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Sweet & Sour News for Apple from Chicago to China

Posted by: Jerome McDonnell on July 06, 2012
iPhone 5 Ice Cream is popular in China
Photo From China Hush

Earlier this week it was announced that Apple and Proview Technology resolved their differences over the “iPad” trademark, and billions of consumers in China will now have access to the world’s most popular tablet. Brandchannel.com had an interesting take on the whole affair, suggesting that Apple’s actions could make matters worse for brand owners that struggle with China’s trademark system. It contends that the $60 million settlement figure may encourage trademark squatters to prolong their efforts and/or inspire others to engage in such tactics.

It’s an interesting point of view—but I don’t think that brand owners need worry any more now than they should/already have been prior to this. As we know, this saga was not really about the workings of China’s intellectual property system, but/rather a breach of contract that happened to involve a trademark.

China’s first-to-file rule can be a challenge for brands that wish to expand there, but it’s hardly the only country that employs such a system in assigning trademark rights. And Chinese law does provide some protection for foreign brands; those than can prove their name was too well-known for the Chinese holder to have registered it in good faith can prevail.

Starbucks and auctioneer Sotheby’s both won cases against squatters. It’s not easy, but the reality is that it’s the price of doing business these days, and every brand owner should know that trademark rights are territorial.

It’s rumored that Proview agreed to settle because of debts and looming bankruptcy. But as one Beijing IP lawyer has pointed out, ultimately the settlement amount isn’t really so bad for either party. While Proview may own the rights to the trademark, it wasn’t the one responsible for building the brand value. And, with China currently accounting for approximately 20% of Apple’s overall revenue, the tech giant can write this off as money well spent.

With this matter behind them, Apple can focus its efforts on more pressing issues: After he dismissed Apple’s lawsuit over patent infringement against Motorola Mobility (aka Google) a couple weeks ago, Judge Posner yesterday declared that patents in most industries are doing more harm than good. While this won’t lead to a drastic overhaul of the patent system, rulings on individual cases will likely give pause to those that use lawsuits in an attempt to weaken the competition.

Meanwhile, the iPhone 5™ is already available in China.

Jerome McDonnell is Group Trademark Director for Interbrand.

Category: Trademarks

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