Cisco Sues Apple Over iPhone Trademark

By Michelle Kessler

When Apple CEO Steve Jobs unveiled the much-hyped iPhone this week, he left one detail hanging: the rights to the iPhone name.

Network equipment giant Cisco Systems owns the trademark. Wednesday, Cisco sued Apple in U.S. District Court, asking for an injunction against its Silicon Valley neighbor.

Apple spokesman Steve Dowling calls the lawsuit “silly.” He says several companies use the iPhone name for products, though he could not provide examples. Cisco’s claims “are tenuous,” he says.

Apple has made inquiries about the iPhone name for several years, says Cisco general counsel Mark Chandler. Talks picked up in recent weeks and seemed to be going well, Chandler said Wednesday. But Apple stopped communicating with Cisco at about 9 p.m. PT Monday, he said.

Jobs launched the iPhone — which combines a mobile phone, widescreen iPod and Internet capabilities — with much fanfare Tuesday morning.

Financial terms were not an issue, Chandler said. Cisco primarily wanted two things: clarity over who would use the iPhone name and interoperability between Apple’s iPhone and other companies’ products, he says. He would not provide specifics.

Cisco is a big advocate of standards that allow different devices to work together. That’s because the company makes the networking gear that helps connect them.

In contrast, Apple leans toward products that work best with other Apple products, says independent tech analyst Rob Enderle. Apple is afraid that if it makes its products more open, “Somebody can steal their stuff,” he says.

Apple’s shares, which have been rising lately, jumped 5% to a record $97 during regular trading before the lawsuit was announced.

The iPhone name was first trademarked in 1996 by InfoGear, a maker of Internet appliances. Cisco acquired InfoGear, and the trademark, in 2000.

Cisco sells iPhones designed to place calls over an Internet connection, not a cellphone network, so they do not compete directly with Apple’s iPhone. Cisco launched new iPhones in December.

But the name iPhone “has been associated with Apple and the concept of a phone for a couple of years,” says Charles Golvin, a tech analyst at Forrester Research. Apple has a line of products with “i” in the name, including the iBook laptop and iPod digital music player.

An Apple claim to the name probably would not stand up in court, Enderle says. After all, Compaq Computer and its successor, Hewlett-Packard, have sold a line of iPaq personal digital assistants and cellphones for years.

Apple has more to lose than Cisco does, Golvin says. The market for Internet phones is much smaller than that for music cellphones, he says, and Cisco doesn’t have that much invested in its iPhone brand.

Apple is notorious for vigorously defending its own trademarks. It has sent cease-and-desist letters to several firms that use “pod” in product names. (c) Copyright 2005 USA TODAY, a division of Gannett Co. Inc.