After months of haggling, Apple (Nasdaq: AAPL) has finally settled a high-profile trademark dispute with a bankrupt Chinese company over use of the iPad name, paving the way for the US tech giant to continue an aggressive ramp-up in a market that has become its second largest worldwide. News of this settlement looks good for not only Apple but also China, allowing the former to reclaim rights to the iPad name while showing companies that Beijing is committed to creating a business friendly environment for those who play by the rules.
The only one who may be less-than-satisified at the settlement is Proview Technologies, the bankrupt Chinese company that had owned the iPad name in China and conducted a high-profile media campaign throughout the dispute to try to convince the world and its creditors that it could receive $1 billion or more in the settlement.
Under their newly reached court-mediated deal, Apple will get the rights to the iPad name in exchange for $60 million, which will go into a fund being used to pay off Proview’s creditors. (English article) After losing an initial ruling in the case late last year, Apple had appealed to a higher court in an attempt to reverse the decision.
I have no doubt that Beijing became directly involved in the dispute and, working through the court, put big pressure on both sides to reach an agreement that would be acceptable to everyone. As recently as early May, Proview had been seeking a minimum of $400 million while Apple was offering up to $16 million (previous post), so this judgment represents a victory for Apple.
The deal clears the way for Apple to resume selling its older generation iPads in China, and for it to soon introduce its newest iPad to the market. From my perspective, the biggest winner in all of this isn’t Apple but is rather Beijing and companies doing business in China, both domestic and foreign. The deal shows that Beijing is committed to creating a friendly business environment that rewards companies who follow the rules. It also shows the government will be less tolerant of companies that abuse those rules.
Based on my limited knowledge of the situation, Apple should have been the rightful owner of the iPad name in China after buying the rights in a deal several years ago that was never completed for technical reasons. A cash-strapped Proview then attempted to take advantage of that glitch to extort more money out of Apple, violating the spirit of its earlier agreement.
With this dispute now solved, we can expect to see the China market quickly move to the top of Apple’s priority list, meaning the country is likely to be first among global markets for the roll-out of new products in the future and could also become a product development center. The broader business community in general should also feel more confident knowing that smaller rivals won’t be able to give them unjustified problems by taking advantage of technical issues in China’s fledgling legal system.
Bottom line: A settlement of the iPad trademark dispute in Apple’s favor marks a victory not only for Apple, but also for the broader business community in China.
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