iPhone deal a cheap outcome for Apple and Cisco

Stephen Withers
Thursday, 22 February 2007 09:53

IT Industry - Market

The settlement between Apple and Cisco concerning the iPhone trademark suggests to me that both companies realised they were on shaky ground and that going to court could weaken the trademark.

While Cisco claimed the trademark via its acquisition of Infogear, some commentators pointed out that because the company had failed to use the iPhone mark for several years, the trademark had lapsed.

Indeed, one of the arguments put forward by Apple was that iPhone had become a generic term, which meant the Mac and iPod maker had as much right to use it as anybody else.

By agreeing to share the trademark, Apple and Cisco have avoided the risk that a court would find that it is generic. The two companies can also form a united front against anyone else that tries to use the trademark in related categories. It's interesting to note that the companies say they are both "free to use the 'iPhone' trademark on their products throughout the world" even though neither has secured trademark protection in all major markets.

And, of course, there are the significant savings in legal costs by avoiding a trial.

The out of court settlement should be no surprise. The companies were negotiating a deal prior to Apple's announcement of its breakthrough mobile phone, and Cisco has repeatedly extended its deadline for reaching an agreement. Since the details have been kept secret - "Other terms of the agreement are confidential" concluded the terse joint statement - we have no way of telling what the sticking points were, or which company blinked first.