12
Jan/07

My Annotatation of "How Apple could fight Cisco"


How Apple could fight Cisco
By Tom Krazit
Staff Writer, CNET News.com
Published: January 12, 2007, 4:01 AM PST
MY COMMENTS ALL CAPS.
News analysis A cell phone is to an Internet phone as an airplane is to a faucet?

That analogy isn’t likely to appear on the SATs next year. But that’s precisely the question at the heart of the legal dispute over whether Apple will be allowed to use the iPhone name–currently trademarked by Cisco–for the new device unveiled at Macworld. Cisco sued Apple on Wednesday, claiming the iPhone violates a trademark Cisco acquired in 2000 and uses for a line of Internet phones.
NOT REALLY – RELATEDNESS OF THE GOODS IS A SUBSIDIARY ISSUE, AND ONE OF THE LESS CONTROVERSIAL ONES HERE. ARGUMENTS CAN BE MADE TO THE CONTRARY, BUT BECAUSE THE POINT OF APPLE’S iPHONE IS THAT IT IS ‘3 DEVICES IN ONE’, ARGUING UNRELATEDNESS BETWEEN DIFFERENT TYPES OF PHONES IS NOT LIKELY GOING TO BE PLAN A.
IF YOU HAD TO GO WITH SOMETHING OTHER THAN LIKELIHOOD OF CONFUSION AS THE HEART OF THE ISSUE, I WOULD GO WITH ‘STRENGTH OF THE PARTIES’ MARKS.”
There are a few avenues that Apple can pursue in defending itself against Cisco’s lawsuit. However, no matter what the company does, it is treading uphill because Cisco has a registered trademark with the U.S. Patent and Trademark Office, according to lawyers interviewed Thursday. “As a federal trademark holder, there are certain presumptions,” said Grace Han Stanton, a trademark lawyer with Perkins Coie in Seattle.
RIGHT, HOWEVER, APPLE WILL CERTAINLY PICK UP ON THE FACT THAT CISCO FILED A SECTION 8 BUT NOT A SECTION 15 AFFIDAVIT IN THE SIXTH YEAR OF ITS REGISTRATION, SO IT WILL NOT HAVE A PRESUMPTION OF CONTINUED USE DURING THE LIFE OF THE REGISTRAITON. SECTION 8 MEANS CISCO STILL WANTS THE REGISTRATION, SECTION 15 MEANS THAT THE REGISTRANT HAD USED THE MARK CONTINUOUSLY FOR 5 YEARS (AND IF THE SECTION 15 IS ACCEPTED, THEN THE MARK WOULD BECOME INCONTESTABLE AGAINST PRIOR RIGHTS. IT IS ALSO PRESUMPTIVELY DISTINCTIVE.
INCIDENTALLY, ANOTHER NEWS ARTICLE ON THIS CASE POINTS OUT THAT CISCO FILED ITS SECTION 8 TOWARDS THE END OF THE GRACE PERIOD, AND THAT APPLE WILL ARGUE THAT THIS IS EVIDENCE OF ABANDONMENT. WELL, AN AFFIDAVIT FILED DURING A GRACE PERIOD IS TIMELY. GRACE PERIOD FILING MAY BE EVIDENCE THAT CISCO HAS A BUSY TRADEMARK DEPARTMENT. WHATEVER CISCO’S USE PICTURE WAS, THE DAY IT FILED ITS SECTION 8 IS BESIDES THE POINT.
Apple also apparently recognized the value of Cisco’s trademark, as it started negotiating with Cisco for the rights to use the iPhone brand as early as 2001 and was involved in negotiations as late as Monday night, according to Cisco. Apple has declined to comment on its negotiations with Cisco.
APPROACHING CISCO SHOULD NOT BE HELD AGAINST APPLE AS AN ADMISSION OF LIKELIHOOD OF CONFUSION (BUT SHOULD MERELY BE AN ADMISSION THAT CISCO WAS AN ‘ISSUE TO BE DEALT WITH.” DICTA IN THE 2LIVE CREW CASE SHOULD INFLUENCE HERE THAT PARTIES SHOULD NOT BE PENALIZED FOR TRYING TO CLEAR CLOUDS FROM TITLE.
INCIDENTALLY, THE SUBSTANCE OF THOSE DISCUSSIONS PRIOR TO THE ANNOUNCEMENT COULD BE OF RELEVANCE.
One tack that Apple can take is proving that its iPhone is as different from Cisco’s iPhone as Delta Air Lines is different from Delta Faucet, said David Radack, chair of the intellectual property department at the Pittsburgh law firm Eckert Seamans Cherin & Mellott. No one is going to call Delta Faucet looking for a round-trip ticket from San Francisco to New York, so two companies can use the same trademark if they don’t confuse the other’s customers, he said.
SEE COMMENTS ABOVE ON RELATEDNESS.
Preventing consumer confusion is one of the primary reasons for trademark law, Radack said. Courts must consider whether the average consumer would be flummoxed by the fact that a faucet company and an airline share the same name. “Since the mark is the same, are the goods substantially different?” he asked.
This appears to be one facet of Apple’s legal strategy, as one part of its statement Thursday in response to the lawsuit read, “We’re the first company ever to use iPhone for a cell phone.” Any court taking up the Cisco versus Apple case would have to decide if voice over Internet Protocol (VoIP) phones are substantially different from cell phones, and while some might consider a phone a phone, it’s not clear cut, Radack said.
THE ISSUE WIL NOT BE WHETHER VOIP PHONES ARE TECHNOLOGICALLY DIFFERENT FROM CELLPHONES BUT WHETHER IN THE MARKET, ARE THEY PERCEIVED TO BE SO DIFFERENT THAT CONSUMERS WILL EASILY DISTINGUISH BETWEEN SUCH OFFERRING EVEN IF THEY ARE UNDER THE SAME BRAND.
McDefense strategy
Apple can also argue that it owns a “family” of trademarks related to the iPhone,
For example, the iPod, iTunes, iMac, iWork and iLife products all bear a strong association with Apple, so the company could argue that consumers would naturally associate the iPhone with Apple.
SEE COMMENTS BELOW ON MARKET ANTICIPATION THAT THE PRODUCT WOULD BE NAMED ‘iPHONE’ AS EVIDENCE OF APPLE’S RIGHTS IN A ‘i’ FAMILY.
The most famous example of this strategy is used by McDonalds, which has successfully argued that any other company that attached “Mc” to their product, like a McPhone, is creating consumer confusion that the McPhone is a McDonald’s product. Even though you really shouldn’t eat a phone, consumers would automatically associate McDonald’s with anything using the “Mc” . . ..
The problem with this argument is that the letter “i” is not a strong letter for trademark purposes, said Grace Han Stanton, a trademark attorney with Perkins Coie in Seattle. “There are a number of parties that use ‘i’ for Internet services,” she said.
YUP.
For example, Sony uses a technology it calls iLink to describe its implementation of the FireWire, or IEEE1394, connection. And there’s also a company that operates the iBoat Store, selling boats and boating supplies over the Internet. And several iPod accessory makers use lower-case “i”s in their product names, such as the Soundcast iCast or the Klipsch iGroove . .
WELL, THIS WILL CUT BOTH WAYS. IT SHOWS THIRD PARTY USE OF THE i PREFIX BUT ALSO IN A WAY THAT SUGGESTS AFFILIATION WITH iPOD.
And Apple has established an association between itself and the specific iPhone term because it went ahead and launched a product with a name that it didn’t have clear rights to use.
YES, BUT APPLE ALSO WILL HAVE A LOT OF EVIDENCE TO THE FACT THAT THE PUBLIC EXPECTED THE PRODUCT TO BE NAMED iPHONE BEFORE THE ANNOUNCEMENT ON TUESDAY.
This is called “reverse confusion,” when one company starts using a trademark used by another company, and the later entrant into the market creates a significant buzz around its products. Given the sheer volume of iPhone coverage and that Apple is better known among average consumers than Cisco, people might assume that Cisco is ripping off Apple’s iPhone with its family of VoIP phones, Radack said.
HOWEVER, CISCO GOT THE COVERAGE IT DID IN ITS DECEMBER ROLL-OUT PRECSIELY BECAUSE ITS PRODUCT WAS NAMED iPHONE (WITH THE IMPLICATION THAT APPLE COULD NO LONGER USE THE NAME.
THIS IS AN IMPORTANT POINT. ONE ISSUE MIGHT BE: WHEN IS CISCO’S PRIORTY DATE, AND WHEN DID APPLE REALLY DEVELOP A STRONG i-FAMILY?
AS AN ASIDE, IT’S MY UNDERSTANDING THAT THE HIGHEST DAMAGE AWARD CASES IN TRADEMARKS TEND TO BE REVERSE CONFUSION CASES, BUT IN THOSE CASES, IT TENDS TO BE DAVID v GOLIATH. I SUSPECT THAT CISCO HAS A HIGHER MARKET CAP THAN APPLE (MAY BE WRONG) AND IS NOT A DAVID.
If either of those tactics fails to impress a judge or jury, Apple could also claim that Cisco has failed to defend its iPhone trademark, Stanton said. Cisco acquired the iPhone trademark when it bought Infogear in 2000. Since then, other companies, such as Teledex and Orate Telecommunications Services, have shipped products–products that directly compete with the Cisco/Infogear line of phones–bearing the iPhone moniker.
THIS MAY WELL BE ITS ‘ACE IN THE HOLE.” IT CAN LIVE WITH iPHONE AS A WEAK MARK. IT’S PRODUCT HAS ‘OPENED’ THANKS TO THE FREE COVERAGE.
Even Cisco doesn’t appear to have actively used the iPhone name until weeks before Apple’s announcement. Cisco says that it sold products under the iPhone trademark after it acquired Infogear in 2000–until it started selling Linksys VoIP phones using the iPhone name starting in early 2006. But references to either a Cisco or Linksys iPhone were not readily available on the Web sites of either division until December 2006, when Linksys launched the iPhone family of VoIP phones.
If Apple can argue that Cisco failed to defend the trademark until it launched the new iPhones in 2006, it could possibly convince a judge that Cisco abandoned the trademark, Stanton said.
NAH, ABADONMENT IS REALLY HARD TO PROVE. AND IF CISCO KNEW SINCE 2001 THAT APPLE WAS INTERESTED, I WOULD BE SURPRISED IF APPLE COULD ESTABLISH THAT.
Cisco has said that it used the iPhone trademark on VoIP phones sold in early 2006, and maintains that is has actively defended its trademark. “We have taken all actions necessary to satisfy all elements to prove the validity of our trademark under trademark law,” a Cisco spokesman said.
However, settlement is the most likely outcome of this dispute, given the burden of proof on Apple needed to overcome Cisco’s trademark registration, the lawyers said. “Even big companies get legal fatigue,” Radack said.
ALTHOUGH APPLE HAS SPENT MILLIONS ON ITS LITIGATIONS WITH APPLE RECORDS. I DON’T THINK IT FATIGUES EASILY. I THINK UNEASE WITHIN MARKETING IS A GREATER RISK.
But Cisco has said that negotiations broke down over Cisco’s desire for interoperability between its iPhone and Apple’s. Apple is not known for its desire to make its products interoperable with anyone else’s, so if there’s no amount of money that could make Cisco happy, we could be in for a battle.
YES, INTEROPERABILITY MAY BE THE HEART, AND AS STATED ABOVE, APPLE MAY PREFER A RULING THAT iPHONE IS GENERIC BEFORE THEY AGREE TO EXTERNALLY-IMPOSED INTEROPERABILITY.
DISCLOSURE: I HAVE NEVER REPRESENTED EITHER PARTY. I HAVE CLIENTS WHO ARE EITHER ADVERSE TO OR HAVE DEALINGS WITH APPLE (SOMETIMES BOTH). I AM TYPING THIS ON A POWERBOOK. I DOWNLOAD MUSIC FROM iTUNES. MY PHOTOS ARE STORED ON iPHOTO. I WANT TO BUY AN iPHONE.

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