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Court says Apple can still sell iPads in Shanghai

posted 24 Feb 2012, 02:06 by Sam Mbale   [ updated 24 Feb 2012, 02:07 ]

Shanghai residents react as a court rules that Apple is allowed to sell iPads in the city and suspends the trademark infringement case brought by Chinese technology company.

SHANGHAI, CHINA (FEBRUARY 24, 2012) (REUTERS) - A Shanghai court has rejected a request in a trademark case to stop Apple selling its iPad tablet computers in the city, averting an embarrassing suspension of iPad sales in its own flagship stores.

The Shanghai Pudong New Area People's Court denied a request by Proview Technology (Shenzhen) for the injunction and agreed to Apple's request that the trademark infringement case be suspended pending a ruling in a separate case in a higher court.

The decision, announced on Thursday (February 23) on the court's website, gives Apple some leeway in a larger battle over the iPad trademark in China, which is important to Apple as a consumer market and also a major production base for the iPad and other of its products.

Proview's lawyers said last week it had won a lawsuit in the southern city of Huizhou against a retailer selling Apple's iPads.

Its attention will now shift to the appeal it has filed against an earlier decision in Proview's favour by a court in Shenzhen, in the southern province of Guangdong.

Consumers in Shanghai said the different rulings from the local courts would only stand once there is a final verdict on who owns the Apple trademark in the Guangzhou appeal case.

"I think this is a problem with the differences in local courts. After all, there is no final ruling regarding the case in Guangzhou. So for now, we do not know who will finally have the rights to the iPad trademark. So the question of whether there should be or should not be a ban on iPad sales, different courts would have different opinions," said one Shanghai resident, 30-year-old He Ji (pron: her-jee).

The dispute, which dates back to a disagreement over what was covered in a deal for the transfer of the iPad trademark to Apple in 2009, has seen iPads seized by authorities in some Chinese cities.

Proview, which maintains that it holds the iPad trademark in China, has been suing Apple in various jurisdictions in the country for trademark infringement, while also using the courts to get retailers in some smaller cities to stop selling the tablet PCs

An injunction on iPad sales in Shanghai would have dealt a bigger blow than the earlier cases, as it would have forced the U.S. tech giant to remove the tablet PCs from the shelves of its three own stores in the city, one of its biggest markets.

Apple retailers said they were happy with the Shanghai ruling.

"In my opinion as a retailer, the ruling by the Shanghai Pudong New Area People's Court is a suitable and more prudent judgement. Relatively, from a legal point of view, I feel that is a fair judgement," said Mr. Ding, a store manager of one Apple retailer.

The outcome of the broader dispute, which Proview has said it is willing to settle out of court, will now hinge largely on the decision of the higher court in Guangdong, with a hearing in that case scheduled for Feb. 29.

A decision against Apple in that case would set a precedent that would create an uphill battle in other cases in lower courts around the country.

A partner of Stephenson Harwood, an international law firm in Hong Kong said last week that Apple still has cause to worry for the Guangzhou appeal trial.

"I think certainly Proview would have a good technical reason to bring an action like that in China, even despite skepticism about China's legal system. Without a pretty good contract, it would still be quite hard for Proview to ask for that kind of damages if the contract is very clear on Apple's rights on the trademark," said Audrey Shum.

Proview and its eight main creditors, which include lenders such as Bank of China, China Minsheng Banking Corp and China Merchants Bank Co Ltd , would prefer an out-of-court settlement with a sum of compensation, executives close to the situation said.