One thousand ninety.
That's the magnitude of how much more Apple (Nasdaq: AAPL) has agreed to pay regarding the rights to the iPad trademark relative to what it originally paid for the moniker. Leading up to the original iPad's launch in 2010, Apple had purchased the name from Chinese company Proview for just $55,000 as early as 2009. Proview's iPAD ironically looked just like the original iMac from the late '90s, and it didn't know who it was dealing with, because the Mac maker disguised its true identity through a shell holding company called IP Application Development, or IPAD.
Once the jig was up and Apple turned the name into a globally recognized brand, and at a time when Proview was trying to fend off bankruptcy and needed all the cash it could scrounge up to pay off creditors, it called foul. It sued, claiming that the trademark was sold by a subsidiary that didn't have the full rights to do so, eventually bringing a suit in California, while attempting to block exports from China over the dispute, which could have potentially been a crippling blow, considering all iPads are manufactured in China.
A local Chinese court sided with Proview in the case, leading to an appeal to a higher power. At one point, Proview was demanding as much as $2 billion for the trademark. Courts ordered that the two enter mediation talks, where Apple offered $16 million. Proview's counter was a whopping $400 million.
Apple and Proview have at long last settled their differences in the case, and the iPad maker (Apple, not Proview, since it no longer makes its device) has now agreed to fork over $60 million to let bygones be bygones.
That figure is 1,090 times more than the $55,000 originally paid.
Can't we all just get along?
While that's a lot more than the original amount, it's far less than the absurd $2 billion figure Proview wanted, and it's effectively a rounding error for Apple's $110 billion cash stash that it had at the end of its fiscal second quarter or its $3.18 billion in operating expenses. What's a measly $0.06 billion between the largest company on Earth and a gadget maker on its deathbed?
The Guangdong High People's Court confirmed in a statement that the case has now been settled, and an attorney for Proview called the result "acceptable to both sides." I'd hope so, considering Proview should take what it can get. For example, one of the more entertaining quotes from the suit was when in February Apple's local legal representation said, "Proview has no product, no markets, no customers, and no suppliers. It has nothing," arguing that it would "hurt China's national interest" to ban the tablet.
Well, what's done is done. Onward and upward, as they say.
Cleared for takeoff
The important part for investors is that now that this pesky suit is in the rearview mirror, settled for what's a paltry amount for Apple, it paves the way for the release of the third-generation iPad in China. To date, only the iPad 2 is available within China, but that will probably change soon. Regulators signed off on launching the device in China, but we have yet to see an official release, and many have speculated that Apple was looking to settle the trademark disputes before embarking upon the product launch.
Greater China revenue tripled last quarter to $7.9 billion for Apple, and the launch of the new iPad in the region would help keep that momentum going.
With nearly unstoppable momentum, should you buy Apple? That's a worthy question that deserves a worthy answer, and we have it right here.
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