A Shanghai court began hearing on Wednesday a case brought by a Chinese technology firm seeking to halt the sale of Apple Inc's iPads across the affluent Chinese city, accusing the US firm of trademark infringement.
Previous court rulings in favour of Proview Technology (Shenzhen) have covered specific retailers in smaller cities, but a Shanghai order, if imposed, would eat into one of Apple's biggest markets in China. A judgment was not expected immediately.
Proview says it owns the iPad trademark in China and a Shenzhen court ruled in its favour last December.
Apple disputes Proview's ownership of the trademark, saying it bought the trademark from Proview in 2009. The firm has appealed the Shenzhen judgement, with a higher court hearing set for Feb. 29 in China's southern province of Guangdong.
Following the Shenzhen case, Proview has launched a multi-pronged approach to get Apple's iPads off the shelves in the world's second-biggest economy, with mixed success.
It is unclear whether there will be more hearings at the Shanghai Pudong New Area People's Court, and lawyers have said a judgment is not expected for a few months and that Apple would in any case have the option to appeal should it lose.
Proview's lawyer told Thomson Reuters publication Asian Legal Business on Tuesday the purpose of the lawsuit was to seek an injunction to stop the sale of iPads in the city. Proview has said it aims to settle the case out of court with Apple.
Apple's Shanghai unit is the defendant in the case. Losing could mean the city's three Apple retail stores would have to stop selling the popular tablet PCs. Apple has two other flagship stores in China, both in Beijing.
Apple's iPad has a huge lead over rival tablet PCs in China, with a 76% share. But it is not only the consumer market in China that is important for Apple because the country is also a major production base for the iPad and other Apple products.
Proview, a financially troubled technology company, has already petitioned Chinese customs to stop shipments of the iPad in and out of China, although authorities have indicated such a ban would be difficult to impose.
Over the past week, Proview's efforts have borne fruit as local media reported that some cities have started enforcing Proview's request to remove iPads.
Proview's lawyers said on Friday it had won a lawsuit in the southern city of Huizhou against a retailer selling Apple's iPads, boding well for its case in Shanghai.
Proview parent, Hong Kong-listed Proview International Holdings Ltd, was the first Taiwanese technology company to list in Hong Kong and by the end of the 1990s numbered itself among the top five computer monitor makers.
In 1999 it partnered with US chip maker National Semiconductor to launch the I-PAD, a stripped-down desktop computer whose main selling points were its Internet connectivity and ease of use.
Proview continued to grow, shifting from computer monitors to become the world's third-largest OEM manufacturer of flat panel TVs. But by August 2009, when Apple began trademark talks through a proxy, Proview had been badly hammered by the financial crisis.
Trading of its stock was suspended in Hong Kong in August 2010 after creditors in China went to court to recover assets. The company faces delisting in June if it cannot provide the Hong Kong Stock Exchange with a viable rescue plan.