Five months after cracking down on fake Apple stores in China, Steve Jobs’ brainchild lost the right to the iPad trademark in that country when a court rejected its claim against flatscreen manufacturer Proview Technology (Shenzhen). It’s the latest chapter in a complicated story that could cost Apple millions of dollars in penalties and lost sales.

Under Chinese law, Apple can appeal.

Here’s basically what happened. Proview Shenzhen and Proview Taipei are subsidiaries of the Hong Kong-headquartered Proview International Holdings Ltd. The parent company registered the iPad trademark in several countries between 2000 and 2004. Proview Taipei sold the rights to the iPad trademark to Apple in 2006 for about $55,000. Apple, believing the rights were valid worldwide, applied for the transfer of the two Chinese trademarks. The request was refused on the grounds that the rights Apple acquired did not include the rights held by Proview Shenzhen for the Chinese mainland.

Apple then sued Proview Shenzhen with the intent of having the court declare that it did have all of the relevant Chinese rights, but the Shenzhen Intermediate People’s Court (pictured, right) ruled otherwise.

Proview Shenzhen would welcome any financial gains from the situation, since it is near bankruptcy and undergoing a court-ordered debt restructuring process. HeJun Vanguard Consulting Group, which is handling the restructuring, said it intends to claim 10 billion yuan ($1.6 billion) in compensation from Apple for copyright infringement.

Meanwhile, Grandall Law Firm, acting for Proview Shenzhen, sued Apple resellers in the southern cities of Shenzhen and Huizhou and is seeking an immediate injunction against iPad sales. Hearings in those cases are scheduled for Dec. 30 and Jan. 7 respectively. The legal team has said it will pursue resellers elsewhere in China should it be successful in those two initial cities.

Related links:

Official media release [Chinese] –

Xinhua – Chinese firm to claim compensation after Apple trademark lawsuit thrown out

Shanghai Daily – Heard the one about the iPad which isn’t an iPad?

The Hindu – Apple loses battle for control of iPad trademark in China

Financial Times – Apple loses iPad trademark case in China

Photo by Flickr user Eduardo Mariz, used under Creative Commons license