Cisco Sues to Block Apple Use of iPhone Name

According to a sto­ry by IDG News, Cisco Systems has filed suit against Apple in an attempt to block the use of the name iPhone for Apple’s new inte­grat­ed iPod, cel­lu­lar phone, and palm­top device. Following Apple’s announce­ment of the hot­ly antic­i­pat­ed iPhone Tuesday at the Macworld Conference & Expo in San Francisco, Cisco filed suit in Federal District Court in Northern California claim­ing trade­mark infringement.

In 2000 Cisco acquired Infogear Technology, Corp., own­er of the Linksys divi­sion and mak­er of the iPhone Voice-Over-IP tele­phone hand­set. Although a Cisco spokesper­son not­ed that Apple and Cisco have spent the last two years in nego­ti­a­tions to license the iPhone trade­mark to Apple, at the time the iPhone was announced on Tuesday, the agree­ment yet to be signed. According to Cisco, nego­ti­a­tions con­tin­ued through Monday evening before the Apple iPhone announce­ment, but at the time of the unveil­ing at Macworld Expo, Apple did not have the right to use the trade­mark iPhone, which Apple iden­ti­fied in press releas­es and the Apple​.com Website as a reg­is­tered trade­mark of Apple.

In a quote to PC World mag­a­zine, Apple’s vice pres­i­dent of world­wide iPod mar­ket­ing, Greg Joswiak, hint­ed at Apple’s prob­a­ble defense against the alleged infringe­ment rid­ing on the thin line between trade­mark clas­si­fi­ca­tions. Under U.S. and inter­na­tion­al intel­lec­tu­al prop­er­ty law, trade­marks and ser­vice marks are lim­it­ed to the types of prod­ucts or brands they describe. A peri­od­i­cal enti­tled Blue Milk, for instance, is in a dif­fer­ent clas­si­fi­ca­tion than a food brand name of Blue Milk. Thus both may reg­is­ter the trade­mark “Blue Milk” with­out infringe­ment because the two prod­ucts and brands do not com­pete in the same type of prod­uct or indus­try. Cisco’s iPhone, Joswiak not­ed, is for a VOIP phone where­as Apple’s iPhone is for a cel­lu­lar phone and music play­er, which, if inter­pret­ted nar­row­ly enough by the court, would place the two devices into dif­fer­ent prod­uct clas­si­fi­ca­tions and thus reduce or elim­i­nate con­flict and infringe­ment between them.

Had Apple used the iPhone name with­out pri­or knowl­edge of Cisco’s claim to the name, a defense based on mark clas­si­fi­ca­tion would eas­i­er to mount. Having acknowl­edged Cisco’s claim to the name, and indeed nego­ti­at­ing for so long to license that name, how­ev­er, com­pli­cates any such defense. Intellectual prop­er­ty attor­ney Allonn Levy of San Jose, Calif. told IDG News that, should Apple con­tin­ue to move for­ward with pro­mo­tion of the device under the iPhone name with­out secur­ing prop­er licens­ing from Cisco, it “could be seen as inten­tion­al infringement.”

Arm-chair attor­neys respond­ing to the IDG News sto­ry are not as con­fi­dent. “In the pub­lic’s mind, iPhone has always been asso­ci­at­ed with Apple. Cisco’s recent iPhone offer­ing was a lame attempt to prof­it from the hype. It will die on the vine and all they’ll wind up with a name on paper,” said Kwill.

TeaEarleGreyHot, anoth­er com­men­tor, asked: “I don’t see Apple Inc.‘s name or logo any­where on the photos/drawings. Only Cingular. Has Cingular been named in the suit, since they seem to be more tight­ly brand­ed with the offend­ing prod­uct?” And, he went on to spec­u­late that, since the Apple iPhone has not yet been autho­rized by the Federal Communications Commission, as not­ed on the Apple​.com Website, Cisco’s action is pre­ma­ture. If the FCC forces a name change pri­or to autho­riz­ing the iPod/cellular phone hybrid, TeaEarleGreyHot said, Cisco would be reduced to com­plain­ing that Apple “tar­nished their image with an ad cam­paign for a non-existent device,” and that Apple can “offer that state­ment as proof that they nev­er tru­ly infringed on any trade name.”

Among the respon­dants, a con­sen­sus has devel­oped that Apple should rename its prod­uct to the “ApplePhone.” Although those cham­pi­oning the name change believe the prod­uct would be as strong under that brand, a switch away from the iSomething brand­ing scheme that has poured such suc­cess upon Apple’s oth­er prod­ucts such as the iPod, iPod Shuffle, iPod Mini, iMac, iWork, and iLife, would cer­tain­ly trans­late to a sig­nif­i­cant dimin­ish­ment of brand recog­ni­tion and sales. Apple and Cingular, its part­ner in the iPhone, are rely­ing on the brand asso­ci­a­tion to the phe­nom­i­nal­ly pop­u­lar Apple iPod MP3 play­er to jus­ti­fy con­sumer moti­va­tion to shell out for the US$499–599 device (a 4‑GB device will retail for $499 and an 8‑GB ver­sion for $599). Numerous mod­ern cel­lu­lar phone mod­els have built in MP3 play­ers, most notably those man­u­fac­tured by Motorola, and most of them are priced in the $49–199 range. Although loy­al Apple fans with the funds will pur­chase the Apple phone, it’s the asso­ci­a­tion to the iPod that will make the device a suc­cess in a mar­ket where it is already years late to the game. Without the iPhone brand, Apple and Cingular would miss the oppor­tu­ni­ty to cap­i­tal­ize on the iPod brand loy­al­ty and could lose a sig­nif­i­cant por­tion of the con­sumer mar­ket to less expen­sive com­pet­ing devices. Moreover, if Apple changes the name and Cisco lat­er licens­es it to a competitor–Microsoft or Motorola, for instance–who brands a less expen­sive cel­lu­lar phone and MP3 hybrid the iPhone, the results for Apple’s entire iSomething prod­uct line could be knocked back sole­ly into the com­put­er hard­ware and soft­ware realm, with the iPod being the only suc­cess­ful for­ay into the lucra­tive con­sumer elec­tron­ics space.

Apple has three choic­es: Go back to Cisco and final­ize the licens­ing agree­ment; employ the patent­ed Steve Jobs right­eous­ness and take its chances using an unli­censed iPhone trade­mark, or; change the prod­uct name, com­pound­ing the hur­dle of a high price tag to risk lack­lus­tre con­sumer recep­tion. It will cer­tain­ly be inter­est­ing and enter­tain­ing to watch which option Apple takes. Undoubtedly, rep­re­sen­ta­tives from Apple’s numer­ous com­peti­tors and ene­mies are also watching–and draw­ing up offers to license the iPhone name for themselves.