Apple faced exploitation in iPad dispute, Hong Kong court rules

IDG News Service - Apple's opponent in an ongoing dispute for the iPad trademark in China previously tried to "exploit the situation" by demanding the U.S. tech giant pay $10 million for the trademark, a Hong Kong judge ruled last June.

Chinese display vendor Proview refused to honor its agreement in transferring ownership of China's iPad trademark to Apple, according to a newly revealed court document. As a result, Apple was granted an injunction against Proview, preventing the company from selling off the trademark rights.

The Hong Kong court's siding with Apple sheds some light on a high-stakes legal battle between Apple and Proview over who owns the iPad trademark. A loss for Apple could force the U.S. tech giant to pay penalties and even see the banning of its iconic tablet under the iPad name. Already, regulatory offices in China are investigating iPad sales.

Proview, which has filed for bankruptcy, contends the company still holds the iPad trademark rights after acquiring them in 2001. A court in Shenzhen, China, ruled in its favor in December when it rejected Apple's claims over the trademark.

Apple, however, is appealing the December court ruling. The company maintains it bought the iPad trademark in 10 different countries from Proview, adding that a Hong Kong court has supported Apple in the dispute.

On Friday, a person familiar with the matter provided a document of the case, which Apple filed to seek an injunction against Proview. The document states that Apple established a separate firm called IP Application in August 2009 to acquire the iPad trademarks, in order to preserve confidentiality of the company's plan to launch its tablet.

In December 2009, Proview's Taiwan company agreed to sell the trademarks to IP Application for 35,000 British pounds (US$55,000), with Apple believing it had purchased all the trademarks. But Apple later found that the iPad trademarks for mainland China were registered under Proview's Shenzhen company.

"The Contracting Defendants (Proview) refused to rectify the mistake and suggested that Apple should pay US$10 million to purchase the China trademarks," the court document states, adding that Proview founder Yang Rongshan had knowledge of the agreement to sell the trademarks to IP Application.

On Friday, Yang said the Proview's Taiwan subsidiary sold the iPad trademarks for mainland China without his permission. "We are following Chinese law to maintain our rights," he said, adding that the company was not aiming to take advantage of Apple.

Proview began developing its own "iPAD" device, a Windows-based computer, in 1998, according to Yang. But the product failed to take off. When the company entered talks to sell off some of the iPad trademarks, IP Applications repeatedly promised they would not be used to compete with Proview's electronic products, Yang said.

Proview now plans to file legal action against Apple in the U.S. for using a "fake company" to mislead Proview in selling off the iPad trademarks.

Apple spokeswoman Carolyn Wu declined to offer new comment.