The “iPhone” Brouhaha

One of the more interesting intellectual property lawsuits in recent years is starting to unfold as two IP behemoths — Apple and Cisco — square off over Apple’s new “iPhone.” The alleged issue is trademark infringement.

What make this such an interesting suit is that it really isn’t about trademarks. There are deeper business issues, and it was a negotiations impasse caused the twin events — Apple’s new product announcement and Cisco’s lawsuit announcement.

This isn’t one of those cases where somebody adopted a name only to discover that somebody else had the name. No. Apple knew full well that Cisco owned the name. In fact, Apple and Cisco had been talking for several weeks about working together. The problem was the business philosophies of the two companies.

Mark Chandler, Cicso’s senior vice president and general counsel, said in a blog, “What were the issues that kept us from agreement? Was it money? No. Was it a royalty on every Apple phone? No. Was it an exchange for Cisco products or services? No.”

What Cisco wanted, according to Chandler, was “an open approach. We hoped out products could interoperate in the future. In our view, the network produces the basis to make this happen — it provides the foundation of innovation that allows converged devices to deliver the services that consumers want.”

Apple, according the The Wall Street Journal, “has kept tight control over internally developed technology to be able to offer exclusive features. Many competitors, for instance, have asked Apple to make it possible for songs purchased from the company’s iTunes music store to be loaded on their portable music players. But only Apple’s hit iPod can do that.”

So when the peace talks failed, Apple and Cisco decided to go to war.

Cisco controls the high ground. They own the iPhone trademark. They bought in 2000 when they acquired Infogear Technology. Infogear’s registrations for iPhone date back to 1996 well before Apple launched its iPods and iMacs. In fact, Cisco has been supporting iPhones for years, according to Chandler, and have begun shipping its new version of iPhone since last spring.

Apple argues that other companies have used “iPhone” for internet-based calls and that Apple is the first to use this name for a cellphone product.

The winners in this case are going to be legal counsel for Cisco and Apple. Don’t hold your breath for an early settlement.