Apple & Cisco Squabble Over iPhone Name
Jobs' reputedly 'game-changing' announcement pushed Apple shares, albeit briefly, to an all-time high
By: iPhone News Desk
Sep. 7, 2007 02:30 PM
Cisco peed on Steve Jobs' running shoes late Wednesday when it up and sued Apple for infringing on its iPhone trademark a day after Jobs announced the June arrival of a radical new eponymous widget at MacWorld in San Francisco that the New York Times claims is still a prototype.
Jobs' reputedly "game-changing" announcement unleashed an avalanche of iPhone-smitten press, pushed Apple shares, albeit briefly, to an all-time high of close to $98, sent the Blackberry running for a bomb shelter, overshadowed the whole rival Consumer Electronics Show and stirred Cisco's lawyers into action.
Evidently something went radically wrong with the "repeatedly" Apple-sought negotiations that the pair has reportedly been in for years - at least three times in the last year - that were supposed to be getting down to the fine print right before Jobs' historic keynote by trying to work out a so-called "shared trademark" approach because Tuesday Cisco was saying that it believed "Apple intends to agree to the final documents and public statements that were distributed to them last night and addressed a few remaining items."
Cisco expected a signed agreement Tuesday, but had had no communication from Apple since 8pm Monday night.
So, without any accommodation being reached, Jobs threw caution to the wind and announced the anorexically thin $500-$600 gadget calling it the iPhone. He presumably has another name up his sleeve or a sizeable check he's ready to sign.
Wall Street thinks the problem is going to evaporate relatively simply at the click of a pen.
The widget is important enough to Apple that it changed its name from Apple Computer to Apple Inc to signal its diversification into what it hopes is the spearhead of in-home convergence.
Hopefully for Apple it won't have to change its headstrong and charismatic CEO too because - despite Apple and Jobs' reassurances - Jobs has yet to escape the company's backdating overhang.
Over the holidays Apple admitted to over 6,400 separate instances of options backdating between 1997 and 2002 and at least one instance in 2001 of falsifying the minutes of an imaginary board meeting voting shares in favor of Mr. Jobs.
It then restated its 1998-2006 results and took a telltale $84 million charge.
Apple's internal investigation committee, headed by the former Vice-President of the United States Al Gore, claimed it "found no misconduct by current management," although Steve "recommended the selection of some favorable grant dates."
The SEC, which is known to be sensitive about forged documents, has yet to wade in.
There are also backdating problems over at Pixar, which Jobs sold to Disney. Disney is now doing its own investigation.
Anyway, in a press release issued after office hours in New York Cisco said Wednesday that it had filed suit in federal court in Northern District of California.
One can only wonder how long Cisco has had the suit locked and loaded.
Cisco has owned the iPhone trademark since 2000 when it acquired InfoGear Technology Corporation. InfoGear used the name at least since early 1996 when InfoGear applied for registration in the US and Cisco division Linksys has used it on products since early last year - lately for a Skype VoIP phone. Some folks say it only resurrected the brand because of the rumors of an Apple phone coming.
According to Cisco, "There is no doubt that Apple's new phone is very exciting, but they should not be using our trademark without our permission. Today's iPhone is not tomorrow's iPhone. The potential for convergence of the home phone, cell phone, work phone and PC is limitless, which is why it is so important for us to protect our brand."
Cisco wants an injunction.
Apple, officially calling the suit "silly," says the two products don't compete, that there are several companies using the term iPhone for VoIP products, that the name iPhone has never been used for a cell phone before (bet the remaining Beatles could hum that tune), and that Cisco's trademark is "tenuous at best."
"If Cisco wants to challenge us on it, we're very confident we'll prevail," it said.
In a blog, Cisco general counsel Mark Chandler, noting Apple's own usually aggressive enforcement of its trademark rights, explained the rumpus:
"What were the issues at the table that kept us from an agreement? Was it money? No. Was it a royalty on every Apple phone? No. Was it an exchange for Cisco products or services? No. Fundamentally we wanted an open approach. We hoped our products could interoperate in the future. In our view, the network provides the basis to make this happen - it provides the foundation of innovation that allows converged devices to deliver the services that consumers want. Our goal was to take that to the next level by facilitating collaboration with Apple. And we wanted to make sure to differentiate the brands in a way that could work for both companies and not confuse people, since our products combine both web access and voice telephony. That's it. Openness and clarity."
Apple's indubitably sexy, touch screen-based, iPod-like iPhone plays music and surfs the web as well as functions as a normal cell phone complete with voicemail and e-mail. It synchs with a user's iPod or computer, both Macs and Windows.
Ironically Apple has applied for something like 200 patents on the thing.
Cingular Wireless, sight unseen, agreed to an exclusive contract to market the device. Google and Yahoo will be iPhone partners with Google supplying search and maps that let you call someone by clicking on their location and Yahoo supplying the e-mail.
Deutsche Bank describes the instant consumer interest in the thing as "rabid." Jobs, on the other hand, has relatively modest ambitions of selling 10 million units through 2008, representing roughly 1% of the market. Credit Suisse figures Apple will sell five million in calendar '07 despite the heady price.
Apple also announced a $300 Intel-based set-top box originally called iTV and now rechristened Apple TV that streams video from the Internet to your television and stores 50 hours of video, 9,000 songs or 25,000 photos. It's due out next month.
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