Om was on to something last night when he raised questions about Cisco’s curious reaction to Apple’s use of the name “iPhone” for its smashing new gadget. Cisco owns the trademark “iPhone” and announced a series of boring VoIP phones in December, no doubt to ensure that it could prove in a court of law that it was actively using the iPhone name (a tactic that could come perilously close to what intellectual property lawyers call “squatting,” i.e. nominally using a trademarked name simply to gain legal leverage).
In a move that strikes me as unbelievably swift, Cisco today filed suit against Apple in the U.S. District Court for the Northern District of California saying that Apple is infringing on its trademark. Cisco has owned the name iPhone since 2000 when it acquired InfoGear Technology Corp., which originally trademarked the name.
What’s going on here? In a statement issued yesterday, Cisco said that it expected to receive a signed agreement from Apple regarding the iPhone name — the company claims it has been negotiating with Apple on this matter for years. In all probability, Cisco was using this statement to send Apple a message: better get us that contract or we’ll sue.
Did Apple completely ignore Cisco or fail to send a signed contract back fast enough, thereby wounding nothing more than Cisco’s ego? After all, Cisco could have waited a day or two (or twenty-two) before filing suit. Or, is Apple playing hardball, hoping to soften what no doubt are monetary demands by Cisco, and has already told Cisco to go pound sand?
Ashby Jones in the Wall Street Journal’s Law Blog received this comment from Cisco spokesperson John Earnhardt:
Intellectual property is the lifeblood of Silicon Valley and we all have to protect our property. The iPhone trademark is owned by Cisco, as noted in your story. We (Cisco) had hoped to reach an agreement to share our trademark with Apple, yet they decided to use the name without our agreement, so we, unfortunately, are having to go to court to stop them from using the name. We still hope we can reach an agreement, but when your neighbor steals your property, you have no recourse other than to call the cops and file a complaint.
Whatever is going on, Apple is in the better position because its stunning little market-changing device is only one day old - it can easily change the name to Apple Phone or whatever and suffer no ill consequences. Trust me, people will buy this phone regardless of what it’s called.
Which raises yet another question: Why would Apple proceed with such a high-profile product debut without being sure of the legal rights to use the name iPhone? The afterblast of Apple’s announcement is still sucking the oxygen out of the communications world and Apple had to know it would be an enormous hit — with or without the iPhone name.
If Cisco is hoping to extract better terms from Apple, good luck to them with that. Apple doesn’t negotiate with anybody — the company’s notorious reputation for doing what it wants has served it well, and I doubt if Steve Jobs or Apple will go back to Cisco with a counter-offer, particularly given the abundant praised being heaped on the (dare I say it) iPhone. If I were Cisco, I’d take whatever money Apple is offering and run.
But, if Apple has offered no money at all, if Apple merely wishes to use the iPhone name with or without Cisco’s permission, then Cisco had no choice but to stop the Cupertino superstar. As Cisco’s spokesman said, if your neighbor steals your property, you’ve got to call the cops.
Update: Cisco has released an official statement about the lawsuit which sheds little light on this odd situation. Here’s the reason Cisco offered for its swift complaint, attributed to Mark Chandler, senior vice president and general counsel:
Today’s iPhone is not tomorrow’s iPhone. The potential for convergence of the home phone, cell phone, work phone and PC is limitless, which is why it is so important for us to protect our brand.
Update: As John Earnhardt has noted in a comment to this item, Cisco’s Mark Chandler has posted a deeper explanation about the lawsuit’s motivation on Cisco’s blog. The lawsuit is not motivated by money, royalties or the chance to sell Cisco products to Apple, Chandler contends:
What were the issues at the table that kept us from an agreement? Was it money? No. Was it a royalty on every Apple phone? No. Was it an exchange for Cisco products or services? No.
What Cisco sought from Apple was collaboration on new products, or something to that effect.
Fundamentally we wanted an open approach. We hoped our products could interoperate in the future. In our view, the network provides the basis to make this happen—it provides the foundation of innovation that allows converged devices to deliver the services that consumers want. Our goal was to take that to the next level by facilitating collaboration with Apple. And we wanted to make sure to differentiate the brands in a way that could work for both companies and not confuse people, since our products combine both web access and voice telephony. That’s it. Openness and clarity.
As admirable as Cisco’s position seems to be, this is Apple we’re talking about after all. A company headed by a man who brings record company executives (notorious for their ruthless, take-no-prisoners negotiating tactics) to their knees and who actually denigrates clients to their faces.
Apple could, however, be sensitive right now due to the backdated options thing. If that’s the case, they might consider 1. dropping the iPhone name to deprive this lawsuit of its power to generate negative publicity or 2. collaborating with Cisco. My money’s on number one.
Cynthia Brumfield at 6:54 PM|Comments(1)
Please read Cisco's SVP and General Counsel Mark Chandler's blog on this issue at: http://blogs.cisco.com/news/2007/01/update_on_ciscos_iphone_tradem.html
He states, in part, "this is not a suit against Apple's innovation, their modern design, or their cool phone. It is not a suit about money or royalties. This is a suit about trademark infringement."
Posted by: John Earnhardt at January 10, 2007 8:40 PM
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