By LORETTA CHAO in Beijing, JESSICA E. VASCELLARO in San Francisco and PAUL SONNE in London
Apple Inc. took in nearly $8 billion in greater China during the first three months of 2012. The price of continuing to sell its tablet in China under the iPad name: a mere $60 million.
The Cupertino, Calif., gadget maker has paid that sum for the transfer of the iPad trademark from the China unit of Proview International Holdings Ltd., according to a Chinese high court in the southern Chinese province of Guangdong.
The amount, which was far short of the as much as $2 billion that a Proview arm had asked for in a U.S. court, represents a tiny sum for the world's most valuable company. Apple had a cash hoard of more than $110 billion as of March.
China experts said Apple got off cheaply, in part because Proview, which is in bankruptcy and has about $400 million in debt, needed to settle.
Shaun Rein, managing director of the China Market Research Group, a consulting firm in Shanghai, said the Chinese government was likely pushing for a settlement as well, hoping to stave off fears among foreign companies about doing business in China.
"I think Apple got off very cheaply," Mr. Rein said, adding that now Apple would have no reason not to push the iPad into the region faster.
One of Proview Shenzhen's attorneys, Xie Xianghui, said, "I have to admit the amount Apple paid far from covers all of Proview's debts." He added that since the agreement was accepted by both sides, "There's nothing Proview can do. They have to accept it."
Mr. Xie said that the money will likely be distributed to the China-based creditors of the debt-laden unit, Proview Technology (Shenzhen) Co.
An Apple spokeswoman declined to comment beyond its court documents.
Proview had registered the trademark years earlier for an "Internet personal access device," or IPAD. Proview was no longer producing IPADs but still owned trademarks in several regions, including China.
Apple's dispute was rooted in an agreement signed in 2009 to transfer the ownership of iPad trademarks in several countries, including China, from Proview and its affiliates to an Apple representative. The contract was signed by Proview's Taiwan subsidiary, but Proview's mainland China arm argued that it didn't sign the agreement and so could keep the China rights.
The imbroglio spotlights the complications foreign companies face dealing with intellectual-property issues in China. Some legal experts said Apple could have avoided the dispute had it taken steps necessary for companies striking such agreements there.
Apple "didn't do their homework, they didn't do the contract well, they didn't negotiate this the right way," said Stan Abrams, an attorney with GoldenGate, a Beijing-based law firm. "Those are all lessons that should be known already."
The resolution of the dispute comes as Apple's business in China has been growing rapidly. And overall revenue for greater China, which includes Taiwan and Hong Kong, more than tripled during the first three months of the year from the same period in 2011. IPhone sales in mainland China increased fivefold during that period.
Apple still has a lot more business to tap in China. The iPhone still isn't available through China Mobile, the world's largest mobile carrier, and Apple's five China retail stores frequently run out of supply.
Some analysts said the Proview case indicates how Apple's sales growth in China outpaced the growth of its operations in the country. Apple's "sales grew ahead of the company's ability to keep up," said Duncan Clark, chairman of consulting firm BDA China Ltd. Without more "senior management with a deep understanding of China," there is "a risk of mistakes."
Apple has beefed up its staff in China and quickened its pace of releasing products in the market. Last month, Apple unveiled a host of new features tailored to Chinese users, including integrating its operating systems with Chinese Internet services and making it easier to input Chinese characters.
Five years ago, Apple had a relatively skeleton crew in China, with 50 to 75 people focused largely on retail and online stores, according to former employees.
Apple's iPad legal woes began a few years ago. In 2009, Apple representatives incorporated a U.K. company called IP Application Development Ltd., intended to be used to purchase Proview's trademarks, according to a person familiar with the matter.
In August 2009, Graham Robinson, managing director of an intellectual-property investigation firm named Farncombe International used the alias Jonathan Hargreavesâ€"representing IP Application Developmentâ€"to approach Proview representatives in the U.K., according to court proceedings and people familiar with the case.
Apple's in-house lawyers and outside counsel at the law firm Edwards Angell Palmer & Dodge LLP drew up a contract, and the two sides for weeks shuttled drafts of it back and forth via Farncombe. When the day came for the final signing, Apple said in an earlier statement that Proview "insisted" on signing in Taiwan.
A spokesman for the outside law firm, now known as Edwards Wildman Palmer LLP, declined to comment.
The final contract featured the Taiwanese subsidiary of Proview, rather than the Shenzhen-based company, as the contracting party. An appendix listed all nine trademarks that would be handed over and the corresponding countries or territories where they were active, including China.
Apple could have avoided the issue had it insisted on signatures from all the affiliates, among other steps, said Mr. Abrams, the GoldenGate attorney.
After late Apple co-founder Steve Jobs showed off the iPad in January 2010, Proview argued the contract Apple signed didn't include the rights for mainland China. China trademark officials rejected Apple's attempts to register the trademarks there.
Apple sued Proview in Shenzhen, but the court in December 2011 ruled in Proview's favor, prompting an Apple appeal to a higher court in Guangdong.
â€"Paul Mozur in Beijing, Yang Jie in Shanghai and Ian Sherr in San Francisco contributed to this article.Write to Loretta Chao at loretta.chao@wsj.com, Jessica E. Vascellaro at jessica.vascellaro@wsj.com and Paul Sonne at paul.sonne@wsj.com
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