Politics on Apple's Side as It Faces Trademark Dispute in China

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Politics could tip the scales in Apple's favor for a high-stakes legal battle that will decide ownership of the iPad trademark in mainland China. But some legal experts remain divided on whether it will be enough to help the U.S. tech giant avoid a ban of its iconic tablet in the country.

"This is a really famous case, and Apple is not only a multinational company, but employs a lot of people," said Stan Abrams, an intellectual property lawyer and professor at Beijing's Central University of Finance and Economics. "The political argument in itself does favor Apple."

Apple faces the prospect of paying fines totaling millions of U.S. dollars and seeing its iPad banned in the country if the company loses a court battle with a little-known Chinese firm called Proview, which has also claimed ownership of the iPad trademark in China.

On Wednesday, Apple and Proview exchanged arguments during a court hearing appealing a December ruling that rejected Apple's claims to the iPad name. The dispute centers on whether Proview sold the iPad trademark to Apple in 2009, given that the transaction was made not by Proview's headquarters, but by a subsidiary in Taiwan.

"The legal issues are kind of hairy when you look at technical arguments. Did one company authorize the other to act?" Abrams said. The court could go either way, he said.

But Chinese authorities could decide to factor in Apple's importance to the country when the court makes it decision, he said. "Apple pays its taxes, and it's popular. Those kind of things matter," Abrams said. "Politically there is not as much of an argument for Proview."

Proview, a Chinese display vendor, has shut down its business after seeing its funds dry up following the financial crisis in 2008. The company, now controlled by eight banks, wants Apple to pay US$400 million for the iPad trademark.

For months now, Proview has been filing lawsuits and complaints to request authorities stop iPad sales, in an effort to pressure Apple to settle, according to legal experts. Last month, Proview also filed a lawsuit in the U.S. against Apple, alleging that the U.S. tech giant had misled Proview in selling off its iPad trademarks.

Although Apple tried to present new arguments in Wednesday's court hearing, the company will still likely lose its legal battle against Proview, according to Zhao Zhanling, a legal expert on China's information technology law.

During Wednesday's court hearing, Apple had tried to establish that Proview's top management was fully aware it was selling off its iPad trademarks for mainland China. The evidence included e-mails sent by officials Apple claims worked at Proview's headquarters in Shenzhen.

Zhao, however, said Apple's arguments were unconvincing. "I think there is little hope Apple will win," he said.

Apple instead will have to weigh between settling with Proview or changing the name of its iPad product in order to sell its tablet in China. If Apple chooses to change the tablet's name, Chinese authorities will still want to penalize the U.S. tech giant for past iPad sales because of trademark infringement, Zhao added.

"I think vendors will stop selling the iPad in order to avoid any risk of seeing legal action. Some websites have already stopped selling the iPad," he said. "So in the short term people won't be able to buy the iPad."

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