[Infowarrior] - Cisco sues Apple over use of iPhone trademark

Wed Jan 10 22:28:30 EST 2007

Cisco sues Apple over use of iPhone trademark

By Marguerite Reardon
http://news.com.com/Cisco+sues+Apple+over+use+of+iPhone+trademark/2100-1047_
3-6149285.html

Story last modified Wed Jan 10 19:08:21 PST 2007

Cisco Systems has filed a lawsuit against Apple accusing the company of
infringing its iPhone trademark, the networking company said Wednesday.

The suit also accuses the iPod maker used a front company to try to acquire
rights to the name.

Cisco accused Apple in a suit filed in United States District Court for the
Northern District of California of willingly infringing its trademark when
it announced the new iPhone at the Macworld Expo in San Francisco on
Tuesday.

Cisco said in the complaint that Apple had attempted to get rights to the
iPhone name several times, but after Cisco refused, the company created a
front company to try to acquire the rights another way, according to the
lawsuit (click for PDF).

Mark Chandler, senior vice president and general counsel at Cisco, said in
an interview that the companies were close to finalizing a deal Monday night
that would have allowed both Cisco and Apple to use the iPhone name. One
aspect of the agreement called for some sort of technical interoperability
between Cisco's Linksys Internet telephony products and Apple's cell phone.
Chandler said the hope was that by making the products interoperable, it
would help alleviate confusion among customers, who would likely be target
consumers for both products.

The companies left the negotiating table at 8 p.m. Monday with only a few
points left to negotiate, Chandler said. Then on Tuesday, Apple CEO Steve
Jobs took the stage at the Macworld Expo and, amid much fanfare, unveiled
the new "iPhone."

"We indicated that it was important that the negotiations be completed
before the launch of their product," Chandler said. "Our expectation was
that our name wouldn't be used without permission. And it is a surprise when
any large company announces a product using a name they don't have a right
to use."

Chandler said Cisco made it clear after Apple's launch that negotiations
needed to be completed immediately, but he said Cisco has still not heard
from Apple.

Cisco is seeking an injunction that will prevent Apple from using the name
as well as damages from the company, the lawsuit said.

Fresh off one of the biggest launches in its history, a product Jobs called
one of the most exciting products he's ever worked on, the company dug in
its heels. "We think Cisco's trademark suit is silly...We believe (their)
trademark registration is tenuous at best," said Natalie Kerris, an Apple
spokeswoman.

"There are already several companies using the iPhone name for VoIP (voice
over IP) products," Kerris said. "We're the first company ever to use iPhone
for a cell phone. If Cisco wants to challenge us on it, we're confident
we'll prevail."

Cisco obtained the iPhone trademark in 2000 when it acquired Infogear, a
small Redwood City, Calif., start-up that developed consumer devices that
allowed people to easily access the Internet without a PC. Infogear had
actually registered the iPhone trademark in March 1996. Cisco's home
networking division, Linksys, has been using the iPhone trademark on a new
family of voice over IP phones since early last year, Cisco said. And last
month, Linksys expanded the iPhone family with additional products.

A British company called Orate Telecommunications Services also offers a
VoIP phone called an iPhone, and closer to home, a San Jose, Calif., company
called Teledex offers an iPhone for hotel rooms.

Chandler said Cisco is aware that other companies have used the iPhone name
and in the past Cisco has been involved in "enforcement actions involving
the use of this name."

For more than a year, Apple watchers have speculated about a new phone
developed by Apple that would combine smart phone cellular technology with
the full functionality of an iPod music and video player. Fans and bloggers
had been referring to an Apple-designed cell phone as the iPhone for some
time, and Apple's repeated attempts at obtaining the trademark make it clear
Apple hoped to use the moniker as well.

Cisco said in its complaint that Apple had first approached the company
about acquiring the rights to the iPhone trademark in 2001. Over the years,
Apple continued to make requests for the rights, including several attempts
in 2006, Cisco said.

"Each time, Apple was told that Cisco was not interested in ceding the mark
to Apple," Cisco's complaint reads.

Apple apparently was not willing to accept Cisco's decision, so it created a
Wilmington, Del.-based front company called Ocean Telecom Services that
applied to use the trademark in the U.S. on September 26, 2006, according to
Cisco's complaint. That company, Cisco says in the filing, is "owned or
otherwise controlled by Apple and is the alter ego of Apple." Around the
same time on September 19, 2006, Apple also filed for the trademark for
iPhone in Australia.

In Ocean Telecom Services' U.S. filing and in Apple's Australian filing,
each company refers to a trademark filing made on March 27, 2006, in
Trinidad & Tobago. In its complaint, Cisco said that it's the reference to
this document that is almost identical in each filing that leads the company
to believe Ocean Telecom is actually owned by Apple.

Longtime Apple watcher Roger Kay, an analyst with Endpoint Technologies
Associates, was blunt in his assessment of the situation.

"This was just brass balls on the part of Steve (Jobs), to go in there and
just grab that trademark and not pay a license for it or negotiate. It's the
height of arrogance," Kay said. "He basically thinks he can get away with
it."

However, it's likely that the two companies will settle their differences,
as prolonged litigation doesn't really serve either company, Kay said.
"Apple is playing chicken with Cisco, and there's other companies I'd rather
play chicken with," he said, referring to Cisco's deep pockets.

Cisco holds a clear advantage in the legal dispute as the trademark holder
of record and having already released products using the iPhone name, said
Bruce Sunstein, co-founder of the Boston law firm Bromberg & Sunstein. "The
one who has a registration is in a better position than the one who does
not."

Apple's only choice is to argue that its "iFamily" of trademarks such as
iPod, iTunes and iMac create confusion in a customer's mind as to who makes
the iPhone, Sunstein said. It's not out of the question, but in general the
company in Cisco's position with clear rights to the trademark has a
stronger argument than a company making the family argument, he said.

Also, the applications for trademarks in other countries have no bearing on
Cisco's iPhone trademark, Sunstein said. "The fact that Apple may have
superior rights in Australia doesn't (give) them any rights in the U.S.," he
said.

Apple's Kerris had no comment on the status of negotiations between the two
companies, including whether Apple had received documents from Cisco the
night prior to the iPhone launch, as Cisco had stated Tuesday.

In the U.S., courts evaluate trademark disputes based on a list of 13
factors, including how similar the trademarks are, how well-recognized they
are--and, crucially, whether there will be "any actual confusion" on the
part of consumers.

Identical product names in similar areas have prompted courts to side with
the original trademark holder in the past.

In one 2003 decision by a federal appeals court, a company selling "Red
Bull" tequila sought a trademark. But the court ruled a malt beverage made
by Schlitz and also called Red Bull was already trademarked, and granting a
second one would result in a "likelihood of confusion" between the two
alcoholic drinks.

Under federal law, the loser in a trademark dispute can be forced to hand
over any profits it received as the result of selling the device in
question, and signs, labels, and packaging can be required to be destroyed.

CNET News.com's Declan McCullagh contributed to this report.