Apple Could Lose $1.6 Billion In iPad Lawsuit 286
redletterdave writes "Proview Technology, which currently uses the 'iPad' name on several of its products including computer monitors, stands to win up to $1.6 billion and an apology from Apple for allegedly infringing upon Proview's trademarked name to use on its bestselling tablet. Proview International, which owns subsidiaries Proview Technology in Shenzhen and Proview Electronics in Taiwan, originally registered the name 'iPad' in Taiwan in 2000 and mainland China in 2001. Proview eventually sued Apple in 2011, and even though the Cupertino-based company retaliated with a counter-suit of its own, Apple lost the case in local Chinese courts. Depending on the court's findings, Apple could be fined anywhere from $38 million to the $1.6 billion that Proview is seeking. In addition to the money, Proview also wants Apple to apologize. 'We have prepared well for a long-term legal battle,' said one of Proview's lawyers."
And Apple's Worried? (Score:5, Interesting)
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Hey that's a lot of money. Just $97 billion to go :P
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Selling? They would lose money doing that. Now, they can threaten to stop building them in China. That's a threat.
But let’s be honest: this was an Apple fuckup. They have the resources to search these names in all nations and trademark them in time, if taken anywhere; they can just use a different name in the country or pick a name that has not been used.
That being told, perhaps it would be cheaper for Apple to buy out this company than to pay up 1.6 billion.
Re:And Apple's Worried? (Score:4, Informative)
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They did search. And paid the company for use of the name. The Chinese company seems to be trying to double dip.
Nonsense. Apple only paid for the use of the trademark within Taiwan. They didn't negotiate for its use in the rest of the world.
ROC vrs PRC (Score:5, Interesting)
Re:ROC vrs PRC (Score:5, Informative)
The Chinese arm of the company is filing the lawsuit. Not sure witch is the parent company. I would assume the Tiawan based one since that is who Apple paid.
Both companies are subsidiaries of a larger parent company.
Proview International, which owns subsidiaries Proview Technology in Shenzhen and Proview Electronics in Taiwan, originally registered the name 'iPad' in Taiwan in 2000 and mainland China in 2001.
Apple bought the trademark from Proview Electronics, and they are now being sued by Proview Technology. Both companies are owned by Proview International, which is based in Hong Kong.
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Re:And Apple's Worried? (Score:4, Insightful)
It's not about hurting Proview, it's about hurting China's economy. If Apple threatens to move all of their device production out of China, that's incentive not to rule against Apple (or at least not rule on the order of $1B+). Some estimates say Apple subcontractors in China employ over 500,000 people building Apple products...
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Well, I guess of course it doesn't have to be an all or nothing deal. Apple has been talking about expanding their production to Brazil anyway (which makes business sense - this current co-dependence shows one problem with locating all of your factories in one place!) They could just ramp up that plan and start spreading out their production, making China much less of a critical element to Apple's success. It would be a clear but subtle message (in keeping with the way China loves to send their indirect
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One source I read (look it up yourself, took me all of 10 seconds) said Foxconn currently has "over a million" employees (Wikipedia says 920k+ in 2010, and it has likely grown significantly), and several sources (including the New York Times) estimate Apple to be ~40% of Foxconn's business.
And that's just Foxconn. There are plenty of other subcontractors, suppliers, etc. that employ many more people in China in order to fulfill Apple's manufacturing needs. That's close enough to 500k (for which I clearly
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Now, they can threaten to stop building them in China. That's a threat.
yeah, cos that would reduce the competition for the local chinese ripoffs
Re:And Apple's Worried? (Score:4, Interesting)
They are in bankruptcy right now. They're betting on this to save them. Bail them out essentially. Apple already bought the trademark from them (under another name), so I'm not even sure how they could have possibly lost this lawsuit.
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It's the Chinese government playing politics. The same government that does pretty much nothing to stop Chinese manufacturers from violating foreign company copyrights and trademarks is now claiming Apple is violating some bankrupt company's (who they already paid for the use anyway) trademark? They are trying to make it look like the "big American company" is just as guilty as they are for condoning trademark infringement...
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Selling? They would lose money doing that. Now, they can threaten to stop building them in China. That's a threat.
It's not much of a threat - there's nowhere else on earth that could build them for the same cost. Raising the retail price of an iPad to $999 would severely slow sales.
If Apple loses the suit they would either need to (a) pay up; or (b) move all manufacturing of Apple products, including iPhone and iPod, outside of China, to stop the unsold product from being seized for lack of payment.
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Some other random thread indicated that, for a typical electronic device like the iPad or iPhone, manufacturing it in China saves Apple maybe $20-$30 per device compared to manufacturing it in the U.S. So a $599 iPad with maybe a 2X? markup would be $649 produced in the U.S.A.
It's really not that big of a difference, unless you're a corporate executive responsible solely to your stockholders and your own annual bonus (aka a greedy bastard) who'd rather squeeze out that money by working Chinese in sweat sho
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Replying to my own post with a source.
http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?pagewanted=all [nytimes.com]
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Selling? They would lose money doing that. Now, they can threaten to stop building them in China. That's a threat.
And since the A5 is made in Texas, it's actually possible for Apple to make such a decision stick, rather than have China respond to the blackmail threat by ordering the factories keep making iPads anyway.
Re:And Apple's Worried? (Score:5, Insightful)
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There's no hypocrisy. Apple bought the iPad trademark from a Proview subsidiary. I don't know Chinese law, but it's difficult to see how Proview can now sue for it's misuse.
Prediction: Apple will win at appeal.
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Was the subsidiary the owner of the trademark?
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Morally a parent company ought to be responsible for the actions of it's subsidiaries. Whether Chinese law follows morality in that regard I wouldn't know.
Re:And Apple's Worried? (Score:4, Informative)
Here's [electronista.com] more.
So it sounds like Apple perhaps fucked up and they didn't secure the rights in China like they thought they were, or the Taiwanese company deliberately misled them, waiting until they were in financial trouble to cash in this particular chip, and say "Surprise, you didn't buy the rights in China like you thought."
Whichever it is, I suspect it'd be easier and cheaper for Apple to simply buy the company and shutter it than it would be to pay 1.6 billion dollars and lose the right to use the name. Realistically, I think you can expect the companies to settle with Apple being granted the rights to the name, and Proview getting a nice chunk of cash for it.
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Re:And Apple's Worried? (Score:4, Insightful)
I don't think you quite know how the Chinese work. This is a country which turns a blind eye to entire corporations being cloned including multi story buildings and factories being made for phantom companies. Companies such as NEC existed in China for years unnoticed until NEC in America started getting warranty calls for DVD players, a product it doesn't make but none the less had its logo on it.
If Apple pulled out of China ... nothing changes. iPads would still be available on the grey market just like every other product. Now if Apple pulled PRODUCTION out of China that may be a different story entirely, but the reality is they don't have anywhere else to go, and this is not a decision a company can make on the short term.
Corporations lobby and threaten, that's about the extent of power over governments. In the west this lobbying works worryingly well.
Re:And Apple's Worried? (Score:4, Funny)
'... but the reality is they don't have anywhere else to go,...'
How about Samsung in South Korea; Apple claims they already make iPads! ;^)
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Not that $1.6 billion would hurt them much, but all they'd have to do is threaten to stop making the iPad in China. At that point, the government will just make Proview go away.
FTFY.
The loss of jobs would be immense. If Apple stopped selling the iPad legitimately, it's not as if Chinese people wouldn't be able to get a bootleg version of it. Hell, China has made a knockoff Apple Store! [wsj.com]
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Not that $1.6 billion would hurt them much, but all they'd have to do is threaten to stop selling the iPad in China. At that point, the government will just make Proview go away.
Not in anyone's wildest delusions would that be the outcome. A much more likely outcome would be the Chinese government telling Apple to not let the door hit them on the ass on the way out, and just formally authorize the sale and distribution of iPad clones in China.
Apple has exactly zero leverage against China, since the Chinese hold all of Apple's manufacturing capacity, and have the will and capability of cloning anything Apple makes.
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You realize these factories make more than iPads, right? And if China starts making itself unfriendly to a major foreign manufacturer (Apple is a BIG FUCKING COMPANY these days), they risk what amounts to the fuel of their economic engine.
My bet is that the whole thing will be squashed in very short order. The Chinese government knows what side the bread is buttered on.
Re:And Apple's Worried? (Score:5, Informative)
you realize that Apple relies on cheap Chinese slave labor to make iPads at $499/ea, right? And if Apple pulled out of China they'd have nowhere else to go. America isn't an option because of labor regulations and an expensive workforce. iPads would be up at $1499 and still losing money, iPhones would be $1000 subsidized and America's economy would take a larger nosedive than China's. Brazil? They've already tried that and it's as bad as America.
Bullshit. The differences in manufacturing costs amount to a few dollars per unit. From the New York Times [nytimes.com]:
So we're talking about $22, not $1000. You're off by over an order of magnitude. Sure, moving the supply chains from China to the USA would be a big challenge, but that's a one-time expense.
Re:And Apple's Worried? (Score:4, Informative)
I expect (based on your info) we'll be seeing a massive influx of manufacturing from Apple, Dell, HP, et al.
How exactly to you reach that sarcastic conclusion based on what GP wrote? His/her point was that the non-material cost differential (I'm assuming this is including shipping the unit from Asia to the US) was about $17 per unit. Obviously when you'r selling tens of millions of units a quarter, this is not an insignificant sum.
But, that cost increase would not cause Apple to up prices 300% and be unprofitable, which was baseless assertion you made.
Re:And Apple's Worried? (Score:4, Interesting)
Overall, manufacturing in America is growing, and is quite low cost - it's just all the new stuff is automated (so no associated jobs). You should expect a massive influx in electronics manufacturing sooner or later. Meanwhile, the manufacturing economy in China is collapsing (China loses far more jobs to robots every year than it gains from outsourcing), and that's a real and growing problem for the Chinese economy.
Re:And Apple's Worried? (Score:5, Informative)
America isn't an option because of labor regulations and an expensive workforce. iPads would be up at $1499 and still losing money
Bullshit See thisForbes article [forbes.com].
Using the correct labor costs of assembling an iPad 2 in the U.S., an iPad 2 made in the U.S would cost $445 ($325 for parts + $120 for labor), as opposed to a Chinese iPad’s cost of $335 ($325 for parts + $10 for labor). Assembling the iPad 2 in the U.S. and selling it for $729 would bring Apple’s gross margin down to 39%, not the 15.25% cited to by Mr. Thompson.
That a 39% margin vs. the current 54% margin.
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One has to live with reason, and not be demanding unreasonable compensation. (What is reasonable anyway??)
Unions are the only reason that companies offer workers a livable wage and safe working conditions. Companies will naturally try to pay workers as little as they can and spend as little as possible on things that don't directly contribute to production, like safety equipment.
Laborers are not in short supply, so given free-reign, companies could offer wages that would put the average worker on the street and still be able to hire enough workers to maintain production. Why do you think we have a mandated min
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I'm pretty sure they won't pay anywhere near 1.6 billion. They'll probably settle for a sizable amount with no admission of wrongdoing and get use of the name, all for a fraction of the 1.6 billion that Proview is claiming they're owed.
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China has the whip hand here. If push came to shove, China could just shut down the iPad factories and even nationalize it.
They could, but they won't, because doing so would make it difficult if not impossible for them to get more foreign corporate investment in the future. If Apple's operations in China are not safe, what other western corporation will think their Chinese operations would be?
Re:And Apple's Worried? (Score:5, Insightful)
No, this is the cost of doing business poorly. A trademark search needs to be international in scope if you plan on making an international product. On top of damages Apple should be prohibited from further infringement (rename the product in countries with a previously registered trademark). There was a similar debacle (within the US registry if I remember) over the iPhone. I think it was settled, but the infringing product (Apple's iPhone) should have been pulled off the shelves, relabeled, and future infringement explicitly prohibited. It seems that Apple only cares about IP when they can use it to keep others out of their business - the evidence here is that they don't even bother looking to see if they infringe in a direction they want to go.
Re:And Apple's Worried? (Score:5, Interesting)
Actually, I would assume they did do a trademark search. They found that this company owned the trademark and bought it from them. However, this company claims that they didn't sell the trademarks for China and Taiwan. Just everywhere else.
Fine print...
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Yeah with a Cisco product called iphone, I think.
I get the feeling Apple does whatever they like best and counts on the legal team to sort out the issues later.
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It was iOS. Apple also made an agreement with Cisco before using the name too.
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It was iOS. Apple also made an agreement with Cisco before using the name too.
It was also iPhone. Cisco also had a product called iPhone that they picked up from Linksys. Apple and Cisco had a trademark dispute about it a few years ago.
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Re:And Apple's Worried? (Score:5, Interesting)
That might be true. I think Apple tries its best to avoid or settle trademark disputes but it's impossible to know about all of the products. What's funny in this case is the suit is originating from a country where knock-off products are common place and culturally entrenched. Even the Apple Store was copied. It's kinda ironic.
surprise... (Score:3, Interesting)
That's funny (Score:2)
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Isn't the summary missing something? (Score:5, Informative)
Apple supposedly purchase the trademark in 2009 from Proview, but it appears that they may have bought it from their Taiwanese counterparts [geek.com], which the Chinese portion is using to its advantage. China being China, they are choosing to side with the Chinese-based business.
If China awards the company anything remotely close to $1 billion, then I hope Apple pulls out of China. Wishful thinking as it is, it would be interesting to watch. I also hope all such companies fail, but that's pretty obvious.
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Anything happening in China is considered bias by us nowaday, while at the same time we blame them for ignoring IP. But imagine if Proview has a US subsidiary that owns the trademark and the Apple lawyers forgot to work out the agreement with the US subsidiary, don't you think the US subsidiary would sue and win too? It is $1.6 billion; everyone would try to look for loophole with such huge amount, regardless if it is based in China, Taiwan, US, or fantasyland.
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I disagree because the comparison is not really the same thing.
The Chinese Proview is claiming that the Taiwanese Proview did not represent them in the business deal, and they therefore could not sell the rights to the Chinese trademark. That is different from saying that Apple, or any other company, forgot to work out the agreement. They were told one thing by the business, and then the other arm of the business is abusing the politics of the situation. Proview-China is hoping that a mainland China court w
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Isn't the summary missing something?
Judging from the number of people who are (hypocritically) calling Apple hypocrites for not doing any searches for the trademark in question... yes, the summary is definitely not doing its job of educating anybody around here.
Then again, a lousy summary is only half the problem...
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How are people Hypocritically calling Apple Hypocrites?
Well if you're really truly genuinely curious about the answer to that question, you could try reading the rest of the sentence instead of clicking 'reply' halfway through.
Or is this a really clever satire illustrating my point?
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Oh, see, I didn't see any hypocritical about people bashing apple for getting sued over something so ridiculous...
Amazing... That's the second reply to something I didn't say, yet if taken as satire it eloquently supports my point!
Do you write for the Onion?
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Why would Apple pull out of China over this? Do you think Apple would remove its headquarters from the US because a patent troll is going after it?
Worst case would be that Apple stop selling the iPad or other Apple products from China. They are still allowed to use Chinese factories to build iPads and ship them overseas.
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Re:Isn't the summary missing something? (Score:4, Insightful)
There is a place where they could go where there is a whole huge pool of workers who have had their rights trampled, their savings destroyed, and their ability to think dismantled in a systematic way for decades. It is called The United States and there are people there who will jump at the chance to get a job, no matter how terrible the conditions, how grueling the work, or how poorly compensated they are.
Of course, we're not talking Chinese slave wages, but close.
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Re:Isn't the summary missing something? (Score:5, Insightful)
There is a place where they could go where there is a whole huge pool of workers who have had their rights trampled, their savings destroyed, and their ability to think dismantled in a systematic way for decades. It is called The United States and there are people there who will jump at the chance to get a job, no matter how terrible the conditions, how grueling the work, or how poorly compensated they are.
Of course, we're not talking Chinese slave wages, but close.
At Foxconn salaries? You are on drugs if you think so.
Mind you that I would love to see these jobs back in the US, but you are engaging in wishful, triumphalist thinking. These jobs, and all of those jobs WILL NOT COME BACK. Furthermore, it is unreasonable, however much we love this country, to presume replacing $1/hour Chinese workers (if they are lucky) with no benefits such as sick leave with $15/hour (at least) US workers with all the minimal benefits one would typically according to the law.
If it is not China, there is India, or the Philippines or Indonesia or Thailand or Ghana or Brazil or Argentina or Central America or Romania... shall I go on? The time where the majority of the world lived in violent stone age conditions is gone (most likely forever.) New markets and manufacturing grounds are available all over the world.
From a purely capitalistic point of view, it makes no sense to do mind-numbing manufacturing in the US. Even if you were to improve working conditions in China, it will still be immensely cheap. Even in countries with a strong stakeholder's capitalist mentality like Japan are finding out harder and harder to keep tricket-manufacturing jobs within their own borders.
The only way for the US to get these jobs back is with heavy government involvement, greater subsidies (meaning higher taxes), all the stuff that our bovine collective calls "socialism" in a brain-dead, knee-jerking fashion.
Those jobs ain't coming back Sonny boy. We are simply not capable of competing for them anymore. We demand greater salaries and we have higher costs of living than our foreign competitors (not to mention that our competitors actually produce HS graduates that know how to read, write and add fractions, which we don't.)
In other words, unless we do something else entirely, we are in deep shit.
Perhaps the Chinese will respect IP? (Score:2)
(IP: Intellectual Property not Internet Protocol).
I don't know the particulars of this case but, assuming Apple IS violating their trademark, what are the chances that this will cause other Chinese companies to stop infringing on foreign trademarks, copyrights and patents?
If this really changed the way Chinese companies legally did business (and stopped their alleged illegal theft of IP through industrial espionage) then 1.6 Billion would be a small price to pay. Way to take it on the chin for America, App
Re:Perhaps the Chinese will respect IP? (Score:5, Insightful)
Re:Perhaps the Chinese will respect IP? (Score:5, Insightful)
No... Chinese gov't protects the Chinese and the US gov't protects the top 1% of shareholders who import the Chinese crap. Don't start thinking that the government protects US IP or US people in general. They don't do that.
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If Apple didn't really violate anyone's trademark and there was obvious corruption, it can expose China as a poor place for foreign companies to do business in.
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In FreeMarket Communist China... (Score:4, Funny)
Let me translate this for you. (Score:3)
$1.6 Billion payment to Proview = Chinese Government Kickback.
Of course my babelfish may be horked.
what would proview cost to purchase (Score:2)
Could Proview prevent exports of Chinese made iPad (Score:4, Interesting)
Surely, if Proview is established as the owner of the trademark within China, then the iPads being produced in China by Foxcon are counterfeit items. Could that be the basis for an injunction banning the export of these items?
That would be an excessively heavy hammer to bash an enormous settlement out of Apple.
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... and they'd have a better case as they're not just, arm, squatting on the name.
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what, did you think that companies actually made money out of innovation nowadays?
Re:What about MaxiPad? (Score:5, Funny)
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Re:What about MaxiPad? (Score:4, Insightful)
Life was much easier back in the day with my zip drive, voodoo 3, and Pentium 2 MMX overdrive. That thing had loads of EDO RAM. Adding the Kittyhawk was just overkill, but I'd like to think the Diamond Stealth 64 ensured that "outside" was just a concept. Poor bastard down the street had an Audrey 2000, and my brother got my old Sinclair 1000! (lol!)
Still far superior to the Adam though....
Comment removed (Score:5, Informative)
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I like to think that the 'i' is short for idiot, all such products are much more amusingly named when you mentally replace the i with that.
I've yet to come up with anything globally satisfactory for terms beginning with e though, like e-mail, but I suspect when I do, it'll make ASUS' EeePCs the most amusingly named product going with said word repeated 3 times.
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if they nail Apple we may be looking at iTab or iSlate or iMove or some such shit.
They can name it in honour of the legal team suing Samsung. The Apple sTab.
Re:What about MaxiPad? (Score:5, Funny)
Possibly. Both Maxipads and iPads are used by cunts.
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Or perhaps they did, and decided that it did not matter?
I think that's more likely. If Steve wants to use a name, he'll use it, and leave it to the lawyers sort out the mess later. It's not the first time, and won't be the last.
Re:Good (Score:5, Funny)
I can assure you, it will be the last for him.
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It's a rather interesting question. How hard is it to come up with a name that is meaning neutral in all languages and isn't trademarked/copyrighted/used ANYWHERE in the world?
I recently worked on a US-centric software release. US trade and service marks were registered. A month after release I found somebody developing a competing program with almost exactly the same name, based in Europe.
What should happen next?
Re:Good (Score:5, Informative)
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Actually, if you read the piece, they bought the name off the company before they started marketing the iPad, but now the company is coming back and claiming that Apple only purchased the name for use outside China. So either they did a real dumb, or this company is trying to use local corruption to shake money out of a foreign company that they backstabed and are trying to double dip on the deal.
Sounds to me like China understands Capitalism better then we thought.
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No, not ding ding ding, you ding-a-ling.
The bought it from Fujitsu, nor Proview; which has registered the trademark in several countries.
And it is not unheard of for business to get IP agreements from Chinese companies under the Agreement they won't use it in China.
I don't know because I don't have a copy of the contract; i'm just saying it ma not be as unreasonable as we think.
Re:Good (Score:5, Interesting)
Let Apple taste some of their medicine.
We're going to need to increase the dosage dramatically if we want them to start paying attention.
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It's definitely the latter. They pulled the same stunt when they released the iPhone, a name already belonging to Cisco/Linksys.
http://en.wikipedia.org/wiki/Linksys_iPhone#Apple_iPhone_and_trademark_dispute [wikipedia.org]
Re:Good (Score:5, Informative)
You need to read the history on this one before commenting. It's not a simple matter. In this case, Apple bought the mark from an intermediary who bought the global rights from Proview (Taiwan). Apple claims they bought the rights outright, Proview claims that the china rights were held by a second subsidiary, Proview (Shenzhen)
From http://www.marbridgeconsulting.com/marbridgedaily/archive/article/53231/update_apple_appeals_ipad_trademark_lawsuit#When:12:00:00Z [marbridgeconsulting.com]
Apple laid forth a number of views in its appeal, including that the case should be adjudged according to the laws of the Hong Kong Special Administrative Region; that Proview (Shenzhen) had given written authorization for Proview International Holdings' Taiwan subsidiary, Proview Electronic, to sign a trademark transfer agreement, under the principle of unnamed agency, meaning that all iPad-related trademarks should be considered by the court to have already been transferred by Proview (Shenzhen) to Apple. Apple will also name Proview Electronic as a defendant in the case.
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Snark normally comes across better if you RTFA . Mistakes were perhaps made (though that remains to be seen), but certainly not what you seem to think happened.
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Re:Good (Score:4, Insightful)
And like McIntosh Laboratory [macworld.co.uk], Cisco's iPhone [pcworld.com], and the way the Mighty Mouse [geek.com] turned into the Magic Mouse. It's hard to feel sorry for Apple when they keep making the same class of mistake.
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Apple failed to prevent others from using the term the Appstore.
Companies sue each other for trademark violations in the US, but the judgements are usually fair if both parties have the resources for adequate legal representation. The problem with China, is that you don't know how much the legal decisions are based on the rule of law, or based on corruption.
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...you don't know how much the legal decisions are based on the rule of law, or based on corruption.
And this is different from here in America how, exactly?
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In what way are they the same country?
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Indeed.
Which is a great piece of political mental masturbation but of little use in reality, where there are separate governments and separate courts and separate financial institutions at play.
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In what way are they the same country?
Taiwan is either a Chinese province in rebellion or a Chinese government in exile, depending on who you're talking to. For all practical purposes the rest of the world treats them as two independent sovereign nations, but the Chinese, whether they be ROC or PROC, don't see themselves that way.
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Taiwan+China are technically the same country)
No they're not. Taiwan is technically "The Republic of China". Mainland China is technically "The People's Republic of China".
Similar sounding formal names. Very different countries.
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Apparently by logging in I ended up on a different Apple story. Sorry. :-(