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.
Posted by Cynthia Brumfield at 6:54 PM | Print | Comments (1)Some companies are destined for niche status, if not oblivion, simply because their technologies, once popularized, are easily replicated by competitors. I thought this was the case with Tivo, the pioneer of digital video recording.
Over the past four or five years, the basic functions of digital video recording have been reengineered by cable and satellite companies and built into video set-top boxes, potentially making the need for an extra unwieldy Tivo box superfluous for most consumers. And, indeed, Tivo has been on the downswing…until recently.
Under the guidance of CEO Tom Rogers, Tivo is pulling out all the stops to survive. Speaking yesterday at Citigroup’s Entertainment, Media and Telecommunications Conference (webcast here), Rogers recapped the company’s turn-around strategy, one that primarily centers on partnerships that are transforming Tivo’s go-it-alone status into technology alliances.
“Twelve to eighteen months ago we were very much viewed as an island,” Rogers said. “Now we’re very much a part of a number of companies’ plans weaved into the media landscape.”
Perhaps the most important deal that could rescue Tivo is its pact with top cable operator Comcast. Comcast has agreed to deploy a Tivo-enabled set-top box starting this year (which was heavily promoted at CES.)
Beyond the notion of getting inside cable and satellite set-top boxes, Tivo is aiming to serve as an integrated gateway of sorts for all kinds of video content. “We’re after something distinct,” Rogers said, which “is to have a wholistic, integrated menu no matter where the programming is coming from.” The goal, and it’s going to be a challenge given the burgeoning number of rivals seeking to do the same thing, is to offer “one simple interface to have all your TV programming in front of you right where you want it.”
If all else fails, Tivo has some secret weapons: its patents. The company already won a huge victory in its patent infringement fight with DBS provider EchoStar (although the effect of that ruling has been stayed pending appeal). Rogers hinted at a more active patent litigation strategy. “That litigation is over one patent, the time warp patent. We have eighty other patents in our portfolio.”
Tivo has stanched the loss of customers by its decision to subsidize the cost of the Tivo box to maintain and gain market share. This gambit has worked well by ensuring that enough current generation Tivo boxes are in the field so that the company can begin experimenting with new and different applications.
But, cheap or free Tivo boxes could soon become a thing of the past. “We’ve pursued an approach that is heavily subsidizing the box. We did that because we wanted to start talking about features when we decide to start advertising,” Rogers said, referring to the fact that Tivo has undertaken almost no marketing or advertising initiatives recently. “We need to evaluate how we’ve done and decide if there is a better way now that” the new boxes are out in the field.
Posted by Cynthia Brumfield at 12:05 PM | Print | Comments (0)Brian Roberts, CEO of the nation’s top cable company Comcast, thinks the triple-play bundle of landline voice-video-data services will boost Comcast’s bottom-line in 2007 even more than it did in 2006. But, adding a cell phone option to the potent package of services, creating the veritable quadruple-play bundle, in other words, doesn’t strike Roberts as the world’s greatest idea.
Speaking at Citigroup’s Entertainment, Media and Telecommunications Conference in Las Vegas yesterday, (webcast here) Roberts said that he has a “bias” against the idea of offering cell phone service as a fourth component of the bundle even though Comcast is working with Sprint to experiment with mobile service and is a partner in a consortium that paid $2.4 billion for broadband wireless spectrum.
Consumers place a high value on purchasing landline voice, video and high-speed services with a single phone call, but cell phone service is somehow different. “As to the cell phone voice business today, that’s not something we see consumers lusting after in bundling,” Roberts said. Moreover, the operational efficiencies that Comcast experiences with the triple-play don’t obviously extend to cell phone service.
Still, Roberts is “interested to see the results” of the trials the company has underway with Sprint although he doesn’t believe must-have innovative advanced mobile applications will emerge from the cable industry’s Sprint-related experiments for years to come. “Within the next 15 years there is a chance that there wIll be applications that do do that [offer a compelling consumer experience via cable’s wireless efforts], but there won’t be in 2007.”
That’s OK because Comcast is going gangbusters as it is — the company hopes to add even more subscription units during 2007 than it did during 2006, which was a stellar year for Comcast. “If you liked 2006, you’ll really like 2007,” Roberts said.
Look for Comcast to continue developing non-traditional media businesses that leverage the boom in IP-based video delivery. “We think with our new Comcast Interactive Media division, we will be able to do things others can’t do in a cross-platform way,” he said. After all, Comcast has “more connections to PCs and TVs than anybody else.”
But Comcast’s big priority in 2007 will be pushing into the commercial services market, particularly swiping market share from the incumbent telcos in the small business sector. “We believe that [Comcast Digital Voice] is a credible replacement for the local exchange carrier and this is a business that has little or no competition today,” Roberts said. He thinks Comcast can capture a 20% market share in this space, and that the cash flow margins of small and medium-sized business telephony could be the highest of all Comcast products — 50% or more.
Posted by Cynthia Brumfield at 8:36 AM | Print | Comments (0)
As expected, net neutrality legislation has been introduced in the Senate. Senators Byron Dorgan (D-SD) and Olympia Snowe (R-ME) have introduced a bill that appears to be identical to the one they championed during the last Congress.
The bill establishes a policy of national broadband non-discrimination and contains a series of requirements that broadband providers must meet, such as offering comparable levels of bandwidth to third-party providers that they offer to their own affiliated services. The bill further directs the FCC to set up a complaint procedure for enforcing the requirements.
Although net neutrality legislation has been expected given the Democratic shift in Congress (six Democrats and no Republicans joined as co-sponsors of the bill), how fast the Dorgan-Snowe bill got introduced is something of a surprise, as CNET’s Anne Broache notes. It’s possible that Congressional strategists decided to strike while the iron is hot, riding the momentum of AT&T’s agreement to abide by net neutrality requirements.
Posted by Cynthia Brumfield at 7:21 AM | Print | Comments (1)
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