Apple Inc suffered a setback in the Chinese market today as a court rejected its lawsuit against a local company for alleged infringement of its 'iPad' trademark, as a result of which it may have to sell the product under a new name in China or cough up USD 1.6 billion.
Apple may have to sell its popular iPad tablet computers under a new name in the Chinese mainland in future if it does not first purchase the trademark from a Chinese tech firm as a result of the verdict, official media here reported today.
The Municipal Intermediate People's Court in Shenzhen, a southern Chinese city neighbouring Hong Kong, earlier this week rejected a lawsuit by Apple accusing Proview Technology (Shenzhen) of infringing on its 'iPad' trademark.
Proview Technology (Shenzhen) is a subsidiary of Hong Kong-headquartered Proview International Holdings Limited, which also has a branch in Taipei.
Proview Taipei registered the 'iPad' trademark in a number of countries and regions as early as 2000 and Proview Shenzhen registered the trademark on the Chinese mainland in 2001, long before Apple launched its iPad tablet.
Apple bought the rights to use the trademark from Proview Taipei in 2009 with a payment of 35,000 pounds (USD 54,616).
However, Proview Shenzhen reserved the right to use the trademark on the Chinese mainland.
The two sides have been entangled in a legal battle ever since. Proview Shenzhen, once a famous flat-panel display producer, is now on the brink of bankruptcy due to debts owed to banks in the wake of the global financial crisis.
Li Su, the President of Beijing-based Hejun Vanguard Group, a leading management consultancy firm, has been entrusted by banks to assume the post of "debt restructuring consultant" for Proview Shenzhen. "Apple's actions are strange.
They had not obtained the rights to use the 'iPad' trademark when they began to sell the iPad on the Chinese mainland in September last year," Huang Yiding of the Hejun Vanguard Group's public relations department was quoted by state-run Xinhua news agency as saying.
"Their copyright infringement is very clear. The laws are still there and they sell their products in defiance of laws. The more products they sell, the more they need to compensate," he said.
China, where a plethora of Apple products are assembled, is also a major market for iPhones and iPads.