Apple Inc (NASDAQ:AAPL) has paid $60 million to Proview Technology (Shenzhen) to end a dispute over the iPad trademark in China that saw the world's most valuable technology company engaged in a protracted legal tussle with a near-bankrupt Chinese firm.
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The lawsuit had hampered some sales and delayed the launch of the new iPad in China. Prior to the launch, Proview requested Chinese authorities in scores of Chinese cities to order re-sellers to take all iPads off their shelves.
The court-mediated settlement, announced on the website of the Higher People's Court of Guangdong province, will allow Apple to get on with selling its popular tablet PC in one of its most important markets, analysts said.
"The settlement is great news for Apple. It just allows them to get on with business and stop being distracted. The new iPad has been so late to the China market that if they drag it any longer, Apple will stand to lose quite a bit more," said Teck-Zhung Wong, a Beijing-based analyst with technology research firm IDC.
Apple and Proview Technology (Shenzhen), a unit of Hong Kong-listed Proview International Holdings Ltd, have been negotiating to reach a settlement since the court conducted an initial hearing in February, after Apple appealed a lower court ruling against it.
Apple had said it bought ownership of the iPad trademark in various countries from Proview, once a global monitor maker, but the Chinese company argued the U.S. firm dealt with only one unit of Proview. A Chinese court ruled that Proview Technology (Shenzhen) owned the name in China. Proview, which registered the iPad trademark in China in 2001, tried in May to sue Apple in the United States, but that case was thrown out.
An Apple spokeswoman declined to comment on Monday.
The iPad dominates China's tablet PC market with more than 70 percent market share, though Lenovo Group Ltd's Lepads and Samsung Electronics Co Ltd's Galaxy Tabs have been gaining traction.
Apple is experiencing heady growth in Greater China - China, Hong Kong and Taiwan - with second-quarter sales in the region increasing several-fold to $7.9 billion. From the launch of the iPad in the third quarter of 2010 to March this year, Apple shipped more than 6 million iPads to mainland China, according to IDC.
For Proview - which local media had said was seeking as much as 10 billion yuan ($1.57 billion) from Apple - and its creditors, the settlement should be welcomed, some lawyers said.
The $60 million will be paid into a court-designated account and used to pay Proview's creditors, said a source familiar with the situation. In March, Taiwan's Fubon Insurance, one of several Proview creditors and a unit of Fubon Financial Holding Co Ltd, applied for bankruptcy proceedings against Proview because of $8.68 million in outstanding debt.
"The settlement fee is not bad for Proview, because although Proview owns the trademark, it was Apple, not Proview, who created the brand's value," said Chen Jihong, a Beijing-based intellectual property rights lawyer at Zhong Lun Law Firm.