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China seizes iPads as Apple trademark fight escalates

The confiscation of dozens of the tablet computers is the result of a complaint filed by a Chinese company that says it holds the trademark for the hot-selling device in that country.

February 14, 2012|By David Pierson, Los Angeles Times

Reporting from Beijing — Apple Inc.'s fight to use the iPad name in China has hit another snag after authorities seized dozens of the Apple tablet computers from store shelves in northern China.

The seizures in Shijiazhuang, the capital of Hebei province, were in response to a trademark infringement complaint filed by Chinese company Proview Technology, according to its attorney. Proview Technology, which is based in the southern Chinese city of Shenzhen, said it holds the trademark for the hot-selling device in China.

In December, a court in Shenzhen unexpectedly rejected a lawsuit in which Apple said it was the rightful owner of the iPad name.

Since then, Proview Technology has filed complaints in 20 cities, urging authorities to prohibit the California tech giant from selling or marketing its device. The company has also filed lawsuits against Apple and retailers in Shanghai, Shenzhen and Huizhou, a city in southern Guangdong province.

"You'll likely see more and more actions across the country," Xie Xianghui, Proview Technology's lawyer, said in a phone interview Monday. "Apple did not follow Chinese law, so we're confident the authorities will side with us."

That could prove a setback for Apple, which is enjoying explosive growth in China. Last year, Apple Chief Executive Tim Cook described the nation's emerging consumer market as "key" to the company's impressive earnings. So strong is demand for Apple products in China that a riot nearly erupted during the official release of the iPhone 4S in Beijing last month.

The iPad seizures took place as Apple's stock broke the $500 mark for the first time, solidifying its status as the world's most valuable company with a market value of nearly $466 billion. In early 2002, Apple's stock was worth $10 per share on a split-adjusted basis. But a string of hit products — including the iPod music player, the iPhone and the iPad — has lifted the company's shares.

Spokespeople for Apple in China and the U.S. declined to comment on the seizures Monday.

Proview Technology is a subsidiary of Proview International Holdings, a Taiwanese maker of flat-screen displays whose shares trade in Hong Kong.

Proview International registered trademarks for the name IPAD in Europe, Mexico, China and other parts of Asia starting in 2000. The plan was to launch its own hand-held tablet, but that proved unsuccessful.

Proview International instead chose to sell the IPAD trademark to a company linked to Apple for $55,000 in 2006. Apple thought that included the rights to China, but that trademark was still in the hands of Proview Technology.

The hope was that Apple would pay a significant sum for the trademark to help dig Proview Technology out of its debt.

Filings with Hong Kong's stock exchange in 2010 showed the company's chairman, Yang Rongshan, had filed for bankruptcy and owed creditors more than $500 million.

"Apple is not willing to talk with us anymore," said Xie, the company's attorney. "That's why we feel we have to turn to all these tactics to fight for our rights."

It remains to be seen whether more local Chinese authorities will side with Proview Technology. Xie said a district in western Beijing (which houses one of the two official Apple stores in the city) had initially agreed to fine Apple about $39 million. But the penalty was suspended pending Apple's appeal of the Shenzhen court's decision.

Xie said he confirmed with officials at Shijiazhuang's Administration for Industry and Commerce that the iPad seizures were the result of his client's complaint. News of the crackdown was first reported in the Hebei Youth Daily on Monday.

An official at Shijiazhuang's Administration for Industry and Commerce declined to comment.

At least one store owner in Shijiazhuang said he was nervous about being sued and hoped to sell his remaining dozen iPads quickly.

"Other stores have already taken them off the shelves," said a manager at Taihe Electronics City who gave only his surname, Zhang. "After we've sold all of them we won't be selling any more iPads."

david.pierson@latimes.com

Times staff writer David Sarno in Los Angeles contributed to this report.

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