Apple Inc. paid $60 million to Proview International Holdings Ltd for the iPad trademark, allowing them to continue selling iPads in mainland China. The terms of the settlement agreement were reached on June 25, and Apple has transferred the funds as agreed.
For Apple, the $60 million paid to Proview is insignificant compared to its revenue in China, which reached $7.9 billion last quarter.
Proview, which is currently in bankruptcy and owes approximately $400 million, will likely use the settlement to repay some of its creditors.
The dispute between Apple and Proview centered on whether Apple owned the iPad trademark in China. Back in 2001, Proview’s wholly owned subsidiary, Proview Shenzhen, registered the trademark IPAD, standing for “Internet Personal Access Device,” for a desktop terminal with touch-screen display in China.
In 2009, Apple incorporated a U.K. company called IP Application Development to buy up rights to the iPad name around the world. IP Application Development signed a contract with a Proview subsidiary in Taiwan, supposedly granting them the rights to the iPad name in Taiwan, China and other countries where Proview had registered the trademark.
However, when Apple introduced the iPad in early 2010, Proview Shenzhen claimed that the contract Apple signed didn’t include the rights for mainland China.
In fact, a mainland court found in Proview’s favor in the trademark dispute. Specifically, a court ruling in December found that Proview Shenzhen was not bound by that sale of the trademark, even though it was part of the same company.
This led officials in February to require stores to remove Apple’s iPads from their shelves, as they were infringing on Proview’s trademark rights.
As Greater China, including Taiwan and Hong Kong, has become Apple’s second-largest market after the United States, it was beneficial to Apple to resolve the dispute quickly.
Some observers said that the Chinese government was likely pushing for a settlement as well, hoping that foreign companies would continue to see China as a good place to do business.