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Lessons from the iPhone Trademark Spat

Posted in Agreements, Branding, Famous Marks, Infringement, Law Suits, Trademarks

–Dan Kelly, Attorney

I don’t recall what I was doing in January of 2007, but I apparently missed the news that Cisco had sued Apple over Apple’s then-newly announced iPhone product.  I actually stumbled upon this accidentally when I recently searched for federal trademark registrations for IPHONE and found only one, and it belongs to Cisco.  (PDF here.)  Your eyes are not deceiving you:  since 1999, IPHONE has been a federally registered trademark for use in connection with “computer hardware and software for providing integrated telephone communication with computerized global information networks,” and Cisco is the current owner of this registration.  No joke.  Look here.

This raises dozens of questions in my mind, of which I will present only a few.

Q1.  Did Apple conduct a trademark search prior to rolling out the iPhone?

Q2.  If so, what was the legal and business thought at Apple about Cisco’s IPHONE trademark registration?

Q3.  What should a company like Cisco do when a junior user adops an identical trademark for use on identical goods, and the junior user’s product is wildly successful?

My suggested answers are after the jump.

A1.  I would think that Apple conducted a trademark search.  Comprehensive commercial trademark searches are not very expensive, and a legal opinion on the search results are also not terribly expensive.

A2.  Apple probably thought that it could buy the IPHONE mark and registration from Cisco, or at least license it from them.  (According to Wikipedia, Apple and Cisco had been negotiating a license prior to Apple’s announcement of the iPhone.)  Consider that Apple also likely vetted other product names, some of which might have had larger issues in other countries–there can be many moving parts in a global trademark clearance process.  Consider further that Apple owns federal trademark registrations for IMAC and ICHAT for use in connection with computer hardware and software, and these marks and registrations have priority over Cisco’s IPHONE registration.  (Whether this is good leverage could be the subject of another post entirely.)

A3.  In my view, Cisco had as near a slam-dunk lawsuit to enjoin Apple’s use of its mark as I have ever seen.  Even so, suing out even an apparently excellent claim is not cheap, and adjudicated decisions are never guaranteed.  As the terms of the eventual settlement were confidential, I hope for Cisco’s sake that Apple paid (or is paying) a premium for use of the mark.  Also, Cisco has apparently consented to the registration of at least some of Apple’s pending IPHONE trademark applications.  This should be worth an additional premium in a negotiation of this sort.  In short, when in Cisco’s position, and the junior party hands you lemons, it probably makes the most business sense to make lemonade.

  • eroberts

    C1. Yes they did.
    C2. Yes they did.
    C3. Not true. There is speculation that Cisco falsified documents (specimen) because they were not actually using the mark until Apple inquired about it, they would therefore not be entitled to the mark. You can see the shady specimen on the PTO website.
    Lots of history on this case. Google it.