Cisco sues Apple over use of iPhone trademark

Cisco said in its complaint that Apple had first approached the company about acquiring the rights to the iPhone trademark in 2001. Over the years, Apple continued to make requests for the rights, including several attempts in 2006, Cisco said.

"Each time, Apple was told that Cisco was not interested in ceding the mark to Apple," Cisco's complaint reads.

Apple apparently was not willing to accept Cisco's decision, so it created a Wilmington, Del.-based front company called Ocean Telecom Services that applied to use the trademark in the US on September 26, 2006, according to Cisco's complaint. That company, Cisco says in the filing, is "owned or otherwise controlled by Apple and is the alter ego of Apple". Around the same time on September 19, 2006, Apple also filed for the trademark for iPhone in Australia.

Longtime Apple watcher Roger Kay, an analyst with Endpoint Technologies Associates, was blunt in his assessment of the situation.

"This was just brass balls on the part of Steve (Jobs), to go in there and just grab that trademark and not pay a license for it or negotiate. It's the height of arrogance," Kay said. "He basically thinks he can get away with it."

However, it's likely that the two companies will settle their differences, as prolonged litigation doesn't really serve either company, Kay said. "Apple is playing chicken with Cisco, and there's other companies I'd rather play chicken with," he said, referring to Cisco's deep pockets.

Cisco holds a clear advantage in the legal dispute as the trademark holder of record and having already released products using the iPhone name, said Bruce Sunstein, co-founder of the Boston law firm Bromberg & Sunstein. "The one who has a registration is in a better position than the one who does not."

Apple's only choice is to argue that their "iFamily" of trademarks such as iPod, iTunes and iMac create confusion in a customer's mind as to who makes the iPhone, Sunstein said. It's not out of the question, but in general the company in Cisco's position with clear rights to the trademark has a stronger argument than a company making the family argument, he said.

Also, the applications for trademarks in other countries have no bearing on Cisco's iPhone trademark, Sunstein said. "The fact that Apple may have superior rights in Australia doesn't (give) them any rights in the US." he said.

Apple's Kerris had no comment on the status of negotiations between the two companies, including whether Apple had received documents from Cisco the night prior to the iPhone launch, as Cisco had stated Tuesday.

In the U.S., courts evaluate trademark disputes based on a list of 13 factors including how similar the trademarks are, how well-recognized they are--and, crucially, whether there will be "any actual confusion" on the part of consumers.

Identical product names in similar areas have prompted courts to side with the original trademark holder in the past.

In one 2003 decision by a federal appeals court, a company selling "Red Bull" tequila sought a trademark. But the court ruled a malt beverage made by Schlitz and also called Red Bull was already trademarked, and granting a second one would result in a "likelihood of confusion" between the two alcoholic drinks.

Under federal law, the loser in a trademark dispute can be forced to hand over any profits it received as the result of selling the device in question, and signs, labels, and packaging can be required to be destroyed.