Apple Gets Its Trademarks Back Cheap

| About: Apple Inc. (AAPL)
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In many ways the relationship between America and China today is analogous to that of America and Great Britain in the 19th century.

Back then the Brits were constantly complaining of our stealing their intellectual property. The American inventions of the Industrial Revolution were built on British patents. A great theme of Charles Dickens' career was complaining about our refusal to respect his copyright. The United States did not start respecting copyright conventions or patent rights until it could claim a profit on the trade.

China has advanced through 100 years of our history in 30 years, and now stands where we did in the early 20th century. Its sweatshops are dominant, but it does want to build patents and copyrights, to get them respected. So it's willing to deal on the issue.

Of course, that deal is meant to benefit China.

Apple's (AAPL) handling of this issue illustrates tremendous sophistication other American companies can learn from.

The company paid $60 million to a Guangdong company called Proview, which registered the name "iPad" for an electronic product in 2000, in order to gain global rights to the name it registered in 2009, and had licensed from Proview's Taiwan affiliate. But the figure could have been much higher. It turns out Proview was under enormous financial strain and needed to settle.

Trademarks like this can be the simplest intellectual property cases to solve. The facts in this case seemed to be in Proview's corner, at least regarding China. But Apple still played hardball in negotiations and got off pretty cheap.

One result is that Chinese businesses now have a much better understanding of the law in this area. A claim against the "Snow Leopard" name attached to Apple software will likely go nowhere, because the Chinese company that trademarked the term did not do so for software.

Apple's position in China will also be a teaching moment here. Apple doesn't just make iPads in China. It sells a ton of them there. It's not just taking its intellectual property out of the country like many other companies, but leaving considerable investment in both the manufacturing and retailing sectors. It's a big name brand there.

This two-way street should encourage greater respect for patent and copyright generally, although it takes time. The U.S. government currently claims that 20% of Chinese electronics are counterfeit, costing the U.S. $1 billion annually. But that's a smaller percentage, and a smaller total number, than what we faced a decade ago.

And the trend is in our favor. The $60 million Apple paid to settle this lawsuit is a very small price to pay for greater transparency in global trade. Those who insist that the China trade is a one-way street are wrong.

Disclosure: I am long AAPL.