The Natives Are Restless: Proview’s Latest iPad Threatdown

March 8, 2012

As you know, we’re all in a holding pattern on the iPad trademark case, waiting for the Guangdong High Court to tell us who owns what. The court hearing is over and done with, and we don’t have any choice but to wait for the judgment, which could take months. Welcome to the hurry-up-and-wait world of litigation.

Since I’ve written about this topic approximately 6,247 times already, I have no problem moving on to other, more exciting endeavors in the meantime. Whenever the court makes a move, we can all reconvene for some lovely chatter.

But that’s us. We’re patient. For others, particularly those of a more bankrupty persuasion, the waiting is indeed the hardest part. Our old friends Proview, for example, currently the owners of the “IPAD” trademark in China, have not been sitting on their hands. These guys, and their creditors, have been active this week, purely coincidental of course with the unveiling of the iPad 3 iPad HD. (More on that below.)

First, and most bizarre, was a statement made by a group of Proview’s creditors. The issue of Proview’s insolvency, and whether that mattered, has been lurking around in this case from the beginning. We finally have a statement from these folks, but in the end, it sounds to me like just another attempt to drive up a settlement price.

Loretta Chao reported on this for the Wall Street Journal:

A company that said it speaks for a group of major state-controlled Chinese banks said Wednesday that the lenders own the Chinese rights to the iPad brand, the object of a continuing legal battle in China between Apple Inc. and a local technology company.

[ . . . ]

Huang Yiding, vice president of consulting firm Hejun Vanguard Group, said in a emailed statement to reporters on Wednesday that a group of lenders that includes arms of Bank of China Ltd. and China Development Bank Corp. seized control of assets including the “IPAD” trademark early in 2009 through a reorganization of Proview International Holdings Ltd., which is based in Hong Kong. That was months before Apple reached an agreement with an arm of Proview International that the U.S. company argues included the transfer of the iPad trademark.

If this is true (no idea), what does it mean? Good question, and if anyone out there is a bankruptcy lawyer, please feel free to jump in. We’ve now touched on practically every area of the law with this case. The scope is amazing.

So here’s the deal. The creditors are apparently saying that the Proview holding company was already in some sort of receivership (according to Hong Kong law) prior to the deal between Proview and Apple’s intermediary company to sell the China marks. Does this mean that Proview had no legal authority to sign off on that deal without approval of the creditors’ committee?

Heaven knows. Maybe.

If that is what the creditors are actually claiming here, and if they’re right, that would be a big deal. However, why wait until now to bring it up? And are we supposed to believe that Apple would have gone ahead with the deal if they had known about that potential problem? I’ve been critical of their legal team’s handling of the assignment agreement, but I can’t believe they would ignore this sort of thing. In other words, I’m highly skeptical of all this. Moreover, should Apple win the High Court appeal, what are the creditors saying they will do, take a Hong Kong court judgment to the Trademark Office and interfere with the transfer?

A spokesman for the creditors said this to the Financial Times:

No matter what the [final] result of the lawsuit is, the eight creditor banks have the right to directly apply to the Trademark Office to reiterate the creditors’ rights of control and seizure and stop the loss of Chinese intellectual property[.]

I’m dizzy. I don’t even know if creditors have standing at the Trademark Office. And since the creditors include Bank of China, Minsheng Bank and other financial stalwarts, the political implications are also interesting; I still think politics favor Apple in the long run, though.

Before I lose my mind, let’s move on to Threat #2. This came to us today from Proview, coinciding with the launch of the new iPad. (By the way, 4G? No one has the patience to download media anymore? You poor ADHD-suffering kids.)

Nothing really new here, just another ramping up of Proview’s rhetoric:

Proview Technology (Shenzhen), in an open letter to China’s suppliers and resellers, urged them to immediately stop selling, storing and shipping the iPad as of Thursday, citing trademark infringement issues.

“Anybody who continues to do so will be seen as intentionally infringing rights and the company will adopt the most severe measures by taking legal action,” Proview Technology said in the letter to iPad suppliers and resellers in China.

Kind of a tough situation for sellers. The iPad is indeed infringing on Proview’s rights, unless and until the court says differently. The enforcement authorities have stayed on the sidelines for the most part, but not everywhere. If I was advising a seller, I’d suggest contacting the relevant AIC to find out which way the wind is blowing. And what happens if a seller keeps doing business and then Apple loses? Yes, there is potential liability there. That’s why some of them have taken the products off the shelves, at least temporarily until all this is sorted out.

Speaking of the iPad HD (terrible name – now what are they going to call the next one?), Proview’s letter also contained what I’ll call Threat #3, which essentially said that they’ve got an eye on product shipments. Well, we’ve known that Proview has been interested in an export ban for a while now, but there are (at least) two problems with this.

First, the horse is making its way out of the barn at an alarming rate:

Ahead of Apple’s big iPad 3 big event, shipments from China have increased by 20 per cent – in just one week.

The analysts, from the local media outlets, noticed that the third generation iPad is heading from the manufacturers plants to the US. This suggests that very soon after the unveiling, the device will be available to customers.

If Proview wants to stop exports, they better find a way to do so quickly.

Second, this is an old, recycled threat; Proview already went to Customs and was politely rebuffed. So it doesn’t look like anything’s going to happen soon that will disrupt the U.S. launch, at least from this end.

Right, there you have it. One new threat by the creditors that includes an angle to this story that will no doubt make it into the movie version, plus two warmed-over threats from Proview about sales and exports that we’ve seen before.

This post is now well over a thousand words; all I really needed to say was that nothing of substance occurred this week. When will I learn?