The latest news is that Proview, owner of the iPad trademark in China, might file an application with China Customs. This wrinkle was reported on Sina (Chinese) (h/t Bill Bishop/DigiCha).

According to the Sina report, which includes statements from the Proview legal team, there are now roughly 20 actions in nine provinces pending around the country. I believe these include both administrative actions (AIC) and judicial actions (civil suits for trademark infringement, which may involve preliminary injunction orders).

As I’ve said before, the AIC and court actions could involve raids on resellers or other retailers, fines, seizures of product, formal determinations of infringement, and orders for a public apology. So far, it sounds like the AIC in some cities have merely requested that resellers take iPads off the shelves until the dispute is resolved. Things could be a lot worse for Apple if this goes to the next level and officials get more aggressive. I’m also assuming that these actions are local and that there is no national coordination — politically, this could happen, but I haven’t seen any evidence of this so far.

Speaking of which, an action with the General Administration of Customs could be significant for Proview, and the Sina article suggests this might be in the works [this has been confirmed since I originally wrote this post]. This is a relatively simple procedure whereby an IP owner, in this case trademark owner Proview, files their trademark certificate with GAC, which is then “on notice” regarding Proview’s ownership rights.

Even before such a filing, GAC has the authority to stop any import/export of goods suspected of infringing intellectual property. Note that although this includes exports, Apple’s ownership of the mark in most other jurisdictions probably minimizes the danger on that end. This would be a true nuclear option if we were dealing with a patent infringement.

But that’s not how Customs usually operates, which is why I haven’t mentioned this before. Usually, a filing is made with Customs by the IP owner as a first step. After that, the IP owner will determine when a shipment is scheduled, which is usually done by an investigative firm, and then notify Customs of the details. Assuming everything is done properly, Customs will then seize the shipment, the IP owner will pay a bond, and the suspected infringing products will sit there in a warehouse pending resolution of an infringement suit.

The extent to which a Customs action would hurt Apple depends a bit on their supply chain and where these products go once they are assembled. I’ve mulled this over, and without knowing how Apple operates in detail, I can’t really tell how much damage this will do.

I’m getting way ahead of things, but I wonder whether Proview, which is reportedly in severe financial trouble, even has the financial wherewithal to put up the bond for a seizure. In the old days, the amount of that bond would have been equal to the full value of the shipment, but under current regulations, the bond amount is only a small percentage of the declared value. I doubt that we’ll ever find out the answer to this question, but it’s fun to speculate (unless you work for Apple).

Unsubstantiated rumors floating around this morning on the Intertubes speculate that Proview’s creditors might be responsible for legal fees at this point, but I can’t confirm that. It would explain things, though.

So the news here is that Proview may file their IP with Customs. This would be step one, and a shot across Apple’s bow. Would they then go after iPad shipments? That remains to be seen, but as with the infringement suits and AIC actions, Proview also has the law on its side when it comes to a Customs action.

You might be thinking, wow, Proview’s lawyers are really playing hardball here. Yes and no. All of the steps they have taken thus far, including a future Customs action if it comes to that, are par for the course when it comes to trademark infringement. Using courts, AIC, Customs — this happens every day here in China. These are not extraordinary measures by any stretch of the imagination, and I assume that Apple has anticipated all of this.

© Stan for China Hearsay, 2012. | Permalink | 8 comments | Add to del.icio.us
Post tags: apple, customs, proview, trademark infringement