Why didn't Apple work out the legalities of using Cisco's iPhone trademark before going through the Macworld song and dance?
Very good question. But one that could be summed up in one word: Arrogance. The more Steve Jobs spoke at Macworld the more it seemed safe to assume that Apple worked out any trademark issues with Cisco. In fact I assumed it.
As of this morning though, Cisco was still waiting for the paperwork. Turns out Apple picked the wrong fight--Cisco sued today and has what could be a valid case (see complaint). Would you do all of this if you didn't have a trademark locked down? Can you imagine if Apple has to rebrand the "iPhone?" Then again maybe telecom revolutions can't wait for trademarks?
Connecting the dots, you could see it coming. In an email to me earlier today, Cisco spokesman John Noh said:
"The fact is that we have not received the approved agreement back from Apple as late as this morning. What we said in our statement, which you posted, was that we sent them the final terms on Jan. 8 and by the fact that they launched the iPhone on Jan. 9 without an agreement in place with us, we could only assume that they had agreed to our final terms and that we expected a signed agreement from them as early as yesterday. As of this morning, we're still waiting."
Why would a company with a market cap of $83 billion (Apple) pick a fight with one worth $174 billion (Cisco)? Talk about reality distortion fields.
Sure, you could argue that Cisco is just filing a lawsuit to extract more dough from Apple. But Cisco owns the trademark and it has the right to license it or not. And you'd think Steve Jobs would nail down trademark issues--the Cisco lawsuit just doesn't look good for a guy with options backdating issues. According to Cisco's complaint Apple has been asking about the iPhone trademark since 2001. "Apparently dissatisfied with Cisco’s refusal to allow Apple to use the mark iPhone for products that would conflict directly with Cisco’s current use of the mark, Apple began a surreptitious effort to attempt to obtain rights to use the name 'iPhone'," said Cisco in the complaint.
As for the complaint, it's pretty clear Apple has issues. It infringed on Cisco's trademark in front of the world. Why shouldn't Cisco seek an injunction, destruction all everything with Apple's iPhone branding and damages?
According to the complaint filed by Cisco in the Northern District Court of California:
Apple’s use of “iPhone” in its product promotion and advertising at Macworld constitutes the use in commerce of a colorable imitation, copy and reproduction of Cisco’s iPhone mark. Upon information and belief, the two marks will share an identical sight and sound and a strong similarity of meaning. Apple’s use of “iPhone” for a cellular and internet phone device is deceptively and confusingly similar to Cisco’s long-standing trademark for an internet based telephony device.
Apple’s infringement constitutes a willful and malicious violation of Cisco’s trademark rights, aimed at preventing Cisco from continuing to build a business around a mark that it has long possessed.
Cisco alleges that Apple’s use of Cisco’s trademark inures and creates a likelihood of injury to Cisco’s business reputation because persons encountering Cisco and its products and services will believe that Cisco is affiliated with or related to or has the approval of Apple, and any adverse reaction by the public to Apple and the quality of its products and the nature of its business will injure the business reputation of Cisco and the goodwill that it enjoys in connection with its iPhone trademark.
My hunch--and it is only a hunch--is that the two parties will settle and Apple will pay up. After all, it really has no choice. Cisco can't be pushed around and if there's a lawyer arms race ahead this skirmish could last awhile.