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Old Feb 16, 2012, 12:02 AM   #1
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iPad Issues in China: Amazon Not an Authorized Retailer, Apple's Victory in Hong Kong Trademark Case






Earlier today, we noted that the iPad had been pulled from sale at online retailers Amazon China and Suning.com, with the development coming just days after authorities had seized some iPads over a trademark dispute involving the "iPad" name. At the time of the removal, an Amazon China spokesperson indicated that the iPad had been removed at Apple's request rather than as a result of actions associated with the trademark dispute, but Apple's reasons for the request were unknown.

The Wall Street Journal now reports that Apple did indeed request that Amazon China remove the iPad from sale, simply due to Amazon China not being an officially authorized retailer.
Quote:
The Cupertino, Calif., consumer electronics giant asked Amazon in China to stop selling iPads because it is not an authorized reseller, according to people familiar with the matter. Amazon has since removed iPads offered by other resellers on its Chinese website as well.
The report's sources indicate that the move was not specifically related to the ongoing trademark dispute, although the timing suggests that it perhaps did play some role in the decision, if only by spurring Apple to reassess iPad distribution in China and tie up any loose ends.

While Chinese courts have so far ruled against Apple in the trademark dispute with Proview Technology, Apple has noted that it did win a court case on the issue in Hong Kong last year. The Wall Street Journal's report offers some additional details on that decision, which held that Proview and its subsidiaries had conspired against Apple in a scheme to extract more money from Apple.
Quote:
The court said, in its findings, that Proview, its subsidiaries and at least one other company had combined together "with the common intention of injuring Apple," by breaching the agreement over the iPad name. The court, calling the event a conspiracy, further said Proview had "attempted to exploit the situation as a business opportunity," by asking for money.

"It is accordingly important that (Apple) is able to secure and obtain the China trademarks," the court wrote in its decision.
Proview reportedly failed to transfer the iPad trademark assignment in China to Apple as required by a 2009 agreement, instead demanding that Apple pay $10 million for the rights. Proview is now seeking as much as $1.6 billion in damages in Chinese courts.

Article Link: iPad Issues in China: Amazon Not an Authorized Retailer, Apple's Victory in Hong Kong Trademark Case
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Old Feb 16, 2012, 12:08 AM   #2
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What would happen if Apple decided to play nice?


Would they no longer make an obscene amount of money ?

I think not
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Old Feb 16, 2012, 12:10 AM   #3
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A conspiracy? Proview trying to extort Apple for money? Who knew??
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Old Feb 16, 2012, 12:10 AM   #4
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May have simply been a way at cutting down on all the scalpers in china. (the amazon 3rd party pull)
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Old Feb 16, 2012, 12:11 AM   #5
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Was the other company Samsung? No I'm not serious but what if?
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Old Feb 16, 2012, 12:11 AM   #6
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Does Apple and Disney have enough money to fund a private Army to overthrow the Red Chinese? This would solve a lot of problems.
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Old Feb 16, 2012, 12:14 AM   #7
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May be an obvious question, but if Amazon China was not an authorized retailer, where were they getting iPads from?
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Old Feb 16, 2012, 12:21 AM   #8
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Originally Posted by CFreymarc View Post
Does Apple and Disney have enough money to fund a private Army to overthrow the Red Chinese? This would solve a lot of problems.
And create even more.

In all seriousness, this explanation sounds a lot more plausible than Apple neglecting to check if their agreement gave them the iPad copyright in China.
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Old Feb 16, 2012, 12:21 AM   #9
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Hong Kong uses the common law system (and rules of equity) so the outcome is very much expected and reasonable.

In China it's to some extent depend on the government's discretion The bigger the case the more chance for the government to intervene. Anyway Apple employs such a huge amount of Chinese workers I don't think the Chinese government will be that harsh to them.
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Old Feb 16, 2012, 12:23 AM   #10
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May be an obvious question, but if Amazon China was not an authorized retailer, where were they getting iPads from?
Apple China?
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Old Feb 16, 2012, 12:24 AM   #11
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I keep failing to see the 'damages' APPL has caused using the trademark.
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Old Feb 16, 2012, 12:26 AM   #12
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Win the case in Hong Kong means nothing because the law in HK doesn't apply to China.
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Old Feb 16, 2012, 12:32 AM   #13
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Originally Posted by sdugoten View Post
Win the case in Hong Kong means nothing because the law in HK doesn't apply to China.
actually it means everything. Mainland Chinese will just buy iPads from Hong Kong and sell it in Mainland unofficially.
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Old Feb 16, 2012, 12:44 AM   #14
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actually it means everything. Mainland Chinese will just buy iPads from Hong Kong and sell it in Mainland unofficially.
so no change really (other than more commissions for the Mainland China version of Ebay)

$1.6 billion in damages? How much would it really cost Apple to come up with a new name?

It's not like Apple would need to spend much on regaining brand recognition or share.

Like one customer is quoted as saying:

Quote:
Zhang Lichao, an Apple fan, said he would buy the iPad regardless of its name or copyright.

"I'm not blindly supporting Apple. I ignore Proview Shenzhen's accusation because it has not made any product like the iPad that is worthy of our nation's pride or that is worth fighting for." (China News Daily)
And does it need to rename all iPads or can it come up with a special China only name (heck car manufacturers do it).

(Okay, okay I am sure there are subtleties I have missed entirely)
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Old Feb 16, 2012, 12:47 AM   #15
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Does Apple and Disney have enough money to fund a private Army to overthrow the Red Chinese? This would solve a lot of problems.
Sure, but it would be a mickey mouse outfit.
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Old Feb 16, 2012, 12:47 AM   #16
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what a mess
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Old Feb 16, 2012, 12:53 AM   #17
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Macrumors and WSJ are distorting facts here and make it sound like its all Proview's fault.

Truth is today there is no such as a single "Provew". Today Proview Shenzhen and its parent company are two seperate and independent entities sharing merely a name. Proview Shenzhen = the creditors of Proview Shenzhen.

The whole group is on the brink of bankrupcy and its oversea parent company lost control over Proview Shenzhen to the creditors.

Yes Proview Shenzhen's parent company agree to casue Proview Shenzhen to transfer the trademark.

But Proview Shenzhen is taken over by its creditors. And whatever its parent company as its shareholder say or decide (transfer of the trademark) is not binding on Proview Shenzhen unless they are able to repay the debts.

It's like whatever you agree to do(and court asked you to do) , you cannot legally do it unless you actually legally control it.

It is well within the legitimate rights of the creditors (aka Proview Shenzhen) to refuse to transfer the trademark, since the parerent company lost is legal power to tell Proview Shenzhen what to do. The HK court's ruling is absolutely correct. But it is a useless ruling because whatever the HK court require the parent company to do, the parent company had already lost its power and legal capacity to do so.

I do not understand why such simple facts become portrayed in a way like the country and its government is bullying Apple.

Should this happen in any other western country, Apple would in even bigger trouble, since Apple is clearly infringing a trademark legetimately owned and used by someone else for over a decade. The blame is totally on Apple. When you purchase something, it is your responsibility to find out whether the seller actually owns that thing. If you failed to do so, you bear the consequences. Simple as that.

Last edited by dannysiu; Feb 16, 2012 at 03:45 AM.
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Old Feb 16, 2012, 01:04 AM   #18
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For my own edification, what would happen in the US had Proview actually still owned the trademark here? Would they only get the amount of actual damages or would the courts award them some random amount? TIA
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Old Feb 16, 2012, 01:07 AM   #19
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The Hong Kong ruling can be read here:
http://www.hklii.hk/cgi-bin/sinodisp...2011/1375.html

It is an order to all, including Proview Shenzhen, which is a defendant in the Hong Kong case. It also alleges that Proview Shenzhen also signed the contract where Proview Electronics said it was the owner and would transfer the marks to IP/Apple.

Quote:
Eventually, IP Application and Proview Holdings, Proview Electronics and Proview Shenzhen (“the Contracting Defendants”) entered into a written agreement in December 2009 whereby the Contracting Defendants agreed to sell, transfer and assign the Subject Trademarks to IP Application for £35,000 (“the Agreement”).

9. It is Apple and IP Application’s case that in the process of drawing up the formal written agreement (“the Written Agreement”) and the assignments (“the Country Assignments”) to give effect to the Agreement, the representatives of the Contracting Defendants represented and led IP Application to believe that all the Subject Trademarks, including in particular the China Trademarks, were owned by and registered in the name of Proview Electronics. Accordingly, the Written Agreement and the Country Assignments executed on 23 December 2009 expressly stated that Proview Electronics was the proprietor of the Subject Trademarks including the China Trademarks and that Proview Electronics warranted that it was the unencumbered sole owner of the Subject Trademarks including the China Trademarks. The Country Assignment pertaining to the China Trademarks (“the China Country Assignment”) also recited that Proview Electronics was the proprietor of the China Trademarks. However, after Apple had announced the launch of iPads in January 2010, it was discovered that the China Trademarks were in fact registered in the name of Proview Shenzhen. The China Country Assignment was accordingly ineffective in assigning the China Trademarks to IP Application.
Quote:
39. In performing of the Agreement, IP Application had paid £35,000 for the Subject Trade Marks (including the China Trademarks) on 23 December 2009. It is plainly arguable that the circumstances of the present case are such that the court may order specific performance if IP Application succeeds in its claim for breach of contract. There is accordingly clearly a serious question to be tried that Proview Shenzhen now holds the China Trademarks on trust for Apple and IP Application.
Quote:
41. There is clearly a serious question to be tried that each of these requirements are made out in the present case :

(a) there exists a trust by reason of the matters set out in Part D.2.c above;

(b) Proview Shenzhen has acted in breach of trust by reason of its refusal to transfer and assign the China Trademarks;

(c) other defendants have induced and/or assisted in Proview Shenzhen’s breach; and

(d) such inducement and/or assistance is dishonest.
Quote:
Here, the conduct of all the defendants demonstrate that they have combined together with the common intention of injuring Apple and IP Application by acting in breach of the Agreement. Proview Holdings, Proview Electronics and Proview Shenzhen, all clearly under Yang’s control, have refused to take any steps to ensure compliance with the Agreement so that the China Trademarks are properly assigned or transferred to IP Application. Instead, they attempted to exploit the situation as a business opportunity for the Proview Group by seeking an amount of US$10,000,000 from Apple.
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Old Feb 16, 2012, 01:09 AM   #20
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Was the other company Samsung? No I'm not serious but what if?


Come on, really?
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Old Feb 16, 2012, 02:00 AM   #21
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May be an obvious question, but if Amazon China was not an authorized retailer, where were they getting iPads from?
Authorized 3rd parties are usually allowed to sell items on Amazon, not sure about the iPad.

Have you ever seen the "order fulfilled by" clause on amazon when you buy via amazon but it's being sold and shipped by another store.
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Old Feb 16, 2012, 02:17 AM   #22
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Originally Posted by dannysiu View Post
Macrumors and WSJ are distorting facts here and make it sound like its Proview's fault.

Truth is today there is no such as a single "Provew". Today Proview Shenzhen and its parent company are two seperate and independent entities sharing merely a name. Proview Shenzhen = the creditors of Proview Shenzhen.

The whole group is on the brink of bankrupcy and its oversea parent company lost control over Proview Shenzhen to the creditors.

Yes Proview Shenzhen's parent company agree to casue Proview Shenzhen to transfer the trademark.

But Proview Shenzhen is taken over by its creditors. And whatever its parent company as its shareholder say or decide (transfer of the trademark) is not binding on Proview Shenzhen unless they are able to repay the debts.

It's like whatever you agree to do(and court asked you to do) , you cannot legally do it unless you actually legally control it.

It is well within the legitimate rights of the creditors (aka Proview Shenzhen) to refuse to transfer the trademark, since the parerent company lost is legal power to tell Proview Shenzhen what to do. The HK court's ruling is absolutely correct. But it is a useless ruling because whatever the HK court require the parent company to do, the parent company had already lost its power and legal capacity to do so.

I do not understand why such simple facts become portrayed in a way like the country and its government is bullying Apple.

Should this happen in any other western country, Apple would in even bigger trouble, since Apple is clearly infringing a trademark legetimately owned and used by someone else for over a decade. The blame is totally on Apple. When you purchase something, it is your responsibility to find out whether the seller actually owns that thing. If you failed to do so, you bear the consequences. Simple as that.
That's a very well reasoned argument, but I'd like to learn some facts, which most media outlets lack. Specially the timeline of the deadline for the trademark transfer and when the creditors got involved. Also the legal agreement when the creditors signed on, was there a clause not to interfere in previous contracts/agreements.

There's also the idea of "good faith" meaning Apple thought that they own they rights through their purchase, so they can't be penalized too harshly, at least under Hong Kong law.

If Proview wins this, it will probably hurt American public opinion about China, something which is not going to go well on top of all the complaining about American manufacturing going to China.
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Old Feb 16, 2012, 02:53 AM   #23
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Here is analysis I found insightful (from comments on the China Hearsay blog):
http://www.chinahearsay.com/proview-...reality-check/

Quote:
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.
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Old Feb 16, 2012, 03:02 AM   #24
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Originally Posted by dannysiu View Post
Macrumors and WSJ are distorting facts here and make it sound like its Proview's fault.

Truth is today there is no such as a single "Provew". Today Proview Shenzhen and its parent company are two seperate and independent entities sharing merely a name. Proview Shenzhen = the creditors of Proview Shenzhen.

The whole group is on the brink of bankrupcy and its oversea parent company lost control over Proview Shenzhen to the creditors.

Yes Proview Shenzhen's parent company agree to casue Proview Shenzhen to transfer the trademark.

But Proview Shenzhen is taken over by its creditors. And whatever its parent company as its shareholder say or decide (transfer of the trademark) is not binding on Proview Shenzhen unless they are able to repay the debts.

It's like whatever you agree to do(and court asked you to do) , you cannot legally do it unless you actually legally control it.

It is well within the legitimate rights of the creditors (aka Proview Shenzhen) to refuse to transfer the trademark, since the parerent company lost is legal power to tell Proview Shenzhen what to do. The HK court's ruling is absolutely correct. But it is a useless ruling because whatever the HK court require the parent company to do, the parent company had already lost its power and legal capacity to do so.

I do not understand why such simple facts become portrayed in a way like the country and its government is bullying Apple.

Should this happen in any other western country, Apple would in even bigger trouble, since Apple is clearly infringing a trademark legetimately owned and used by someone else for over a decade. The blame is totally on Apple. When you purchase something, it is your responsibility to find out whether the seller actually owns that thing. If you failed to do so, you bear the consequences. Simple as that.
The Hong Kong court ruled that Proview Holdings (the parent company), Proview Szenzhen (the Chinese subsidiary) and Proview Electronics (the Hong Kong subsidiary) conspired to mislead IP Application into believing that Proview Electronics had the right to sell the worldwide rights. If the parent company and the Chinese subsidiary, under the control of their creditors, conspired to mislead Apple's representative about the ownership of the trademark, then how can one of those conspirators sue Apple for the use of that trademark? It would be like stealing good and then suing the original owner when those stolen goods were returned to them. The court agreed that Apple all the parent Proview company AND both the Chinese and Hong Kong subsidiaries were signatories to the agreement. If these findings are correct, then no court subject to the rule of law would rule against Apple.

The only problem is that Chinese courts are not always subject to the rule of law, as has been amply demonstrated by their backing of the Chinese government's repression of its own citizens.
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Old Feb 16, 2012, 03:02 AM   #25
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"It is well within the legitimate rights of the creditors (aka Proview Shenzhen) to refuse to transfer the trademark, since the parerent company lost is legal power to tell Proview Shenzhen what to do. The HK court's ruling is absolutely correct. But it is a useless ruling because whatever the HK court require the parent company to do, the parent company had already lost its power and legal capacity to do so."

That's not necessarily true.

It depends on when the purchase of the trademark took place in relation to the so-called creditors who assumed control of Proview Shenzhen. A sale agreement has validity even across borders. We simply don't have enough details to say. If the HK court thinks there's a conspiracy to cheat Apple, at least it comes from someone who has access to the details of the case.
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