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Last Updated: Friday, 12 January 2007, 00:04 GMT
What is the problem with the iPhone name?
MONEY TALK
By Tamsin Holman
Ashurst solicitor

Tamsin Holman
Cisco and Apple have not only got each other to worry about

Superficially, one might think that the unauthorised use of another person's trade mark on the same or similar goods for which the mark is registered, would be a straightforward case of infringement.

However, as the current battle between Cisco Systems and Apple Computer over the use of the name iPhone highlights, attention quickly focuses on the scope and validity of the registration itself.

The situation is further complicated when, as in the iPhone case, third parties may also have been using the same name.

Trade marks are inherently territorial in nature, with various systems of registration in different parts of the world, many which have different rules as to what can be registered and when.

Some countries refuse registration to quasi-descriptive marks, others are more lenient.

Some demand a clear intention to use, others are strictly first come, first served.

Global juggling act

As global players such as Cisco and Apple are well aware, protection of a mark on a worldwide scale is difficult and expensive to achieve, involving the securing and maintenance of a portfolio of parallel registrations.

Iphone
Disputes over the iPhone name could last a long time

The initial clearance of rights can be particularly onerous, usually involving the purchase or licensing of rights from third parties.

Whilst buying is often preferable to submitting to ongoing obligations under a licence agreement, the costs of either option can be considerable.

The subsequent policing and enforcement of the mark in different jurisdictions, whilst essential, brings its own significant complications as well.

Generic term?

Apple claims to be the first company to use the iPhone name for a mobile phone, and distinguishes this from the Voice Over Internet Protocol (VOIP) products that have been produced by other companies under the same name.

It is not known whether Cisco has been in discussion with those other companies but, so far as Apple is concerned, a Cisco spokesperson is quoted as having said that the parties entered into negotiations after Apple repeatedly asked them for permission to use the name.

If the parties fail to reach agreement, then no doubt Apple will seek to rely on its enormous reputation in the iPod brand in support of the argument that the "i" prefix has become synonymous with Apple in the minds of the public for these kinds of products, and that it distinguishes their goods from those of others (and that anyone else using an "i" prefix is trading unlawfully off their reputation).

An added difficulty for both sides may be that iPhone is inherently lacking in distinctiveness when applied to multi-functional phones of this type - "i" is a descriptive shorthand for internet and interactive, and the iPhone part speaks for itself.

Revoked rights

One issue which Cisco will no doubt have to tackle is the extent to which it has put its own mark to genuine use since 2000, the year it became the owner of the iPhone mark (as a result of its acquisition of Infogear Technology, which had originally registered the name).

The Beatles
Apple has been in court before

Infogear used the name for several years, but it is thought that Cisco did not revive the mark until early 2006.

In late 2006, it launched its own phone using the brand.

Under the law on UK and Community Trade Marks (CTMs), a mark that has not been put to "genuine use" for a continuous period of 5 years is liable to be revoked, and indeed an application for the revocation of Cisco's CTM registration for iPhone was filed on 18 December 2006.

Examination of the merits of a cancellation request by the Office for Harmonization in the Internal Mark (OHIM), the body responsible for the registration of CTMs, can take many months, so Apple will no doubt await the outcome of that process with interest.

Meanwhile, Apple also has problems at OHIM, where its own application to register iPhone as a CTM is the subject of a number of oppositions.

Agreed settlement

With so many issues up in the air, in so many territories, the best bet for Cisco and Apple would surely be to settle their differences.

When it comes to negotiating settlements, there are no hard and fast rules, and compromises over trade marks can be cut any number of ways, depending on the commercial priorities of each side.

One of the main advantages of agreements is that they enable parties to solve disputes by reference to a far wider range of options than would be available to any court.

Money is only one of a number of "chips" used in deals that can include cross-licensing arrangements and dividing the use of marks along territorial, market sector and other lines.

The other main advantage of agreed settlements in global disputes is that they can introduce a degree of certainty into the future exploitation of a trade mark, avoiding the inherent uncertainties of litigation in multiple territories and the attendant risks of conflicting outcomes, lengthy appeal processes and a potentially open-liability liability for legal fees.

This problem is exemplified by the "Bud" wars between Anheuser-Busch (of USA) and Budweiser Budvar (of the Czech Republic) where different countries have come up with different results as to who can use "Budweiser" on what.

Apple

But settlements are not always guaranteed to succeed, as Apple knows only too well from its battles with the Beatles recording company Apple Corps.

In a recent High Court case, Apple Corps lost its claim for breach of an agreement made between the two companies in 1991 which regulated the use of their respective apple marks in respect of various areas of activity.

Overall, however, the incentives for settling global trade mark disputes by agreement usually make good commercial sense.

After all, in the iPhone case, Cisco and Apple have not only got each other to worry about.

Whatever terms they can reach between themselves, they will always have to protect the iPhone brand against everybody else - such is the burden that comes with the benefit of a worldwide brand.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.




SEE ALSO
Cisco to sue Apple on iPhone name
11 Jan 07 |  Business
Beneath the bonnet of the iPhone
10 Jan 07 |  Technology
Cheers and tears for Apple's iPhone
09 Jan 07 |  Technology
iPhone surprises technology world
18 Dec 06 |  Technology
At the core of the Apple dispute
08 May 06 |  Entertainment
Q&A: Apple vs Apple
08 May 06 |  Entertainment

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