Just a quick follow up to yesterday’s post on this topic. I haven’t read all the media reports today (Friday, always busy), but I did check out Malcolm Moore’s piece in the Telegraph, which adds some important details. Amazing what a bit of journalism can do!
If you recall, I mentioned yesterday that I would be very surprised if Apple’s lawyers had failed to perform adequate due diligence on who the registered owner of the “IPAD” trademark was in China. I guess I gave them too much credit?
Apple’s lawyers appear not to have noticed that the rights to the name in China were not actually held by Proview Electronics in Taiwan.
Not sure if Malcolm has a source for this or not (can’t tell because of that “appear” thrown in there, which sounds a bit like speculation). I remain curious as hell about this and would love some confirmation and details of this major screw-up by Apple’s lawyers.
Another issue relates to this third party company that approached Proview to purchase the mark(s). I noted yesterday that it sounded like Apple’s agent. I was sort of right – it is actually a special purpose vehicle used by Apple for these kinds of situations. Here’s what Apple’s lawyer had to say:
Paul Schmidt, a lawyer for Baker & Mackenzie, which is representing Apple, explained that because Apple products are subject to so much hype the firm had to use a third party to maintain confidentiality.
“Apple faces the dual challenges of maintaining the confidentiality of the product [ …] and ensuring that upon its launch the product can be marketed under the name selected for it,” he wrote, in an affidavit to a court in Hong Kong.
“In order to meet the second challenge, Apple buys up global rights to its product names, but uses a “special purpose vehicle”, he added.
Regarding the hype and secrecy surrounding Apple product launches, Schmidt’s comments certainly ring true. However, it should be pointed out that this is a very common strategy among trademark owners trying to purchase marks and/or domain names. You go in with a big name, and the price immediately shoots upward. Companies with famous brands therefore either use special purchase vehicles with innocuous names or, very often, they work with investigators and other service providers who maintain such identities for the benefit of their clients.
So this sort of thing really is industry practice and not at all out of the ordinary. I was therefore amused at this quote:
“Apple was quite deceptive when it first approached Proview to buy the name,” said Xiao Caiyuan, the head of the Guangdong Guanghe law firm, which is representing Proview.
Ha ha. That’s funny coming from a lawyer in Guangdong, who certainly knows better. But I guess he’s playing his role as client advocate, so it’s all good.
This particular lawyer also had this to say, which is just as amusing, but from the other side:
“They had lawyers in Europe, Hong Kong and Taiwan to look through the paperwork, but they failed to spot that the trademark was registered elsewhere. They tried to claim in court this was because they could not read Chinese!”
This is quite entertaining from my perspective, since this is the exact argument that Chinese companies make when faced with a dispute involving an English-language contract (i.e., I’ve been on the opposite side of that charge several times). In fact, this kind of “defense” is used all over the world. It’s common, but it’s not usually a winner. I suppose it’s always worth a try, but it certainly makes Apple look foolish in hindsight, doesn’t it?
One last issue from Malcolm’s article in the Telegraph, which was great for the additional details it brought to the discussion. However, I do need to point out a slight problem with this:
[T]o comply with Chinese law, [Proview] had registered the rights with its arm on the mainland, Proview Shenzhen. All trademarks in China have to be registered with a China-based company.
No idea where this came from. It’s incorrect. Anyone can hold a China trademark, foreign or domestic. Perhaps there was confusion over who can perform the registration? (domestic applicants can file with the Trademark Office directly, while foreigners must use an agent.) Whatever the reason, if this statement originated with Proview as some sort of excuse, they are either mistaken or being deliberately disingenuous. There is no legal reason why the Shenzhen entity filed the mark as opposed to the Hong Kong or Taiwan company.
Okay, I’m out of here. By the way, while I was out today, I couldn’t help but notice all those iPad advertisements on bus stops, etc. all over Beijing. I wonder when those are going to come down.