May have to pay $1.6 b for the right to retain the name in mainland
Would an iPad by another name sell as sweetly? Apple Inc. found itself grappling with that question on Wednesday after it had a lawsuit rejected by a court in southern China, a move that could force the electronics devices giant to pay as much as $1.6 billion for the right to retain the ‘iPad' name in the fast-growing mainland Chinese market.
The Shenzhen court's verdict this week marked the latest twist in a long battle that Apple has waged in China, from tackling tens of thousands of counterfeiters, peddling cheap tablet lookalikes, to local retailers who have, remarkably, even set up entire fake Apple stores in second-tier cities.
The court rejected Apple's complaint against the company Proview Technology Shenzhen, which claimed to have registered the iPad trademark in the year 2000, before Apple did.
The court said Apple “should be more careful when trying to gain trademarks owned by others and signed transferring contracts with the trademark owner according to regulations on the mainland,” the Shenzhen Daily reported of the lawsuit's rejection.
According to Chinese media reports, Apple had bought the rights for the iPad trademark from Proview Taipei in 2009 with a $54,616 agreement, although Proview Shenzhen, another subsidiary of Hong Kong-based Proview International Holdings, said it had still reserved its trademark rights, leading to the dispute.
For Apple, the legal troubles signal an unwelcome obstacle as the company looks to make further inroads into the booming China consumer market, identified by the company as a key driver of growth, with a number of Apple stores scheduled for opening in the coming months. The case, analysts fear, could open the door for similar lawsuits against the company.
Apple could now also face the prospect of selling its most recognised product in China under a completely different name — a move that could have uncertain consequences in a particularly brand-conscious market.
Apple products, particularly the iPad, have become a craze among China's fast-growing urban middle-class. The products of the company known widely here as “Pingguo” — the Chinese word for Apple — have become a must-have status symbol among the newly wealthy.
In June this year, Zheng, a 17-year-old Chinese teenager, confessed to selling one of his kidneys for the Apple label. He sold a kidney for 22,000 RMB (Rs.1.78 lakh) because “he wanted an iPad 2”, he later told a local television station. The launches of new Apple products have become week-long media circuses in China. Thousands of shoppers lined up for days ahead of the launch of the iPad 2 and the iPhone 4 in Apple's flagship stores in Shanghai and Beijing. In the Chinese capital, fights broke out among shoppers as they forced themselves into the Sanlitun store trying to become the first Chinese to lay their hands on the iPad 2.