National Semiconductor

Apple and Proview trade blows in a Shanghai courtroom

February 22, 2012: 6:32 AM ET

In a fractious four-hour hearing, both sides were admonished by the judge

Proview's i-Pad

The world's most valuable company and a troubled Chinese electronics manufacturer that's about to be delisted from the Hong Kong stock exchange unless it can come up with some cash squared off in a Shanghai courtroom Wednesday.

At stake: the trademark for Apple's (AAPL) iPad, the most successful new electronics gadget since, well, the iPhone.

Apple claims it bought worldwide rights for the trademark three years ago for $55,000. Proview, which briefly partnered with National Semiconductor to market the i-Pad, a low-cost knock-off of Apple's iMac, claims Apple slipped up and neglected to buy the rights from Shenzhen Proview, the company's Chinese subsidiary.

"Apple has no right to sell iPads under that name," the lawyer for Shenzhen Proview argued, according to an AP report.

Apple's iPad 2

"Proview has no product, no markets, no customers and no suppliers. It has nothing," the lawyer representing Apple countered, according to the Washington Post.

"Apple has huge sales in China. Its fans line up to buy Apple products. The ban, if executed, would not only hurt Apple sales but it would also hurt China's national interest."

Proview's lawyer would have none of it:

"Whether people will go hungry because you can't sell iPads in China is not the issue," he said. "The court must rule according to the law. Do you absolutely have to sell the product? Can't you sell it using a different name?"

More than 100 reporters packed the courtroom to watch the fractious exchange. After admonishing both sides to respect the rules of the court, the judge adjourned the hearing.

His decision may rest on the details of the 2009 transaction in which a British firm, secretly working for Apple, bought what it believed were all rights to the iPad trademark from Proview International Holdings' Taiwanese subsidiary. Proview Shenzhen claims that the Chinese rights were not part of that deal.

A Hong Court ruled in Apple's favor last summer, finding that Shenzhen Proview was trying to "take advantage" of the situation. In December, Proview won a judgement against Apple in a provincial Chinese court, resulting in iPads being removed from some retailers' shelves. A hearing on Apple's appeal is scheduled for Feb. 29.

Proview, which filed for bankruptcy in 2010, has said it is open to a settlement. Meanwhile, the Hejun Vanguard Group, a consulting company representing Proview's creditors, announced last week that it is preparing to sue Apple in the U.S. for $2 billion.

"It's all about the money," reads an editorial in the English-language China Daily. "People are anxious to see whether Proview (Shenzhen), which has fallen on hard times, can force Apple to pay up for sloppy legal work establishing its trademark."

Apple seems in no mood to settle. In a letter to Proview's chairman delivered Monday, it claimed to have evidence that he personally authorized the sale of all rights, Taiwanese and Chinese. The letter threatened to sue him for defamation, which in China can be punishable by death.

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