Apple could face disruption in its growing operation in China after a court in the country rejected the firm's claim to own the iPad trademark.
This marks the latest development in a long-battle wrangle between Apple and Shenzen-based Proview Technology, which registered the IPAD trademark in various countries before Apple launched its market-leading tablet computer.
Yesterday, the Municipal Intermediate People's Court in the southern city of Shenzhen dismissed a lawsuit by Apple against Proview over ownership of the iPad trademark.
Proview Technology, a subsidiary of LCD screen maker Proview International Holdings (PVIHF), made an unsuccessful attempt to launch a tablet in 2000, after registering the IPAD trademark in the EU, China, Mexico, South Korea, Singapore, Indonesia, Thailand and Vietnam.
The court in China has now ruled that Proview is not bound by an agreement that its Taiwanese affiliate, Proview Taipei, made with Apple in 2006 to transfer the IPAD trademark to the US company for £35,000.
Apple had claimed that the trademark transfer agreement with Proview Taipei should also apply to the whole company, but the court rejected that, saying that Proview Technology was not involved in those negotiations.
Xiao Caiyuan, a lawyer for Proview at the Guangdong Guanghe law firm, told the Financial Times: "Apple is such a Goliath and has a good image, so people wouldn't imagine that Apple could possibly infringe on our intellectual property rights.
"People always think it's small companies infringing upon large companies' IPR (intellectual property rights)."
Li Su, a representative of Proview, added: "We hope that this decision will make our negotiations with Apple a bit easier."
Proview Technology, which is struggling with financial problems, is said to want $1.6 billion (£1bn) in compensation from Apple for copyright infringement following the court ruling, according to the Xinhua News Agency.
The ruling also leaves Apple and its network of stores and resellers in China open to lawsuits as they are technically selling a product that infringes another firm's trademark.
Proview has already sued Apple resellers in the southern Chinese cities of Shenzhen and Huizhou, calling for an immediate block on sales of iPads.
Apple reserves the right to appeal against the Shenzen court verdict.
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