By RACHEL KONRAD, AP Technology Writer
What's a name worth? To find out, Cisco Systems Inc. and Apple
Inc. may spend millions of dollars in a high-stakes legal battle --
and the winner could walk away with the rights to the coveted name
"iPhone."
In a lawsuit filed Wednesday, Cisco asked a judge to forbid Apple from
using the name "iPhone," a Cisco trademark since 2000. The case hinges
in part on whether Apple's phone -- a sleek, $499 gizmo unveiled
Tuesday to much fanfare -- could confuse shoppers looking to buy
Cisco's iPhones.
Attorneys specializing in intellectual property said Thursday that Cisco
will likely win, if the case goes to court.
"Cisco's argument will hold water," said David Radack, chairman of the
intellectual property department at Pittsburgh-based Eckert Seamans
Cherin & Mellott LLC. "It'd be like if I sold spark plugs, then
someone else said I'm going to sell carburetors with the same
name. Yeah, they're different products -- but they're both sold in
auto parts stores, and someone who saw the brand name on a spark plug
could reasonably think it was made by the same company."
Last spring, Cisco began selling a line of bulky but inexpensive
iPhones that make free long-distance calls over the Internet, a
technology known as Voice-over Internet Protocol. Amazon.com sells
them for as little as $12, though they require extra software and
hardware and are usually sold in kits that start around $70 and can
cost $200 or more.
Apple's iPhone is a sleek cellular gadget that delivers e-mail, Web
sites, music and movies over the Cingular Wireless network. Apple's
iPhone will be available in June for $499 or $599 for a version with
more memory.
Earlier this week, Apple spokeswoman Natalie Kerris called the lawsuit
"silly," and Apple senior vice president Phil Schiller said other
companies have tried to use the name for VoIP phones -- but only Apple's
iPhone is a cellular phone.
Despite that distinction, attorneys are curious about what defense
Apple may offer, noting that the high-profile case could become the
most closely watched naming skirmish since 1989, when Mead Data
Central Inc. -- owner of the Lexis legal database -- sued Toyota
Motor Corp. over its Lexus luxury brand.
Cisco's trademark with the U.S. Patent and Trademark Office describes
"computer hardware and software for providing integrated telephone
communication with computerized global information networks."
According to the lawsuit, Apple's iPhone is "deceptively and
confusingly similar" to Cisco's -- and, as technology advances, both
phones could someday operate on the same networks and assume
similarities in the user interface, hardware or software.
Cisco is asking Apple to pay Cisco's legal fees and relinquish all
profits eventually made on the iPhone. Cisco also demands Apple
destroy all labels, signs, packaging and other promotional material
that includes the word "iPhone," a product it cost Apple millions to
develop.
Apple first asked Cisco in 2001 to acquire or license rights to the
name. When Cisco declined, Apple embarked on a campaign of "confusion,
mistake and deception" in its effort to secure the rights, the lawsuit
claims.
Apple went so far as to create a phony company -- called Ocean Telecom
Services LLC -- to get around Cisco's trademark, Cisco alleges.
In an application to the U.S. Patent and Trade Office in March, Ocean
Telecom billed itself as a foreign company doing business in Trinidad
and Tobago. The company listed its attorney as James Johnson. His
contact information was an e-mail address from Google's free Web-based
gmail service.
On Thursday, the Apple spokeswoman said the company would not discuss
Ocean Telecom.
No one responded to an e-mail that The Associated Press sent to James
Johnson's e-mail account.
Despite harsh words in the lawsuit, Cisco spokesman John Noh said
Cisco's attorneys are still willing to negotiate with Apple. He
emphasized that Cisco -- the most richly valued company in Silicon
Valley, with a market capitalization of more than $174 billion --
never wanted Apple to pay cash for naming rights.
Rather, Noh said, Cisco executives wanted to let Apple use the word
"iPhone" on the condition that both companies' phones could
communicate with each other. He would not provide technical details.
"This is not about money. We were seeking to work closely with Apple
to make our devices more interoperable," Noh said Thursday. "Cell
phones, work phones, home phones, personal computers -- they're all
converging. The value of that convergence is limitless, and the key
to that is industrywide interoperability. It's a core tenets to our
business."
Barry Cohen, a partner in the Philadelphia office of Thorp Reed &
Armstrong, said Cisco had a strong argument. Judges usually allow
products from different companies to share the same name only when
they're starkly dissimilar -- Delta Airlines and Delta Faucet, for
instance.
"Those are clearly two businesses that don't overlap, except for maybe
the bathroom in an airplane," Cohen said.
Judges also consider possible expansions of the product lines in
determining whether trademark infringement occurred. Another factor is
intent -- did the company not know of another with a similar name?
That can't be the case with Apple, which first approached Cisco about
the name nearly six years ago.
Apple may argue that the word "iPhone" is so generic and broad it
should not be trademarked at all. Numerous English words have become
so pervasive -- aspirin, escalator and elevator, for instance -- that
they've lost trademark protection. (Apple has aggressively defended
the word "iPod," sending threatening legal notices to people who use
the word to mean any type of digital music player.)
"The problem with the genericness argument is that, if Apple goes that
route, the next day Nokia could come out with an iPhone, and I can't
imagine that would go over well with Apple," Cohen said.
If Ocean Telecom is the "alter-ego" for Apple and applied for the
trademark, as Cisco suggests, that could undercut the argument that
the name is not worthy of trademark protection.
It's unclear why executives couldn't settle their naming skirmish.
Grace Han Stanton, a trademark expert and partner in the Seattle
office of Perkins Coie LLP, said Apple executives were likely
anticipating the lawsuit long before they launched the iPhone Tuesday.
"Why choose iPhone when there's a known conflict? Maybe they wanted
the media frenzy," Stanton said. "This added a lot of fuel to the
iPhone fire."
Peter Morici, business professor at the University of Maryland,
acknowledged that both companies have ample resources for a
multi-million-dollar court battle -- but why? Apple's marketing
staff is among the most talented in corporate America and should be
able to come up with a catchy new name.
"Apple doesn't need this lawsuit," Morici said. "A new, creative
moniker would be a wise strategy."
Copyright 2007 The Associated Press.
NOTE: For more telecom/internet/networking/computer news from the
daily media, check out our feature 'Telecom Digest Extra' each day at
http://telecom-digest.org/td-extra/more-news.html . Hundreds of new
articles daily. And, discuss this and other topics in our forum at
http://telecom-digest.org/forum (or)
http://telecom-digest.org/chat/index.html
Rachel Konrad, AP (ap@telecom-digest.org)