iPad Trademark
Research for Online Investors

02/22/12

Apple (AAPL) is locked in a trademark dispute in China that has halted sales of the iPad, and threatens their launch of the third generation iPad that is rumored to hit the market next month.  AAPL bought the rights to the iPad name in 2009 through an intermediary British company, IP Application Development Limited from Proview Taipei.

Proview International Holdings Limited is a Hong Kong company that owns Proview Taipei and Proview Technology (Shenzhen, China).  Proview Taipei trademarked the name iPad in a number of countries as early as 2000.  Proview Technology registered the name in Shenzhen for Mainland China in 2001.

Proview International had briefly partnered with National Semiconductor to market a knockoff of the iMac under the name iPad.

When Proview Taipei sold the rights to iPad to IP Application they listed 10 countries and regions where the trademark was registered.  These listed areas were covered by the sale.  News stories are unclear if China was listed in the sale.  Proview Technology declared bankruptcy in 2010 and is in danger of being delisted on the Hong Kong stock exchange.  They have won a court order to halt sales of the Apple iPad in China.

A Hong Kong court ruled in Apple’s favor last summer, but in December Proview won a judgment against Apple in a provincial Chinese court.  The appeal of that judgment is scheduled for Feb. 29.

The court has seized iPads at some retailers, and Proview stepped up pressure last week asking the court to seize all iPad products manufactured in China.  The appeal will be in front of the Higher Peoples Court in Guangdong province.

Proview is trying to extract money from Apple, but Apple does not appear ready to settle.  Apple delivered a letter to the company’s chairman on Monday claiming to have evidence that he personally authorized the sale of all rights to the iPad trademark, Taiwanese AND Chinese.  The letter threatened to sue him personally for defamation.  Defamation in China can be punishable by death.  We will keep you updated.

The market sighed yesterday that a deal had been struck to rescue Greece from a default in March.  Like all deals, the devil is in the details.  We reviewed information on the deal and found a few pitfalls to watch play out over the next couple of weeks.

The bailout agreement requires Greece to go back to private bondholders for a larger write-down than previously negotiated AND 95% participation.  What happens if 95% of private bondholders don’t participate?  That is why the government is going to pass a Collective Action Clause (CAC).  A CAC forces participation by bondholders, but now the ISDA seems to be saying this would not trigger a “credit event.”  Wow, amazing how things can be parsed when money is on the line.

One problematic issue in the agreement to rescue Greece is the European Financial Stability Facility (EFSF) has to raise $93 billion dollars ahead of the bond swap with private creditors.  $39.6 billion dollars is going to the bondholders in cash as a sweetener on the deal, $7.26 billion will be used to pay the accrued interest and $46.2 billion dollars is earmarked for Greek banks to shore up their balance sheets when they take a hit on the government bonds they hold.

Giving this money to Greek banks will allow them to access the ECB credit window for long-term funds at 1%.  They will have to pledge this money as an asset to borrow from the ECB.  We have two problems here.  The ESFS has not been able to borrow money in the past.  How are they going to do it in the next month?  The $46.2 billion given to Greek banks is supposed to be repaid to the EFSF, but how are the banks going to repay it if it is pledged to the ECB?

The agreement requires the Greek government to pass a supplementary budget with $4.36 billion dollars in cuts for this year.  The 325 million euro cuts that were supposed to be in pensions also need to be addressed, in the next week.

The agreement will have to be endorsed by parliaments in Germany, Finland and the Netherlands before their governments can participate.  This may be difficult as many politicians in these countries are skeptical that Greece will follow through on their promises.

The International Swaps and Derivatives Association (ISDA) is already trying to hedge their opinion on whether credit default swaps (CDS) will be triggered on Greek debt.  The Greek parliament is prepared to write a new law called a “Collective Action Clause” that forces private bondholders to participate in the write-down.  Steve Kennedy, with the ISDA said “If one investor had $1.1 million of debt and decided not to tender in an exchange, and the debt issuer stopped making payments on that debt, it would trigger a credit event.”

But if the Greek government passes a CAC and you are forced to participate and lose money, but can’t collect on your CDS, what was it worth?

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

MarketToday Archive

Back to Top