Apple’s Battle for Trademarks: Story of iPhone and iPad – by “Kai C”

Trademark is my favorite component of intellectual property law. Both the conceptual framework and practical implementation have been successful. I am satisfied given the knowledge that when I walk into McDonald’s® I will get quality burgers at bargain price through the dollar-menu and when I go into Starbucks® I expect decent overpriced coffee supplemented by world-class service. Both companies have spent enormous amount of time and effort into developing the company image that they have today. Exclusive trademark protect both the businesses and the customers. Businesses can protect and enjoy the image that they have developed and customers can ensure that the products they are purchasing are ensured by a reliable trademark.

Apple is a perfect example of a company that has heavily invested in the image of its brand and all of its trademark products. For example, with the introduction of the Macintosh computer in 1984, the company spent about a million dollars to develop one of the most famous and influential Super Bowl advertisements in history to promote the Macintosh trademark:

It is clear that Apple’s marketing campaigns have created the company as it is today. The value of that bitten Macintosh apple logo is worth more than the market cap of many mid-size firms. I would argue that without such heavy investment into brand image, Apple cannot possibly sell its products at the prices they offer today.

Currently, Apple holds 185 trademarks covering anything from the Apple logo to iPod family, to Chicago font. The full list of trademarks can be found here: http://www.apple.com/legal/trademark/appletmlist.html

The most notable feature of the Apple product line are that Apple ‘i’ products. Adding the ‘i’ before product name is one of the most phenomenal marketing endeavors. Apple currently holds 23 trademarks that follow this feature. The ‘i’ product line serves two important roles. The ‘i’ automatically signifies that the product is guaranteed to be of good value under the Apple name. In addition, Apple tends to add a generic name after the ‘i’, such as iTunes, iPhone, and iPhoto. This method helps consumers to easily identify the product functionality. In comparison, the Zune and the Android do not have names that indicate the products’ function. (The Zune is Microsoft MP3 player and the Android is a Google phone platform).

Now, the problem arises when Apple wants to introduce a new product line under the ‘i’ series when the name has already been taken! In fact, that has happened to two of Apple’s most important products: the iPhone and the iPad.

Steve Jobs announced release of the iPhone in January of 2007, however, the iPhone trademark was already owned by Cisco. Cisco bought a company called Infogear Technology, which had developed a product that combined web access and telephone called the iPhone in 2000. Shortly after Apple’s iPhone was announced, Cisco filed a trademark infringement lawsuit against Apple. Cisco claimed that the trademark lawsuit was a “minor skirmish that was not about money, but about interoperability.” The two companies soon reached an agreement in February that allowed both companies to use the iPhone name in exchange for interoperability between their security, consumer, and business communication products.

A similar case of trademark overlap occurred to Apple’s recent announcement of the iPad. Despite the controversial name that resembles a product used by majority of the female population, the name was already registered by Fujitsu in 2003. Fujitsu’s iPad is a handheld scanner for retailers that has Wi-Fi, Bluetooth, and VoIP support. In this case, Fujitsu agreed to cede the trademark to Apple after an undisclosed agreement has been reached in March.

The cases of iPhone and iPad shade light upon an interesting topic of dispute in trademark law. Strict interpretation of trademark law would have prevented Apple from taking on the trademark names iPhone and iPad, which would have damaged the company’s branding effort for past decades. Some would argue that Cisco and Fujitsu were more or less lucky to have owned the trademarks and have benefited handsomely from it. On one hand, the names iPhone and iPad were not very valuable before Apple decided to use those names. Neither Cisco nor Fujitsu made visible attempts to glorify their trademark. Cisco’s lawsuit and bid for interoperability and Fujitsu’s disclosed settlement (which I assume meant some form of benefit offered to Fujitsu) were used as leverage to use an asset that they did not create. Yet, according to trademark law, as long as the products still exist and that the companies pay periodic fees, the trademarks should remain with the first registrar. And it sounds fair that trademarks should be given on a first-come-first-served basis instead of who-can-get-most-famous rubric.

My personal take on these two cases is that Cisco and Fujitsu have all the right to grab whatever Apple is willing to offer to sell their trademarks. They should be compensated for sharing or ceding the trademarks they legally own. And if Apple cannot offer what they expect, then they should have the right to retain their exclusive trademarks. Indeed, they are lucky that they are receiving benefits that they obtained through pure luck. But the rightful owner of a property should have the right to enjoy unexpected value increase. However, I can see convincing arguments from both sides. Legally, the opposing view has no potential to achieve substantial success. It would need to come down to a moral argument for the trademark holders.

Just to end on an interesting note, somewhat related to the topic of Apple trademarks: Perhaps Apple needs to be more aware of market potential of ‘i’ series.