Macworld Expo #4: Apple’s Bad Hair Day

January 12th, 2007

Think about it. If you take Steve Jobs at his word, Apple was working for two-and-a-half years on the iPhone. Their legal department no doubt told Steve that the rights the iPhone trademark were owned by Cisco Systems.

After the iPhone was announced, Cisco claimed that Apple was after them for the rights to use the name, and that the agreement was in the final stages of negotiation. If this is true — and you never know when a corporate spin department is fully energized — they expected a contract forthwith.

So, when it didn’t come, they filed a trademark infringement lawsuit against Apple. Now what really happened?

Well, we don’t know. Cisco claims, in a blog post, that their last communication with Apple occurred before Monday evening, and they heard nothing more. Consider the fact that Jobs was ready to unleash the iPhone to expectant Mac fanatics and the tech press the very next day, you’d think his legal people would be on top of this matter, and would get the job accomplished.

Certainly the exact terms of such an agreement are probably not going to be publicized, though it’s possible any cash payments will be referred to in corporate filings. If the agreement hit a snag, did Jobs have a plan “B”? Did they have another name to tout, such as the iPod phone, or did Apple fully expect this matter to be resolved without further delay.

Whatever really happened, this appears to be an error of moderate proportions. I won’t use the term monumental error, because they say that any publicity is good publicity, and all this does is point more attention to Apple and the iPhone.

In fact, in a display of corporate brinkmanship, Apple is charging that Cisco’s claim in the iPhone name is, at best, “tenuous,” which may indicate it’s going to be digging in its heels for the long haul.

In the end, maybe the iPhone will get a new name. People will snicker, the press will join them, and we’ll forget all about it and get on with our lives.

When the actual gadget is released, the whole story might reappear, depending, of course, on how it’s resolved. If there’s a new name, the reasons why will be explained. If it remains the iPhone, maybe there will be a paragraph way down in the article about the Cisco lawsuit and how it was settled.

Regardless how it’s resolved, clearly there was a major miscommunication here. Cisco evidently expected the licensing matter to be resolved, and it’s quite possible that Apple did as well, only things got messed up in the rush to make a huge splash at Macworld Expo. So it could, conceivably, be a case of bad timing. That is, of course, assuming all this talk is true.

At the same time, by filing a legal action the very next day, Cisco behaved a little strangely too. Normally complaints of this sort take years to reach the courts and, even then, the actual trial process tends to be lengthy too. Why did Cisco act so quickly? Did they have the lawyers in readiness just in case that agreement wasn’t signed, with orders to rush over to the appropriate courthouse to get the papers filed in time for the news to reach the press by Wednesday afternoon?

Certainly, poor, neglected Cisco must be feeling left out in this whole situation, because just about everybody has forgotten about their line of Internet phones that bear the iPhone moniker. Is anyone really buying them aside from a few enthusiasts to whom any VoIP device is something to lust after?

Apple has to be embarrassed as well, because it doesn’t need to deal with any legal actions at this point. Having apparently ducked the broadsword of SEC complaints over its stock backdating mess, they would have seemed to want to remain clean and green from then on.

On the other hand, it doesn’t seem as if Wall Street is overly concerned. As I write this, Apple’s stock is down marginally, and Cisco Systems was up slightly. So maybe the market just doesn’t care all that much.

And maybe that’s how we should all react. Trademark issues are matters for corporations to fret over, not regular people. Besides, if Apple called its new gadget Mudpie, you’d probably like it anyway, although the owners of the Mudpie trademark probably wouldn’t like it.

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4 Responses to “Macworld Expo #4: Apple’s Bad Hair Day”

  1. rahrens says:

    Actually, Apple has some good points.

    I read on another site yesterday (don’t remember which) that several companies had used the iPhone name for several different kinds of products since 1997 (or 98, when the company Cisco obtained actually distributed a product by that name), and neither that company nor Cisco has moved to prevent the use of that trademarked name in the intervening period.

    In trademark law, it is even more important than in patent law to protect your trademark. It is well established case law that a company that fails to protect a trademark WILL lose the rights to that trademark. Besides, the iPhone Apple is releasing and Cisco’s iPhone are different animals. Apple’s is a cell phone, Cisco’s, a VOIP phone. In trademark law, that can make a difference. It is all about differentiation to the market, and being able to avoid confusion of the customer.

    If Apple can prove that Cisco has failed to protect it’s trademark, plus prove that there is no or minimal confusion over the two products in the marketplace, then Cisco will probably lose. As a matter of fact, they could lose the trademark altogether.

  2. zato says:

    One important item missing from the drama as described above: Cisco released or re-named a cheap IP phone less than one month before MacWorld. Why would they do this if they were in the final stages of negotiation? How can they then claim “confusion in the marketplace”? Their story doesn’t add up.

  3. Robert Pritchett says:

    You did notice that Apple trademarked “Mobile Me”? The new Star-Treky Tri-corderish universal communicator, (Apple icon) Phone.

    BTW, loved the Tech Night Owl LIVE this week. Excellent discussions!

    I want the (Apple icon) Phone to do Internet Telephony!

  4. Jon says:

    I think Cisco miscalculated. The whole two year negotiations scenario, Cisco’s release of their own iPhone last month after years of holding onto the trademark name (IMHO, a manuever designed to put pressure on Apple), and other companies releasing iPhone branded devices, make me leary of Cisco’s claims.

    I suspect that from the very beginning (of Ciscos’s claimed two year negotiation period) Cisco has been wanting something Apple was unlikely to give them (access to some Apple IP, a rediculous amount of money, egregious licensing terms, something).

    I could be wrong, but I also suspect Cisco wasn’t asking for this demand from the very beginning because they thought Apple would consider it a deal breaker, so they waited until the last minute to place it on the table, figuring Apple would be so desperate to acquire the iPhone name that they would agree to it.

    When this happened (just before MacWorld), I think it was pretty obvious to Apple that they were dealing with with a party that wasn’t going to play nice. Although, I’m sure if they were engaged in two years of negotiations as Cisco claims, they already had some clue. Half seriously, I think Jobs took the stage at MacWorld and called Apple’s device an iPhone to show Cisco the marketing equivalent of a big middle finger.

    If Cisco wants to win a legal case over trademark infringement with Apple, I don’t see how they are going to avoid 1) dealing how they haven’t dealt with previous infringers and 2) how suspicious the release of their own iPhone is. Especially when considered in conjunction with Cisco’s own claim of being in two years of negotiations with Apple.

    To a judge, it might all read like bad faith negotiating on Cisco’s part.

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