proview wants, according to Xie.

The Shenzhen company once the fourth largest flat screen manufacturer in the world plunged into debt after the global financial crisis in 2008. Its assets were seized by eight creditor banks while the trademark is considered to be the most valuable.

Some observers noted that the embattled firm is trying to use it to pay off more than 400 million yuan in debt. The company has reportedly claimed 10 billion yuan for compensation.

After a request for confirming its ownership of the trademark was rejected by the Shenzhen court at the end of 2011, Apple lodged an appeal with the Guangdong High Court.

Now the case is still under investigation.

China is the second largest market for Apple products and contributed $4.5 billion to its revenues stream in the fourth fiscal quarter last year, a surge of 270 percent from the same period of 2010, which accounted for 16 percent of the total sales volume.

China Daily