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Apple Accused of Fraud by Proview

by Sean P. Aune | February 28, 2012February 28, 2012 5:45 am PDT

Proview iPad

Proview has decided that suing Apple in China isn’t enough, so why not also go after them in the United States as well?  And since the U.S. is so fond of fighting things out in the press, why not also get a PR firm into the mix?

Proview Taiwan yesterday issued a press release via PR firm Powell-Tate that accuses Apple of  “fraud by intentional misrepresentation, fraud by concealment, fraudulent inducement, and unfair competition” over the way it purchased the iPad trademark.  As the story goes, Apple hired Graham Robinson of  British intellectual property firm Farncombe International to handle the purchase of the iPad trademark in 10 countries.  To that end, Robinson setup a shell company named IP Application Development Limited (IPAD Ltd.) and said that his name was “Jonathan Hargreaves” for the sake of all contact with Proview.

The statement goes on to say that he dodged questions about what his business his doing by telling Proview, “I’m sure you can understand that we are not ready to publicize what the company’s business is since we have not yet made any public announcements.”  He did, however, assure them that the use of the name would not compete with Proview.

With this new suit, Proview is seeking an injunction against the use of the iPad trademark as well as compensatory damages and “disgorgement of Apple’s profits from the unfair competition.”  In other words … Proview wants every dime the iPad name has earned Apple.

However, there is a problem with Proview’s thinking in this matter.  AllThingsD spelled it out exactly:

The mark is only worth what Proview agreed to sell it for, which is the entire point of establishing a holding company through which to negotiate its purchase. In the end, what Proview is asking the court for is permission to gouge Apple for the iPad mark after the fact, ignoring the reality that the iPad mark is only worth what it is today because of the success of the iPad and the massive investment Apple made in creating it.

At the time of the purchase, the iPad trademark wasn’t really worth anything because Proview was not making any products with the name at the time and the company was on the verge of bankruptcy.  (which it is now in full bankruptcy)  As for making the purchase through a shell company, that may appear shady, but it has been a way of doing business for ages to make sure you pay a fair market value for something as opposed to people seeing dollar signs in their eyes when a big name company comes along.  As we pointed out the other day, the most famous example of this in the United States was Walt Disney purchasing the 45 square miles of land for Disney World in Florida.  He was purchasing what was literally swamp land, and had he done it under his own name, the prices would have led to it being the most expansive swamps in the history of the world.

What’s intriguing here is this press release and court case are being done under the Proview Taiwan name and not the Proview Shenzhen name that has filed the lawsuits in China.  In those cases, the Shenzhen branch said that the Taiwan branch never had the rights to sell the name in the first place.  The suspicion here is that is being done to make sure the two cases don’t impact one another.

Considering that Proview is bankrupt at this point and has little hope of keeping itself afloat, getting any form of money from Apple is about it’s only hope of staying afloat.  These cases aren’t going to go away any time soon.

[press_start]

Proview Taiwan Charges Apple with Fraud and Unfair Competition

NEW YORK, Feb. 27, 2012 — Taiwan-based Proview Electronics Company, Ltd., (“Proview Taiwan”), a leading producer of high-quality monitors for computers and media devices, announced today that it has filed an amended complaint in California Superior Court in Santa Clara, accusing Apple Inc. of fraud and unfair competition.

Separately, in another action, Shenzhen-based Proview Technology Shenzhen Co, Ltd. continues to pursue litigation against Apple in China. In the Chinese lawsuit, Proview Technology Shenzhen Co, Ltd. has demonstrated that the IPAD trademark for Mainland China was never assigned to Apple or its affiliates. The legal questions and remedies in the China and U.S. lawsuits are separate and distinct and have no bearing on one another.

The amended complaint was filed to provide additional information regarding Apple’s fraudulent actions committed against Proview. Among the many allegations in the U.S complaint are fraud by intentional misrepresentation, fraud by concealment, fraudulent inducement, and unfair competition. The complaint provides evidence that the December 23, 2009 agreement that Proview Taiwan entered into was fraudulently induced by the concealment and suppression of material facts by Apple’s agents, and that, as a result, the 2009 agreement is void. Once the agreement is voided for fraud, the iPad trademarks in the European Union, South Korea, Mexico, Singapore, Indonesia, Thailand, and Vietnam will revert back to Proview Taiwan.

As the U.S. complaint alleges, Apple was pressed for time as it sought to acquire the IPAD trademarks, in advance of a January 27, 2010 announcement to launch the Apple iPad. In addition, Apple was predisposed to use deception to obtain the trademarks from Proview Taiwan because it knew from prior dealings with Proview Taiwan that Proview Taiwan opposed Apple’s use of similar trademarks. To further this deception, Apple used an intermediary, Farncombe International and its Managing Director, Graham Robinson, to create an elaborate but false pretext for the purchase of Proview’s IPAD trademarks. Apple created a special purpose company named IP Application Development Limited (“IPAD Ltd.”), then concealed the fact that this company was acting as an agent of Apple. Graham Robinson further concealed Apple’s involvement by adopting a false alias, Jonathan Hargreaves, which he used when negotiating with Proview.

Shortly before the launch of Apple’s tablet device, Robinson, working on behalf of Apple, blatantly misled Proview regarding IPAD Ltd.’s business and IPAD Ltd.’s intended use of the trademark. When Robinson was asked why IPAD Ltd. wanted the IPAD trademark, he replied that it was because IPAD “is an abbreviation for the company name IP Application Development Limited.”

The amended complaint reveals that Robinson evaded direct questions from Proview as to the nature of his business by stating that “[IPAD Ltd.] is a newly formed company, and I’m sure you can understand that we are not ready to publicize what the company’s business is, since we have not yet made any public announcements”. As I said in my last message, I can assure you that the company will not compete with Proview.” As Proview Taiwan now knows, these statements by Apple’s agent were patently false.

“While some technology companies create special purpose vehicles in order to obtain trademarks, in this case the sole function of Apple’s special purpose vehicle was intentional misrepresentation, and an effort to fraudulently induce Proview Taiwan into a sale of the IPAD trademarks,” said Cal Kenney, Spokesman of Proview Taiwan.

“Proview Taiwan had concerns about the purchaser’s intentions, and was very diligent in trying to understand the facts surrounding its interest in Proview Taiwan’s IPAD trademarks. But even careful diligence is ineffective when the counterparty is engaging in intentional fraud,” said Cal Kenney.

The relief Proview Taiwan seeks from Apple includes compensatory damages and disgorgement of Apple’s profits from the unfair competition, as well as an injunction to stop Apple’s continued use of the fraudulently-obtained trademarks.

“Apple obtained the iPad trademark by defrauding Proview Taiwan through tactics that involved explicit misrepresentations, and the use of foreign entities specifically created to perpetrate the fraud,” said Cal Kenney. “By filing the complaint in the California Superior Court, Proview Taiwan seeks the truth about who at Apple orchestrated the fraud, and the specifics of how it was implemented. Proview Taiwan believes that when the truth is exposed, the full weight of Apple’s fraudulent and nefarious behavior will be revealed and the appropriate remedies will be obtained.”
[press_end]


Sean P. Aune

Sean P. Aune has been a professional technology blogger since July 2007, but his love of tech dates back to at least 1976 when his parents bought...

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