Books written by Ray Sullivan

Thursday, 1 March 2012

Did Apple Buy the Brooklyn Bridge?

It used to be a staple Hollywood comedic plot line, the one where the hapless hero of the film is conned into buying the rights to the Brooklyn Bridge, usually using up his last reserves.  Essentially the cinematic equivalent of Caveat Emptor.

A couple of years ago Apple believed it had bought the rights to the iPad name from a Chinese company, Proview, for what must now look like a bargain price.  The rights to the name, which has since become an iconic brand name with sales of iPads exceeding 32 million units since launch, were sold for £35,000 (around $55,000 US at the time).  Were Proview naive or desperate?

Well it seems that possibly both descriptions were partially right, however there is a third possibility that the persons selling Apple the rights had no more authority than if they'd been throwing the Brooklyn Bridge in as well.

The iPad name had been in use by Proview for nearly ten years and referred to a desktop computer optimised for Internet access - the name is an acronym for Internet Personal Access Device - and they shifted about 20,000 of the devices over the ten years.  Perhaps the most important thing to bear in mind with this company, though, is that although it's struggling today, it was a big player in its time - it was ranked tenth in the world for display manufacture at one point.

Then came the sub prime problems and the resulting worldwide recession.  Along with a number of other large and potentially survivable companies, Proview suffered crippling losses and technically they aren't trading as far as I can tell right now.  I haven't seen their company accounts to judge just how badly they are doing, but I'm in good company there - the Chinese Stock Exchange hasn't seen their books either and have given Proview until the end of June this year to publish their results and prove they've enough capital to operate for at least twelve months.  I don't think they're holding their breath on this one.

So, my guess is that when Apple popped up a few years ago and asked to buy the trademark of a product that had sold on average 2,000 units a year and was ten years old anyway, at a time when the company probably couldn't afford a round of lattes from Starbucks (but then again, who can?), they probably thought of a number to get them through the week and doubled it for good luck.  Fast forward on a couple of years, 32 million iPads and 20 billion dollars of sales and they're still hanging on - just. 

Apple have been to the Chinese lower courts to wrestle the rights to the name from Proview on the basis that as far as they are concerned, they bought those rights a couple of years ago.  Proview are stating the people that Apple dealt with weren't authorised to sell the name.  Apparently the courts are struggling to identify who is who anyway (apparently, all Apple employees look the same to them). 

Will Apple lose?  Possibly - they lost the first round and let's not forget that they're playing away.  Ultimately they won't lose the name, or the exclusive rights to it, they may just have to pay a bit more than the original rights to achieve that.  Let's face it, the guys at Proview have nothing to lose and an awful lot to gain.  Given that the company accounts are shrouded in mystery, which is usually a euphemism for undisclosed debt, then perhaps the solution for Apple is to buy the company, clear the debts and pay some redundancy?

It's probably easier and cheaper than battling it out in Chinese courts.

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