Authorities Removing Apple iPads From Chinese Store Shelves? (Updated)

  • Posted by
  • on February 12th, 2012

[UPDATE: Chinese Press Now Reporting Proview Will Also Request That PRC Customs Ban Imports And Exports Of iPads | DigiCha END UPDATE]

So says this report (Chinese) from Hebei Youth Daily.

Apparently as a result of the Proview iPad trademark infringement verdict, some local Administrations of Industry and Commerce (AIC) have started to confiscate Apple ($AAPL) iPads they find on sale. The article claims that many stores and resellers have taken the products off their shelves to avoid discovery by authorities, but if you ask for an iPad you can still buy one. It is not clear if this is going to happen nationwide or if this is just the action of a handful of local authorities, but Apple has a lot of risk in this case.

Stan Abrams predicted this possibility a few days ago:

What can the AIC do? It can raid premises, seize documents, equipment, products and counterfeit marks, and it can halt activity and lock down businesses. Once AIC makes a decision about infringement, it can order fines (these go to the government, not the trademark owner), revoke business licenses, and mandate a public apology.

Note that an AIC raid is often used by trademark owners as Step 1, with a civil lawsuit as Step 2. It would be interesting to know if Proview and its lawyers filed the AIC application in Beijing before filing the civil suit in Shanghai, and whether they have approached other AICs.

OK, so once again, in addition to the contract action in Guangdong, we have an infringement suit in Shanghai, and a pending AIC application in Beijing. According to the Beijing Evening News, which apparently talked to AIC, the authorities are sitting on this for the time being. Why is this happening?

I can only speculate that it’s political. Look, Beijing AIC can certainly claim that since this case involves a pending civil suit, they feel obligated to step back and wait for a resolution from the court in Guangdong. Maybe.

But AIC could act if it wanted to, and the court action is Guangdong is now an appeal that most folks expect Apple to lose. Proview is the owner of record of the trademark, and the infringement is crystal clear. No reason at all that AIC could not raid all the Apple stores and resellers in Xicheng District and effectively shut down all iPad sales there.

No, really. They could do so tomorrow if the political will was there.

So why are they sitting on this? My guess is that this one is just too high profile, Apple has too much clout (Proview who?), and AIC is worried about blowback. The pending court action is great cover behind which AIC can hide until, hopefully, a settlement is cobbled together by the parties.

Has Apple fired the employees and lawyers who screwed up the Proview deal?

[UPDATE: Xinhua has more on the iPad confiscations in Hebei:

The tablets have been confiscated from shelves in many retail shops and electronic stores due to a Chinese company's lawsuit against the Apple Inc over the trademark infringement, in Shijiazhuang city, capital of North China's Hebei province.

Some retailers have removed the iPad tablets to back storerooms, fearing that local Administration of Industry and Commerce will confiscate them.

An inspection squad of the Xinhua District's Administration of Industry and Commerce in Shijiazhuang city, launched a campaign to crack down the sale of the tablets on Feb 9 after receiving Proview Technology (Shenzhen)'s complaint. A total of 45 iPad tablets were confiscated by the authority in the district over two days.

Proview Technology (Shenzhen) claimed in early 2011 that Apple Inc had been infringing on its iPad trademark and launched court proceedings, said Xie Xianghui, a lawyer for Proview Shenzhen.

The company has extended its complaint to the Beijing Administration for Industry and Commerce and appealed to three courts in other places: Shenzhen Futian District People's Court, Huizhou Municipal Intermediate People's Court and Shanghai Pudong New Area People's Court.

Apple has a problem in China, and not just because it can not launch a product without an iRiot. END UPDATE]

You can follow me @Niubi on Twitter@Niubi on Stocktwits and @Billbishop on Sina Weibo.

Subscribe to a free email of news about China here.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Digicha Blog