Amazon has pulled the iPad 2 from its online stores in China setting off a flurry of speculation as to the reason due to an ongoing trademark dispute over the tablet in China.
Early speculation was that the removal was down to a recent court ruling in China that Apple had infringed the trademark in China of Proview International Holdings, which claims to own the trademark iPad.
However, the Wall Street Journal is reporting that the removal was unrelated to the trademark dispute and that Apple asked Amazon.com to remove the listings for the iPad 2 being sold by resellers on its Chinese website because they were not authorised to sell the device.
Proview says that it has had no role in the removal of the iPad 2 in this instance, but shop owners in China have been pulling the tablet until the case is settled.
Chinese customs officials have said it would be difficult to stop sales of the iPad 2 due to its popularity in China, but Proview has asked authorities to in more than 30 cities to investigate possible trademark infringement. Proview is also asking for a ban on the “import and export of all iPad products“, which would cause issues seeing as the iPad is assembled in China.
Proview wants $1bn for the trademark infringement, which Apple would easily be able to pay.A settlement would be a lifeline to Proview, a company that Chinese media say is drowning in debt and is facing pressure from creditors.
Proview registered the trademark for iPad in 2001, but Apple says that it bought the trademark from Proview for China and 10 other countries. The catch is that Apple paid a Taiwanese company affiliated with Proview, and Proview says it still owns the trademark.
Proview Electronics of Taiwan said that while Apple paid for the “global trademark” that this didn’t include trademarks for the Chinese market, according to an interview with Proview chairman Yang Rongshan in the FT. Yang says in the interview that his company is in financial difficulty and the a settlement with Apple “could help us sort out part of that trouble”.
Apple has accused Proview of failing to honour the agreement, a view that a Hong Kong court upheld last year, which ruled that Proview and the Taiwanese company that Apple bought the iPad trademark from are both controlled by the same Taiwanese businessman.
“The conduct of all the defendants demonstrate that they have combined together with the common intention of injuring Apple … by acting in breach of the agreement.”
A mainland Chinese court ruled against Apple last year, and the case is on appeal.
A Chinese legal expert said that the ruling in Hong Kong and the ruling in the Chinese mainland will not have any influence on each other, according to Chinese news service Xinhua.
The row poses larger problems for Apple because China has become central its meteoric growth. Morgan Stanley analyst Katy Huberty believes that China alone will account for 57 mn in iPhone sales by 2013. In the final quarter of 2011, it sold 37 mn iPhones.
Demand for the iPhone and iPad have been strong in China, but growth in sales of the company’s Mac computers have also been higher in China than other markets.
After announcing its record results in January, Apple said that it saw Mac sales grow 12% in the US, but globally, Mac sales grew 22%, a figure that Barclays Capital analyst Ben A. Reitzes put down to China.
It is not clear if the iPad flap could lead to other problems in China. Chinese consumers still crave iPhones, Macs and iPads. However, any further disagreement could dim one of the brightest spots in Apple’s stunning growth story.
Feb 8, 2016