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Apple has decided to settle its ongoing dispute with Chinese company Proview about the trademark for “iPad.” (See Jeremy Gove’s blog for the background of the lawsuit.) The $60 million court-mediated agreement may seem steep at first, especially given the Apple subsidiary’s initial $54,800 purchase price, until you realize that Apple had revenues of $7.9 billion from China (including Hong Kong and Taiwan) just last quarter. That makes up about 20 percent of Apple’s overall revenue of $39.2 billion. And Apple has over $100 billion in cash and securities, so the $60 million price tag is likely well worth it for the company to be able to continue selling its iPads in the growing Chinese marketplace.
The settlement comes after Proview got a favorable ruling in Chinese court in December, 2011, which Apple had appealed. In February, 2012, Proview also filed suit against Apple in California Superior Court in an attempt to stop Apple’s use of the name “iPad” here in the United States. The California judge later dismissed the case, however, finding that the dispute was better resolved by the original Chinese court.
Proview won’t be able to keep its $60 million, however, since it needs to pay off its creditors. In March, Fubon Insurance, a Taiwanese company, initiated involuntary bankruptcy proceedings against Proview based on an $8.68 million debt. The Apple settlement money will go into a court-designated account to get distributed among the creditors.
This settlement also comes just in time for Apple’s release of its newest version of the iPad (complete with enhanced Retina display) in China on July 20th, with pre-order pick-ups starting July 19th. Apple will surely be on the lookout for any supply problems given that its previous attempts to sell iPads resulted in authorities seizing the products from store shelves due to the dispute with Proview. This new release will surely help Apple maintain its dominance in the Chinese tablet market over competition from Lenovo Group Ltd’s Lepads and Samsung Electronics Co Ltd’s Galaxy Tabs, especially since Lenovo is co-headquartered in Beijing, China and is China’s largest PC company. Since Apple is the company which added consumer recognition and brand value to the name “iPad,” this settlement will clear one hurdle to Apple’s continued international expansion while reaching a result many expected all along.
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