iPad Trademark Dispute Addendum: Revenge of the Lawyers

Last week, Grandall Law Firm sued its client, Proview, for failing to pay up the promised 4 percent of Apple’s settlement fee, which equates to 2.4 million U.S. dollars.

According to the Beijing Times, lawyers from Grandall Law Firm, along with an advisory team for Proview, submitted a property preservation application to Shenzhen Yantian District Court on Wednesday.

The application, if upheld by the court, may affect the transfer of the iPad trademark. (Caijing)

I was trying to ignore this since it is a silly sideshow that will most likely prove meaningless. However, some folks are now spouting goofy shit about it, so a brief comment is in order.

OK, first off, what’s really going on here? Well, Proview is insolvent, but not yet in bankruptcy proceedings, and Grandall is trying to get paid. If they actually fronted costs for this case without figuring how to secure their fees, I have to question that move.

But on to the main event. What is going on with the “IPAD” trademark? If you recall, Proview was paid $60 million, which it sounds like was paid in to the court by Apple. By this time, I also assume that the assignment paperwork has been deposited with the Trademark Office, which will process the transfer from Proview (Shenzhen) to Apple’s designated corporate entity. This hasn’t happened yet, but it’s in process.

Who owns the trademark at this very moment? Tough question. One could argue that until a new certificate in Apple’s name is issued by the Trademark Office, it technically still belongs to Proview. On the other hand, Proview signed on to a court-approved (a Provincial High Court!) settlement, accepted their cash, and executed the transfer docs. Looking at this from an equity viewpoint, Apple is the clear owner.

Moreover, we never saw the settlement agreement, so who knows what the two parties agreed on. Perhaps Proview acknowledged that it had already sold the mark to Apple. I have no idea, but that document might have an effect on the status of the title.

Interesting, if rather esoteric, legal issue. Ultimately not very important though.

What is Proview trying to do? Nothing special. It’s suing Proview for money owed, and it has applied to the court to attach the only asset it can think of which is worth any money — the iPad trademark. Same procedure that any plaintiff uses to preserve assets for trial, which prevents the defendant from selling or otherwise transferring that asset to a third party before the case is finished. Usually this involves something like a house, car, equipment or even a bank account. If you’ve ever had a lien put on your house because of a court judgment, you know what I’m talking about.

Apparently this is confusing some folks, like this guy writing for Forbes:

Things are always complicated when the lawyers get involved but this saga of Apple, Proview and the rights to the iPad name in China seems to have one more twist left in it. For the lawyers are suing to have the trademark delivered to them rather than to Apple that has just paid for it.

[ . . . ]

So, what the law firm has done is tried to have the IPAD trademark assigned to itself until it gets paid. Quite how much Proview cares about this I’m not sure. As they’re bankrupt there’s not a great deal that anyone can do to get the $60 million back from them. And quite what the law firm’s end game is I’m not sure either. If the trademark is assigned to them what happens next? Do they sue Apple again for violating the trademark owned now by the law firm? Hope Apple will help them out by coughing up the fees?

Good God. Wrong! Again, what Grandall is attempting is called an asset preservation — the same kind of thing goes on in civil suits in most countries, including the U.S. Even if it succeeded (and I don’t think it will), the trademark would not be assigned to Grandall. It would be held/frozen by the court pending the resolution of the dispute.

I’m not a litigator (and neither, by the way, are any of the folks out there talking about this), so I can’t wade into an analysis of competing rights over the asset and when title is deemed to pass during a trademark transfer like this. I suspect the answer isn’t at all obvious.

However, all this talk is probably a waste of time. There is just no way that a judge in a Shenzhen district court is going to be able to fuck around with a high-profile settlement brokered by the High Court, particularly when money has already changed hands and the paperwork is already with the Trademark Office. It boggles the mind.

A much more reasonable possibility for Grandall is that their fees are taken out of that $60 million settlement amount before it goes to Proview. I wouldn’t bet on that either, though; it’s not the (High) court’s business to get in between Proview and its lawyers.

I think Grandall, like Apple, simply got screwed by Proview here. When your client is insolvent, that tends to happen. Never say never, but I would guess that this little wrinkle won’t amount to anything.

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