Use "POD" in your trademark, get sued. Has Apple gone too far?

[Update: Since first publishing this story, another small business person has come forward with the details of a very similar threatening letter that she received]

Has Apple gone too far? 

Even if the product you make doesn't look, smell, feel, or do anything remotely close to what an iPod does, and even if consumers can't buy it on the shelves in a store, that apparently doesn't mean Apple won't release its legal dogs on you if the name of your product includes the letters P-O-D.

That's exactly what's happening to Dave and Carolee Ellison, owners of Mach 5 Products -- a small, family operated business that makes games for arcades -- the kind that either spit out tickets as a reward for your performance or the crane-oriented games where you take your chance at retrieving a stuffed animal or some other toy with a hand-operated crane. 

Until the Ellisons came along, the only way to figure out how much money an arcade game took in, and how many prizes or tickets it gave out, was to open up the arcade machine and take a reading off a mechanical counter.  So, the Ellison's came up with a digital version of the same thing that transmits the accounting information via infra-red technology to a notebook or a PDA in a way that the data can be loaded directly into a spreadsheet. From a productivity point of view, the digital version could be a real boon to arcade operators since all they have to do now is walk by the arcade machine to get a reading.  But there's one problem.  The Ellisons named the device "Profit Pod."  And, when Apple got wind of it by way of the Ellisons' trademark application, it sent a threatening letter to the Ellisons that, amongst other things, says:

Apple recently learned that Mach 5 Products filed an ITU trademark application for PROFIT POD (Serial No. 76/589,480), on April 30, 2004, for "infrared data transmission and collection system, namely an infrared data transmission and collection system for amusement games comprised of a meter for counting input signals from switches, a processor for processing the signals so that they may be transmitted by an infrared signal, an infrared signal generator and software for programming hand held computers that can detect and process infrared signals" in Class 09.....As set forth below, Apple is concerned that the application for and use of the PROFIT POD mark infringes its trademark rights and dilutes Apple's famous IPOD brand....Apple aggressively polices its trademark rights in order to protect itself and its consumers..

...We believe there is confusing similarity between Apple's IPOD mark and the PROFIT POD mark. PROFIT POD is a POD-formative mark and incorporates a substantial portion of Apple's IPOD mark. The products are likewise related....We believe there is confusing similarity between Apple's IPOD mark and the PROFIT POD mark. PROFIT POD is a POD-formative mark and incorporates a substantial portion of Apple's IPOD mark. The products are likewise related. Both devices receive and transmit data and are used with computers, both are used in connection with video games, and both have other similar components. Moreover, it has not gone unnoticed that, like Apple's IPOD device, the PROFIT POD product is a small, flat, round corned rectangular device with a display screen. In addition to the likelihood of confusion between the products, because Apple's mark is famous, it is entitled to protection from dilution attributable to the PROFIT POD mark.

Accordingly, we must ask that Mach 5 Products immediately abandon the pending application for PROFIT POD, agree to cease all use ofthe PROFIT POD mark and not to use or file any other applications for similar marks in the U.S. or elsewhere. Provided that full cooperation is forthcoming, Apple is willing to provide Mach 5 Products with a reasonable time in which to phase out use of the product.

Here's the full text of the letter.  "Apple is willing to provide Mach 5 Products with a reasonable time in which to phase out use of the product"? Talk about Goliath coming down on Davey.  Wow.

So,  now, judge for yourself.  Pictured below, is a Profit Pod. If you ask me, it looks nothing like an iPod. It doesn't play music. It has nothing to do with digital entertainment. Ordinary consumers will never even see one. It gets built into arcade games and if you look closely at the bottom of the image, it has about six wires hanging out of the bottom of it.  I don't see in any way how the "products are likewise related." Mr. Jobs, this is simply over the top.  Leave these nice people, who are in no way a threat to you or Apple, alone.