Rights fight part of business

Apple's problems in the Chinese mainland over the use of the iPad trademark and retired NBA star Michael Jordan's legal action against Qiaodan Sports over its use of the Chinese equivalent of his name - Qiaodan - are just two examples of the growing importance of intellectual property rights as commercial assets.

Legal claims and counterclaims over intellectual property rights have become part of doing business not just in China, but in many other countries as well. So has using litigation, and the threat of litigation, as a commercial weapon.

Apple's iPad difficulties are not really about whether it has infringed a trademark or not. This is not a case of a local Chinese company "stealing" a foreigner's intellectual property, the issue is who owns the trademark. Before launching its hugely successful iPad tablet in China, Apple was aware that someone else had registered IPAD trademarks in China and other countries. So, very sensibly, it decided to try and buy them. In fact, the trademark was registered by Proview long before Apple launched the iPad in the United States, indeed long before anybody even knew Apple's popular tablet would be called an iPad. Proview and National Semiconductor even held a press conference to announce their IPAD product in 2000, although it never materialized.

Apple claims that before the release of the original iPad in the US in January 2010, it purchased the right to the name in 10 countries and regions - including it thought, the Chinese mainland - from Taiwan-based display maker Proview Electronics Co Ltd.

Proview Technology based in Shenzhen alleges that Apple didn't buy the mainland trademark from the holder, which was the Shenzhen company, and therefore it is not entitled to use the name in the mainland. It has taken legal action against the US company in the Chinese mainland and the US.

Although a lot is still unclear, what does seem clear is that it all depends on whether the 2009 purchase agreement covered the trademarks belonging to Proview Shenzhen. If not, Apple really does have a problem.

Is there anything unusual about all this? No. In all countries, IPR legal actions are used to get money, sometimes justified sometimes not. These legal actions are sometimes based on doubtful or even false claims of ownership. But it is part of business and you just have to deal with it. No doubt Apple will sort it out, either by fighting Proview's claims through the courts, both in China and in the US, or paying to settle. Often it is more beneficial commercially to pay to get rid of an irritation, especially just after a product has been launched and is selling well, even if you think the legal claims are without merit.

Meanwhile, it is surely no coincidence that Michael Jordan's lawsuit against Qiaodan comes just as the Fujian-based sportswear company is thinking about an IPO. Who wants to invest in a business that has just been sued?

Some years ago a South African judge, in a case involving the hugely successful American TV series Dallas, observed that just as a mongrel attracts ticks, so does a successful product attract imitators. Some of these imitators are just trying to hitch a free ride on the product's success and do not break the law, others do break the law by infringing on a company's, or individual's legal rights.

The basketball stars Yao Ming and Yi Jianlian both succeeded in legal actions last year, when Chinese courts ordered unconnected commercial entities to stop using their names. Yi Jianlian won his legal action against another Fujian sports goods company, so it seems likely that Michael Jordan will win too, although it may take some time.

As always, there are lessons to be learnt from all this: First, every country is different. It is essential to get local advice - remember that the advice you get in Beijing may not apply to Fujian. Second, when venturing out of your home market, do your homework and think ahead. The more legal protection you have for your trademarks, your name, your copyrights in each country, the more likely it is you will avoid problems, or succeed in getting a court to remove them. Third, draft all your contracts very carefully, be precise and make sure there is no wriggle room. Finally, if someone is trying to sell you something, make sure they own it.

The author is a professor at School of Law, Singapore Management University.

(China Daily 03/01/2012 page9)