1.      Whose bride should iPad be?

 

Cao Yang

Deputy Director of the Intellectual Property Research Center of Shanghai University of Political Science and Law

From the jurisprudence perspective, there exist two iPad trademarks. One of them was gained through registration while the other through practical use. The biggest conflict in this case is essentially the conflict between the value of a registered trademark and a trademark gained through use, which touches upon the nature of the trademark right. A real trademark must be in use and capable of generating commercial value, while registration only serves to enable the right holder to forbid other people from using the registered trademark. The reason why Proview Technology (Shenzhen) Co., Ltd. (Proview) never asked for compensation in any of the related cases is because Proview does not possess the substantive trademark right as defined by China’s Trademark Law. According to the interpretations of the Supreme People’s Court of People’s Republic of China, if a registered trademark is not actually put into use, the owner of the trademark should not receive any compensation. Under trademark law Proview does have the right to the registered trademark; however, I think that Apple Inc. (Apple) also has a certain right to the trademark since it was indeed Apple’s product and advertising efforts that made the disputed trademark famous.

 

Tao Xinliang

Dean of the Intellectual Property School of Shanghai University

It is absolutely true that the “iPad” trademark was first registered by Proview. There is also no doubt that it was Apple who made it well-known. Assume there are two ends of law here in terms of protecting trademark rights. On the one end is the registered trademark right gained by application, registration and performing the procedural right, which I personally consider as a rather weakened right. As mentioned in the exposure draft of the third amendment of China’s Trademark Law, if a registered trademark fails to be put into use, then even if there is a finding of trademark infringement, the right holder shall not receive any compensation other than a reasonable fee. That’s why I call the above mentioned right as “weakened.” On the other end are trademarks becoming well-known and market appealing through use. In my opinion, the latter echoes better of the original intention of the Trademark Law and should be given special protection.

Another issue that is worth attention is that since the “iPad” trademark is so famous, it has gone beyond a trademark in a narrow sense to become a “generic name” which represents a kind of product without distinguishing the sources and services of individual products. If the court determines that “iPad” is a generic name, the trademark will no longer belong to any individual person or entity, but in the public domain You Minjian The ownership of the “iPad” trademark has two layers of meaning: one is the registered owner and the other is the owner who uses the disputed trademark. Taking into consideration the essence of the IP laws, what on earth is the value orientation of China’s trademark protection? A trademark itself is a mark which serves to distinguish different sources, production areas and manufacturers. Therefore, it is obvious that it is Apple, instead of Proview, that connects the trademark with a certain manufacturer.

 

You Minjian

Partner of Shanghai Co-effort Law Firm

The ownership of the “iPad” trademark has two layers of meaning: one is the registered owner and the other is the owner who uses the disputed trademark. Taking into consideration the essence of the IP laws, what on earth is the value orientation of China’s trademark protection? A trademark itself is a mark which serves to distinguish different sources, production areas and manufacturers. Therefore, it is obvious that it is Apple, instead of Proview, that connects the trademark with a certain manufacturer.

 

Sam Yu

Senior Partner of Beijing Sheng Feng Law Firm

Putting myself in the shoes of Proview, I think it should never attempt to force Apple to pay an extraordinarily high price, or it may risk making Apple retreat from the mainland market. If Apple does give up the “iPad” trademark, the trademark will no longer be such a valuable asset to Proview either.

To Apple, the most valuable trademark is always the Apple logo, rather than “iPad.”

 

2.      Proview (Shenzhen), innocent or schemed?

 

Huang Wushuang

Associate Dean of Intellectual Property School of East China University of Political Science and Law

Although the Hong Kong High Court held that Proview’s move was premeditated and with bad faith, I have a different opinion. In China, the trademark right is a publicity measure and a right whose existence can easily be located. When Apple signed the contract, it should have known clearly or at least to some extend that Proview (Shenzhen) is the owner of the two “iPad” trademarks. Furthermore, according to Chinese mainland law, a transfer of a trademark should be immediately registered and publicized. Why did the Hong Kong High Court fail to take the ignorance of Apple into consideration? Is it fair that Proview is all to blame?

Wu Dong

Senior Partner of Shanghai M&A Law Firm

In my view, Proview (Shenzhen) and Proview (Taiwan) conducted a joint transaction in the transfer of the “iPad” trademark because both of the two companies were chiefly managed by the same controllers and investors. Moreover, the court verdict of the Hong Kong High Court mentioned that in the transfer agreement signed on December 23rd, 2009, Proview (Taiwan) ensured Apple that it was the registered owner of the disputed trademark.

If Proview (Taiwan) claimed that it owned a trademark which actually belonged to another party, I think the act should be deemed as fraud under the common law system or China’s Contract Law.

 

Liu Chunquan

Senior Partner of Panocean Law Firm

I’m afraid that I cannot agree with Mr. Wu. The logic of law is quite different from the logic of business. Maybe Yang Rongshan knows now that he was wrong to say that “the ‘iPad’ trademark right in the mainland also belonged to Proview (Taiwan).” However, if he truly believed that he was entitled to make the statement at that time it was not fraud.

The fact that Proview (Shengzhen) was under the charge of Proview (Taiwan) made him justified to say that his company owns the trademarks according to the logic of business, and he only needed to carry out a simple procedure to make the ownership lawful. Therefore, Yang Rongshan was not committing fraud, at least not in the legal sense.

As to the business sense, just as the old saying goes, “Nothing is too deceitful in war.” Each and every business negotiation is a mental game, and any party engaged would analyze and estimate others’ bottom line on an ongoing basis.

A capital operation insider

From the angle of capital operation, more often than not, the president of a company holds only a small amount of the shares. People may naturally assume that as the President of Proview (Shenzhen), Yang Rongshan, must have overall control of the company and all the interests involved are eventually attributed to him. However, this assumption is not right. Although Yang Rongshan serves as the President of the company, he still may not be able to represent Proview (Shenzhen).

 

Wang Wei

Attorney of Shanghai beyond Law Firm

The Company Law of the People’s Republic of China provides that the action of the legal representative should be deemed as corporate action. There is no doubt about this. In the transfer agreement, the signature of Yang Rongshan is real, but his title was only his title in Proview (Taiwan).

However, his other title of the legal representative of Proview (Shenzhen) was not denied, nor did he declare that he was not representing Proview (Shenzhen). Therefore, he should naturally be considered as the representative of Proview (Shenzhen). In addition, the court held in its judgment that both the content and the signature appeared in the agreement belonged to Proview (Taiwan) and bore no connection with the defendant Proview (Shenzhen), and Mai Shihong, and others, were authorized to transfer the disputed trademarks through signing agreements. However, since the trademarks belonged to Proview (Shenzhen), the assets and matters mentioned in the agreement are certainly related to Proview (Shenzhen).

 

Qu Sanqiang

Dean of the Law School of Beijing Institute of Technology

In China, a transfer of a trademark is not effective until it is approved and published. That is to say, even if Apple had signed a lawful trademark transfer agreement through IPADL, it still could not claim the relative trademark right before the transfer was approved and published by the Trademark Office. If Apple did use the trademark before the transfer was approved and published without Proview (Shenzhen)’s authorization, it might constitute infringement upon Proview (Shenzhen)’s trademark right.

 

3.      Why was apple bitten?

 

Yang Jun

Partner of Watson & Band Law Firm

My years of experience in dealing with multinational companies tells me that many of these companies feel so good about themselves that they simply hire big law firms. Apple clearly fell into this pit in the iPad trademark case. It failed to do a good job in localization. I also notice that the timing of Apple’s negotiation with Proview was very close to the launching of iPad, which also proves that alongside its failure to seek local representation, Apple failed to ensure proper due diligence in China’s IP field before the launching of its products.

Therefore, Apple’s loss in the first instance case cannot be blamed on Apple’s lawyers because after all, “even a clever housewife cannot cook without rice.” The only thing they could do was to dig into the Contract Law and make the evidence availably work for them according to the related provisions.

I think Apple was rather passive in this case. Its fatal disadvantage lies in that it lacks adequate direct evidence to prove that Proview (Shenzhen) was the real contract subject. To make things worse, Apple also failed to register the transfer of the trademark in line with China’s Trademark Law.

 

Liu Chunquan

Senior Partner of Panocean Law Firm

In the acquisition process, Apple was very cautious and cooperated with IP attorneys from many countries and regions, such as the US, UK, Taiwan, etc. However, when it dealt with the IP laws in mainland China there was not a single mainland lawyer involved. If it had done so, many of these troubles could have been avoided.

 

Zhang Taolue

Deputy Director of the Intellectual Property and Competition Law Center of the Law School of Tongji University

In the court session of the Shenzhen court, Apple provided the legal opinion of a famous Hong Kong lawyer which referred to the 1926 Palmer v. Carey Case judged by Her Majesty’s Most Honorable Privy Council, saying that “Before the transfer of the trademark in China is finished, Apple should have the usufruct (the right to profit from) the trademark while the defendant serves only as the trustee of Apple.” That means although Proview’s trademark had not been formally transferred to Apple by that time, there had already been a transfer agreement between the two parties. The lawyer argued that the relationship between Apple and Proview was a fiduciary relationship as well as a return relationship.

However, under the mainland law, whether the transfer agreement has come into effect should be considered first, while whether the agreement is able to claim certain rights or remedies should be judged only after the court has determined the effectiveness of the agreement. Therefore, it was extremely inappropriate for Apple to ask the court to determine the ownership of the trademark right at that time, because firstly, the contractual right had not yet been determined, and secondly, even if the contractual right had been determined, Apple was only entitled to claim the right to specific performance, rather than the trademark.

 

A senior IP councel of a foreign company

I don’t see any fault in Apple’s due diligence.

First, at that time, Apple knew for sure that Proview (Shenzhen) was managed by Proview (Taiwan). They communicated with Proview (Shenzhen) and were told that Proview (Taiwan) was in charge of this issue. Secondly, the contacts, like Mai Shihong, were all employees of the Law Department of Proview (Shenzhen) (among those who were the main figures in the negotiation, Yuan Hui and Mai Shihong served as an employee of Proview (Shenzhen) and the Chief Counsel of the Proview Group respectively).

Meanwhile, the three Proview companies shared the same legal representative. In this situation, I believe that Proview must have provided the specific company rules saying that the signer was authorized to sign the agreement on behalf of Proview, which was a sufficient reassurance for both the Law Department of Apple and the attorneys they hired.

Personally, I think there are flaws in their specific way they signed the agreement. First, if I sign an agreement with the parent company of the counter party which may involve its subsidiaries, I normally require every subsidiary to seal in the annex with a statement reading “I admit and will comply with the agreement between... (the patent company) and...(the counter party) on... (date).” A statement like this with seals on it would have been enough to eliminate the defects in Apple’s agreement. Secondly, Apple chose the jurisdiction of a Hong Kong court. If it were me, I would in no doubt to choose Hong Kong International Arbitration Centre (HKIAC), because the ruling delivered by the HKIAC is inadmissible in the Chinese mainland through international conventions, while a Hong Kong court verdict is admissible in the mainland, though doing so requires going through a rather complicated process. That’s why I think it was the way they signed the agreement, rather than the due diligence, that caused Apple so much trouble.

 

4.    Think outside the IPAD box

 

Yuan Zhenfu

Deputy Director of SHIPA

The iPad case arose essentially from Apple’s company culture: its preference of choosing trademarks with an “i” as the initial letter has already become very risky. In fact, a trademark composed by an initial letter “i” plus the general term of the product lacks distinctiveness and many companies can be easily come up with it. In each country, there are always people who make a living by preemptive registration of trademarks. They may just sense the next valuable trademark and register it. Meanwhile, Apple simply cannot precisely predict what trademark it will use next, before the new product to be developed is decided upon. As a result, Apple is not able to obtain all the trademarks it will need in the future through international registrations. As a result it must purchase some trademarks, such as its purchase of the iPhone trademark from Hanvon Technology Co., Ltd. (Hanvon), and the iPad trademark from Proview. So this case is actually caused by the persistence of Apple on its trademark series

 

Yin Fenglin

Post-doctor of the Department of Law and Intellectual Property of the College of Humanities & Social Sciences of the Graduate University of Chinese Academy of Sciences

While purchasing the iPad trademark, Apple played a common business trick used by western multinational companies, which is to use a third party company to conceal their identity. In this case Apple bought the IP rights through its agency company IPADL. Apple did so mainly because the cost of IP the assets were hard to precisely evaluate in advance. The reason why an IP right is called the right in transactions is also because the value of the IP asset presents itself only during the transactions. Consequently, during the transaction of IP rights, the market position of the transferee usually becomes one of the most important references when the transferor sets the price. The higher the transferee’s market position and the stronger the transferee’s economic power, the higher the price will be set.

 

Yang Yexuan

Former Vice Inspector of the Trademark Appeal Board of the State Administration for Industry & Commerce of the People’s Republic of China

With respect to the penalty, since trademark right is a kind of civil right, penalties should not be a main measure in dealing with trademark infringements. Only those having a relatively great impact on the social public order and the honor of the laws while not paying adequate compensation for the tort should receive additional fines. To impose heavy penalties when the dispute is still pending a decision does not comply with the intent of the Trademark Law.

 

You Minjian

Partner of Shanghai Co-effort Law Firm

I feel that no matter how the court judges this case, it will still make sense. To be honest, personally I cannot accept the idea of Apple losing. I hope Apple will not be bitten by Proview. If Proview wins, we might lose our integrity. I believe that in this case, Yang Rongshan is only a puppet who knows everything yet has no other choice. He is manipulated by the creditors who are State Owned Enterprises and banks. It was the banks that were the initiator of the case. So if Proview wins this case with its little tricks, it will be a tragedy of China’s legal system and business field. I hope that my fellow peers in the legal industry can be wise enough to avoid these petty tricks; we may lose this single case, but will win social credibility.

 

Liu Chuntian

Professor of the Law School of Renmin University of China

The iPad case draws wide attention because it reflects the problems that exist in the current legal environment that are worth analyzing. This case makes us reflect the trademark system. It makes us wonder what is wrong with China. During the process of economic transition, we have witnessed so many trademark infringements, such as rush registering, trademark counterfeiting, usurping and a variety of new kinds of trademark infringements. The trademark system has been established for three decades. It is time for us to reflect; what on earth are the problems and conflictions waiting to be solved, especially those major ones. If we do this the system can be improved once again. That is the issue we truly care about.

 

5.    Prediction: vista of the iPad trademark case

 

Yang Jun

Partner of Watson & Band Law Firm

In my opinion, the judgment of Guangdong Higher People’s Court will certainly refer to the judgments of the Supreme Court and the Shanghai Pudong New Area People’s Court. If there was any possibility of settlement, they would not have talked about infringement. I believe that the Shanghai Pudong New Area People’s Court will support settlement as well. The most probable result is that Apple and Proview will agree to settle the case and the final agreement will be kept secret. Just as Mr. Shi, the President of Innovation Company, once quoted from my eleven-year-old son: “Proview acts very immorally and I’m worried that such a hooligan company should win.”

 

Liu Yonggang

Member of the Oriental IP Club

On the design of the trademark system, we should not encourage tricks. For example, if Proview wins the case and makes a big sum of money, it will actually do harm to the Chinese market.

 

Cao Yang

Deputy Director of the Intellectual Property Research Center of Shanghai University of Political Science and Law

The key to judging this case is how to balance a registered trademark and a trademark gained through use. Maybe the judges are afraid that if Apple wins, there may be troubles with China’s trademark registration system. Companies, especially the big ones, will simply use trademarks without registration and get relative rights from use. I predict the court will ultimately choose to support Proview. However, it is also quite possible that the two parties will reach a settlement. Some people say that the Hong Kong law bears no relation to the mainland law. That is definitely wrong. If the judgments made under different legal systems in China turn out to be completely opposite to each other, the event will be treated as a joke. Therefore, the judgment of the Guangdong Higher People’s Court must be deliberated once and again. Meanwhile, they will also coordinate certain issues with the Hong Kong court.

 

Liu Chunquan

Senior Partner of Panocean Law Firm

I think Apple might lose in the second trial. It is possible for the court to affirm the original judgment. However, it is also possible that the Chinese court will not render a court verdict totally opposite to the Hong Kong court. So maybe the Chinese court will sustain the original judgment but give Apple some directions at the same time.

 

Zhao Zhanling

Researcher of Center for IPR Studies, China University of Political Science and Law

I think the possibility of reconciliation is really big. However, the key issue is still whether Proview could lower its expectation and greatly reduce its requirement of 40 million dollars. If the price remains the same, there will definitely be no settlement at all. Changing the trademark alone will not do so much harm to Apple’s sales volume. However, its infringing acts in the past may be investigated and punished by the State Administration for Industry & Commerce. Moreover, Proview may also appeal for compensation. So I think whether the case will end up with reconciliation or not lies chiefly in which choice is better for Apple.

 

Li Guobin

Partner of Guangdong Rong Guan Law Firm

Apple purchased the trademark from IPADL, which means that it could only purchase the trademarks that already belonged to IPADL. If IPADL failed to get the iPad trademark in Chinese mainland, the said trademark should not be offered to Apple. Since Apple has never indeed purchased the disputed trademark from IPADL successfully, it does not have the right to litigate directly and bring Proview (Shenzhen) to court.

 

Cheng Yongshun

Director of Beijing Intellectual Property Institute, Former Deputy Chief Judge with the IP Division of the Beijing Higher People’s Court

The iPad case has attracted wide attention from the Chinese Apple fans as well as experts and scholars. There are news reports on this issue everywhere and many foreign peers in the legal industry have also eyed the development of this case. The iPad trademark case itself is only a specific case. However, it has aroused many legal problems that are worth further evaluation, including the compensation, the relationship between registration and use without registration, and the definitions of trademark, trademark infringement and trademark right. These are all fundamental issues that are worth our review.

(Translated by Monica Zhang)