Apple will email all Australian buyers of its new iPad to offer them a refund, a lawyer for the company said today, after the country's consumer watchdog accused it of misleading advertising over one key aspect of the product.

The Australian Competition and Consumer Commission has taken legal action to ensure Apple makes consumers aware its third-generation iPad cannot connect to a 4G mobile data network in Australia due to technical incompatibility.

Apple promoted its third-generation tablet as the iPad with Wifi+4G, but Australia has only one 4G network, operated by Telstra, which operates on a different frequency to the 4G on Apple's new iPad.

The consumer watchdog argues that Apple's advertising was misleading and wants the court to force the company to correct its ads, refund any affected buyers and impose penalties.

Apple barrister Paul Anastassiou told the Federal Court in Melbourne that the company would send emails to all Australian buyers to date, offering the refund. The new iPad was launched in stores only this month.

While the iPad is the clear market leader, and the new version with its faster chips, fourth-generation wireless and a sharper display is only expected to cement Apple's lead, the company has hit some bumps in the road.

It is waging a battle with a Chinese technology company, Proview, that claims to own the iPad trademark in China, in a long-running dispute that has threatened to disrupt iPad sales in one of its fastest growing markets.

In Australia, a small but a key launch market for Apple products, it lost a bid to ban the sales of Samsung's Galaxy tablet late last year.

That battle is part of bruising global patent war between the two firms that spans about 30 legal cases in 10 countries.

Reuters