The internet has been abuzz about Apple‘s new latest product: the IPhone.  As the reality distortion field enveloped everyone at MacWorld, the world reveled in the potential that a fully loaded OSX PDA (it’s really not a Cell Phone with all the WiFi features) could bring.  Of course, as the field disappeared and reality returns to normal, people are slowly realizing that the iPhone isn’t all it’s cracked up to be.  To summarize:

  1. It’s expensive: $499/$599 + a 2 Year Contract with Cingular (and only Cingular)
  2. It’s locked: No programs/widgets installed unless supplied by Cingular or Apple
  3. No 3G: So slow 2G on cellular networks, or WiFi

As for the positives, it’s common Apple to have taken lots of existing ideas and simply combine, present, and market them better than anyone else.  Nothing the iPhone does is particularly innovative or unique, but the integration and presentation seems to be better than anyone has managed so far.  Will it be successful? It’s hard to say, we’ll know more as June comes closer.  What really interests me (and many other people) is how Apple is able to call it the iPhone?  It’s been a well-known fact for several years now that the iPhone Trademark is owned by Cisco Systems, although they haven’t had a product using it in quite some time.  So how was Apple able to use a trademark owned by another company for their new flagship product?  With Cisco’s latest lawsuit, it seems they’re wondering the same thing.  Well, let’s take a look…
[tag:apple][tag:iphone][tag:cisco][tag:trademark][tag:legal]

According to both sides, negotiations were ongoing late into the night prior to Steve Job’s Keynote address (announcing the iPhone), and both sides left the table assured that an agreement would be made in time for the KeyNote.  Unfortunately, it never happened.   Cisco was holding out for a promise of compatilibity between their newly announced LinkSys IPhone and the new Apple IPhone.  What kind of compatiblity? That was never stated, but obvious choices would be the possibility of synchronizing contacts/address books between the two, maybe optimized or encrypted communications, perhaps using the Linksys IPhone as a wifi relay for the Apple iPhone, there’s alot of options.  But it seems that Apple wasn’t willing to make that commitment and instead took the more public route of "Ask for forgiveness rather than permission".

So now Cisco is forced into an undesirable position.  They don’t really want to get in trouble with Apple, they’ld much rather have the inside track on compatibility with the new device.  But if they do nothing, then the trademark can be lost by them not enforcing it (Trademark law, unlike patent law, requires that the trademark owners defend their trademarks vigorously, unlike patents which can be infringed for years before going to trial).  So, to keep the trademark, they have little choice but to sue Apple with one hand, but try to negotiate an out-of-court settlement (with their desired compatibility and licensing fees) with the other hand.  It’s not pretty, but there’s really not much else they could do.

But does Cisco really own the trademark? Or better yet, is Apple really infringing on it?  Lots of reports have surfaced later this week detailing many other possible situations, some of which I’ld like to mention here.

The "Apple iPhone"
This was one of the first ones to surface.  The Apple iPhone isn’t really called "The iPhone" but rather "The Apple iPhone".  By always linking the two names together, they won’t really infringe on Cisco’s more generic "iPhone" trademark and they can keep using it.  This is one questionable, legally, but even more so with basic common sense.  When Apple ran into a similar situation with the iTV (conflicting with the similar-sounding but differently spelled eyeTV) they changed thet name to the new "Apple TV", not "Apple iTV".  Doing it differently with the iPhone wouldn’t make much sense, and any judge would realize the true goal of the "Apple iPhone" would be to convince consumers to drop the redundant "Apple" from the name ("It’s Apple’s Apple iPhone!") making them indistinguishable in the marketplace.

Free Publicity
This was, until just recently, the most popular belief.  All of this lawsuit press coverage is simply free publicity for Apple, further reinforcing the Apple and iPhone link in consumers minds.  Since the Cisco iPhone got little to no press coverage, everything the consumer sees is linking the name to Apple.  This would mean that whether Apple wins or loses, people would still remember it as the iPhone, whether they rename it to the "Apple Phone" or the "iTouch Mobile" (at first carried by the AP, but now denied).  This opinion was further reinforced by some mainstream media who know Steve Jobs a little better, folks like Robert Cringely, who see this as just a typical Apple move to maximize media coverage.

Normally the public would slowly start to forget about the iPhone after the reality of it set it (mainly the price, and the restrictions placed on it), but by keeping this lawsuit rolling until closer to the June/July release date they can keep it in the forefront of everyone’s minds.  It also gives them a convenient reason if they need to change any specifications closer to release, and an easy scapegoat to pin them on  ("Because of the agreement with Cisco, we’ve had to eliminate 802.11g support", "Because of the agreement with Cisco, we’ve had to add 3G support", etc).

Cisco doesn’t own the trademark anymore
This is the newest, and currently biggest one.  The theory (indepth story by Ed Burnette) goes that corporations are required to file a Declaration of Use every 6 years after registration of the trademark.  The current trademark seems to have been registered (USPTO Link) on November 16, 1999.  This would place the Declaration Date sometime in 2005, which they apparently missed.  Since no product was on the market during that time, that means they lapsed the name returning it to the public, releasing their rights to the name.

The detail that’s missed in this theory is that Cisco didn’t create the name, the name was created by a company named InfoGear back in 1996 (shown on the Trademark Registration).  InfoGear was acquired by Cisco many years ago, and InfoGear did have a product named the iPhone.  It was a flop of a product (Broadband wasn’t mainstream in 1996, hell even dialup was a stretch) and the InfoGear iPhone (CNN Review from 1999) – a integrated Web Browser & IP Telephone – only sold about 15,000 units.  When Cisco bought InfoGear, they acquired the name (and trademark) as well.  Since a product did exist, it’s possible that this entire argument may not hold water.

Conclusion
So what’s the conclusion?  Honestly, people with more legal experience than me will have to decide.  It seems Cisco has a good case to keep the name and force Apple to license it or change the name.  It also seems like Apple has done this on purpose just for the free PR.  I think that Apple, Steve Jobs specifically, decided that they could grab enough of the public’s attention with the iPhone name to force Cisco (through public pressure) to relent on some of their terms and just agree to a weak licensing agreement, basically giving up the name.  People have been talking about Apple having an iPhone (like the iMac, iBook, and iPod) for years, and I’m sure that Apple doesn’t want to lose that momentum. 

It really seems that Cisco has 2 choices:

  1. Pursue the lawsuit and Apple will change the name to something non-infringing, and they’ll lose anything the Trademark would be worth
  2. Sign licensing agreement with Apple (or sell the trademark outright) with less-than-optimal terms, just to get some value from the Trademark

I guess we’ll just have to wait and see what happens.

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