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Chinese Trademark Dispute Threatens Launch Of Latest iPad

The late Apple CEO Steve Jobs introduces the iPad 2 in San Francisco in March 2011.

The late Apple CEO Steve Jobs introduces the iPad 2 in San Francisco in March 2011.

It is an unlikely David and Goliath story. An insolvent Chinese computer-display producer called Proview goes toe-to-toe with U.S.-based computer giant Apple.

And the venue is odd as well -- a trademark-protection case being heard in a country that is almost as well known for intellectual piracy as for fortune cookies.

In December, Proview persuaded a Chinese court to dismiss Apple's claim that it owns the name "iPad" in China. Immediately afterward, Proview asked authorities in major cities to prevent Apple from selling iPads, prompting small-scale seizures of iPads in at least two Chinese cities.

Proview lawyer Xie Xianghui explains that Proview is not in a compromising mood.

"You cannot just use the trademark before you get permission to use it," Xie says. "So in this case, all the legal action and the punitive measures taken by the administrative authority for industry and commerce have a legal basis, because Apple has been using a trademark that belongs to a Chinese enterprise before getting permission to use it."

Block Exports?

But Proview's next step could be the most painful of all. The company has appealed to the Chinese customs authorities to prepare to block the export of iPads made in China, if Proview wins its final court hearing, which is expected to begin in the Guangdong High Court on February 29.

The dispute is a complicated one. Proview registered the trademark IPAD in several countries in 2000, long before the existence of the Apple iPad. In 2009, Apple purchased the rights from a Proview subsidiary in Taiwan through a British intermediary. But Proview's branch in Shenzhen says it owns the rights to the name in China itself. And so far, Chinese authorities have agreed.

In 2010, just before the launch of the first iPad, Apple asked the Chinese trademark authorities to transfer the iPad trademark from Proview-Shenzhen, but that request was denied.

Although China is widely accused -- not least, by the United States -- of ignoring intellectual-property rights, its own laws in this area allow the government to impose global bans on sales of China-produced products found to be infringing the rights of Chinese companies. Theoretically, the tens of millions of Chinese-made iPads around the world could be affected.

'Clear-Cut Case'

Proview lawyer Xie is urging the government to protect his firm.

"The Chinese administrative authority for industry and commerce and the court should enhance intellectual-property protection for Chinese enterprises, especially in clear-cut cases like ours, in which there is no doubt that the intellectual property belongs to the Chinese enterprise," Xie says. "If they use a trademark without authorization, they should be punished."

But experts say it is unlikely China would shut down exports worth millions of dollars to Chinese firms and risk the inevitable political and economic fallout of such a move.

Instead, they expect a settlement, and Proview lawyers have said they are open to offers.

And the clock is ticking. Industry rumors say that Apple could release the new iPad 3 as early as March 7.

Based on a Reuters report